November, 07 October 2013 - ASX-listed Australian Natural Proteins (AYB) is offering a rare sale and leaseback opportunity on 4,930 hectares of prominent grazing land in the Riverina region of New South Wales.
Located near Deniliquin approximately 280 kilometres north of Melbourne, the mixed cropping and grazing properties comprises nine titles in the Southern Riverina.
The offering is in line with AYB’s corporate vision to establish a vertically integrated lamb meat supply chain from paddock to plate. The implementation is based on an “asset light” model where land, and other similar assets, are controlled and managed via a lease structure rather than direct ownership. This approach enables an effective deployment of capital to continue building a 250,000 lambs per annum meat supply chain.
CBRE’s Phil Beale said AYB recognised the longer term need to secure the land and would enter into a series of put and call options to commence buying the land back after 10 years at a predetermined market value.
Flexibility will be maintained to enable the parties to continue the lease arrangements beyond 10 years should they so desire, Mr Beale explained.
“AYB is building a red meat, protein based intensive pastoral operation by producing prime lamb using rotational grazing on irrigated pastures for both the domestic and export market,” Mr Beale said.
“Secondary income is also being generated from the sale of wool and commercial crops including rice, wheat, barley, corn and sorghum.”
Mr Beale said the sale and leaseback transaction would ensure the company has the required capital to develop its business into Australia’s largest integrated producer of lamb, with an initial lamb breeding flock of 100,000 ewes.
It is proposed the land will initially be leased back to AYB for a10-year term with a commencing net rent of $1.4 million per annum and fixed increases of 4.0% annually.
CBRE’s Chris Holgar said red meat supply remained tight on a global basis – giving Australian red meat exporters a product that is high in demand globally. Food and Agriculture Organization of the UN/Organisation for Economic Cooperation and Development price projections indicate that export prices should remain firm over the next 20 years due to strong global demand for red meat protein.
“Australia is a leading global producer of lamb and is the second largest global exporter of lamb. With supply levels tight, Australia is in a privileged position to capture the significant food demands in our region through Asia and the Middle East,” Mr Holgar explained, adding that AYB’s business strategy was to capitalise on this trend.
“This proposal offers investors the chance to be part of a major growth opportunity in the red meat protein sector, servicing one of the largest livestock regions in the world.”
Offers to purchase will be reviewed over the coming weeks, with a final acceptance of offer made by December2013.
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