Central Plains Water shareholders to raise up to $56m

Shareholders of Central Plains Water, set up to draw water for irrigation from Canterbury's Rakaia and Waimakiriri rivers, have indicated their commitment to the equity component of a looming $140 million capital raising.

The equity component has not yet been finalised but is likely to be 30 percent to 40 percent of the total, chief executive Derek Crombie says. That means shareholders would be tapped for up to $56 million. The company expects to lodge a prospectus by the end of June.

"We've approached all the shareholders and have indicative commitments at the 95 percent level," Mr Crombie told BusinessDesk. The final funding split will depend on feedback from banks and other financiers "but indications from banks are that it's do-able".

Construction on stage one of the scheme, to irrigate 20,000ha using a canal from the Rakaia, is expected to start at the end of October and be completed by October 2015. The government amended the water conservation order covering the Rakaia, allowing TrustPower to release water from Lake Coleridge for irrigation when river levels are low.

Mr Crombie says the company has sufficient working capital, after getting a $5 million loan from Selwyn District Council and a further $5 million under the Ministry for Primary Industries' irrigation acceleration fund.

The company's financial results for the year ended June 30, 2012, were released to the Companies Office this week and show the net loss rose to $2.3 million from a loss of $1.8 million a year earlier.

Some $15 million of the funds raised will be used to buy land. About 60ha of land across 12 farms is needed to build the canal. Central Plains has hired PwC to advise on the fund raising.

Central Plains has 10 shareholdings, the largest being Synlait with about 5.3 percent, according to Companies Office record. Fonterra holds 1.3 percent.

(BusinessDesk)