Kiland Ltd (ASX:KIL) has launched a A$32.4 million fully underwritten 7 for 11 non-renounceable entitlement offer at A$1.10 per share to finance the development of its Kangaroo Island landholding into a top tier institutional-grade agricultural estate.
Background
Kiland’s Kangaroo Island landholding is unique in its scale and rainfall, comprising 18,662 hectares of arable land with >750ml average annual rainfall and significant carrying capacity.
In August 2021, Kiland announced a new agricultural strategy to remove the treecrop and convert the land for more traditional agricultural use.
Since adopting the agricultural strategy, Kiland has bought-back 10,205,133 ordinary shares at an average cost of about $1.26 per share.
The liquidity was provided to shareholders in light of the change of strategy away from forestry.
Following a public tender process, Kiland appointed AAGIM Investment Management Pty Ltd (AAGIM) as property manager for its Kangaroo Island estate in January 2022.
Offer timetable
Executive chairman James Davies said: “We are pleased to announce this significant share offer that will finance the development of the Kiland agricultural land portfolio of high rainfall, high production assets into an institutional grade estate.”
Since appointment, AAGIM and other independent consultants have prepared various options for the development of Kiland's Kangaroo Island estate.
The capital required to implement those various development options varied based on factors including time to reversion, extent of reversion, stocking considerations, farm infrastructure requirements, and the relative value of utilising sub-contractors with leased equipment or purchasing equipment and operating outright.
High-intensity sheep meat production
Upon consideration and consultation with AAGIM, Kiland’s board has determined to undertake the more capital-intensive reversion strategy focused on high-intensity sheep meat production.
The board believes this offers superior economics and a more desirable risk/reward.
Kiland is proposing to develop the estate into a sheep meat farming enterprise of global significance.
The company aims to produce a large scale, high rainfall and high productivity farm with unique Kangaroo Island provenance.
Upon completion of the capital raise, the board expects Kiland to have sufficient liquidity to fund the anticipated equity component of this strategy.
Additional debt funding is also being sought from Australian banks.