Livestock Improvement in talks with Agria over $10m loan
BUSINESSDESK: Livestock Improvement Corp, which has been compensating some farmers for selling bull semen that caused "hairy calf" mutations, is in talks with Chinese-linked agriculture firm Agria Corp over a $10 million loan that is due for repayment next week.
The New Zealand farmer-owned company that sells bull semen and provides a dairy genetics database is in talks with Agria and the Chinese-linked firm's senior lender about the loan and will update the market once those discussions are complete, it said in a statement yesterday.
LIC stumped up the loan as part of Agria's $144 million partial takeover of local rural services company PGG Wrightson. It was made on commercial terms and granted LIC a director on the Agria unit that holds a 50.1% stake in Wrightson.
The New Zealand company wrote the loan to support Wrightson's agritech businesses and to provide LIC an opportunity to find a Chinese distribution partner.
Earlier this month, Agria said it was seeking to extend a $25 million facility with its New Zealand bank to repay LIC, which if provided would restrict the bull semen vendor's ability to enforce security if it was not repaid by the end of October.
"If we are unable to extend existing facilities or obtain new ones we may be required to sell a portion of our shares in PGW, which may lead to us no longer consolidating PGW's results of operation, which would in turn have a material impact on our future reported results of operation," Agria said in its annual report.
The loan negotiations come after Agria chief executive Xie Tao and chief financial officer John Layburn resigned on October 9.
LIC's shares were unchanged at $4.90 yesterday on the small-cap NZAX and have shed 2% this year. Agria's shares rose 1.2% to 83 US cents on the New York Stock Exchange and have dropped 21% this year.
Agria has been in breach of NYSE listing standards by failing to maintain an average closing price of $US1 a share over a consecutive 30-trading-day period and has until late January to meet that requirement.