The board of NZ Farming Systems Uruguay is repeating earlier advice that for now shareholders should not sell to Olam International, which has sent out a takeover offer document to the shareholders.
NZFSU chairman John Parker said the board would provide further advice in the near future, particularly in the target company statement to be published on August 23, which would include a recommendation from the board. Results for the year to June would also be released on August 23.
"The offer document from Olam contains a number of comments and assertions with which your board disagrees," Mr Parker said.
Those matters would be addressed in the target company statement, along with commentary and valuation advice from independent advisor Grant Samuel.
Mr Parker pointed out that the sharemarket had priced NZFSU shares at or above Olam's 55c offer price since July 26. At lunchtime today the shares were at 55c.
In Singapore-based Olam's takeover offer document, Olam chief executive Sunny Verghese said his company had been a patient shareholder in NZFSU.
After spending a considerable amount of time in Uruguay, Olam believed a change of direction was needed in order for the project to realise its potential.
The 55c per share offer was a 38% premium to the three-month volume weighted average price before the announcement of the offer on July 19.
If the offer was unsuccessful it was likely the share price would decline, as the recent rise was likely due to the announcement of the offer, Mr Verghese said.
While the offer was for all shares of NZFSU, Olam would be satisfied if it could get enough shares to take its holding to more than 50.1% of the company.
Olam previously had a stake of 18.45% in NZFSU, and has a commitment from PGG Wrightson that it will accept the offer for its entire 11.52% shareholding.
The operational performance of NZFSU had been poor and, in Olam's opinion, a number of aspects of the business plan and operational strategy needed review, Mr Verghese said.
Based on the current business model, NZFSU's productivity targets were unrealistic and therefore financial performance was likely to continue to fall short of NZFSU projections.
NZFSU had exhausted its capital reserves and recently announced it needed significant additional capital to finish the project, Mr Verghese said.
It was Olam's view that equity would be a more appropriate source of funding than more debt, and NZFSU may need to call on shareholders for one or more equity capital raisings, which Olam would support if its offer was successful.