The Offer is to wholesale investors for Units in Colebrook Kiwifruit Orchard Limited Partnership ("the Partnership"), a Limited Partnership to be formed to acquire a 14.86 cha kiwifruit orchard (10.5 cha of SunGold and 4.36 cha of Hayward) located at 66 Colebrook Road, near Edgecumbe in the Eastern Bay of Plenty.
As a Colebrook Kiwifruit Orchard unitholder ('Unitholder'), you will become a Limited Partner in the Partnership.
Subject to the success of this Offer, the Partnership will purchase the Orchard, meet syndicate establishment costs using a combination of $12.5 million of contributed capital to be raised in this Offer and $5.35 million of bank debt, a 30% debt funding level and a 34.9% loan to value ratio (‘LVR’). The LVR is higher than the debt funding ratio because the calculation of LVR excludes establishment fees and costs.
The Offeror reserves the right to use up to a further $2.298 million of bank debt and declare the sale and purchase agreement unconditional once it has received applications for $10.185 million of contributed capital. If only $10.185 million of contributed capital is raised, the LVR post settlement would increase to 50%. The Offeror and associated entities may underwrite $3.0 million of contributed capital for a 4.0% fee payable by the Partnership.
In the event that the Offer is under-subscribed at the Closing Date of 17th July 2020, MyFarm will hold any unsubscribed units as Unpaid Units and continue to market these Unpaid Units on the secondary market after the Offer has closed, at the Offer price of $10,000/Unit.
Up to $0.5 million of over-subscriptions will be accepted. Any over-subscription money will be used to invest in Zespri shares. Over subscriptions are not included in financial forecasts.
The Orchard will be leased to DMS on terms that include a $60,000/cha p.a. base rent paid monthly plus an 85% share of Orchard profits. The lease terms will provide for a term of 10 years with one right of renewal for five years. DMS is a leading Bay of Plenty kiwifruit and avocado orchard management and post-harvest operator. It is locally owned and operated and focused on providing services aimed at increasing orchard productivity and grower profits.
The Offer will be for 1,250 partly paid Units in Colebrook Kiwifruit Orchard LP at an issue price of $10,000/Unit, plus over subscriptions of up to 50 units. Payable at the time of application is $8,000/Unit (80%). The remaining $2,000/Unit (20%) will be payable by 31 May 2021 (unless delayed by failure to secure a SunGold licence for area to be converted from Hayward). The minimum investment will be five Units ($50,000) and thereafter the size of an investment can be increased in multiples of one Unit.