June 26 (BusinessDesk) - Livestock Improvement Corp, or LIC, is to increase its holding in National Milk Records (NMR)
to 17.2 percent from 2.6 percent after agreeing to subscribe for shares to allow the UK farm management recording
services to fund its exit from a pension fund.
LIC will buy 4 million shares in NMR at 65 pence apiece, or 2.6 million pounds. NMR, whose shares trades on the NEX
Exchange Growth Market, faces a total cost of 14.8 million pounds to exit the Milk Pension Fund, according to an NMR
statement. Exiting its liabilities to the fund would allow NMR to attract new investment and focus on its core
businesses, it said.
It will meet that through a lump sum payment of 10.1 million pounds to the trustees of the fund, a payment of 4.68
million pounds to UK biotech company Genus in cash and new NMR shares to assume its liabilities in the fund, and the
sale to Genus of its genetic products subsidiary Inimex. The transaction will be funded via the issue of 7.33 million
pounds of shares at 65 pence each, existing resources and a new bank facility, it said.
LIC chief executive Wayne McNee said the increased investment in National Milk "aligns with the co-op’s strategy to
focus on key international markets that will add value for shareholders". The UK "is a key market for LIC and NMR is a
key player in that market."
LIC originally invested in NMR in 2003. As part of the new investment the two companies have agreed to "work together to
deliver mutual benefits, including greater integration of LIC and LIC Automation into the UK dairy industry," McNee
said.
LIC shares, which can only be traded by cooperative members, last changed hands at $2.45 and have dropped 2 percent in
the past 12 months while the S/NZX 50 Index rose 11 percent. NMR last traded at 71.5 pence and has fallen 8.9 percent in the past year.