NZ Farming Systems Uruguay needs to sell $US60 million of farm land over the next two years to provide for operating cash, farm development expentiture and settlement of the PGG Wrightson performance fee, Forsyth Barr says.

NZFSU successfully raised $US30 million in Uruguay with an over subscribed bond issue last month.

The NZX-listed company was founded by PGG Wrightson and Craig Norgate.

In a research note Forsyth Barr analyst John Cairns said the company’s development profile was adversely impacted by drought conditions during the 2008/09 year and a lack of capital to fund further development.

Since then NZFSU held its successful bond issue and has indicated another $US30 million tranches is expected later this financial year.

Mr Cairns said assuming that is success, NZFSU would need to sell $US60 million of farm land over the next two years.

NZFSU recently sold an 830ha farm for $3.6 million and plans sell more to raise a further $45 million and lease the land back.

Mr Cairns noted a number of development risks including the successful role out of irrigation to around half of the dairy farms the company is developing.

The company has already invested more than $US200 million in land and livestock as well as 26 milking sheds. A further five a likely to be built as a result of the bond issue along with infrastructure investment on the farms, including irrigation systems.

NZFSU shares closed trading yesterday at 51c.

Forsyth Barr has downgraded its estimated value of the company from 98c to 76c a share.

NZFSU will release its full year results on August 26.