Rural Funds Management Limited (RFM), as responsible entity of the Rural Funds Group (ASX:RFF), today released a Notice of Meetings and Explanatory Memorandum dated 2 March 2020. The purpose of the Meetings are to seek Unitholder approval to increase RFF’s Guarantee to J&F Australia Pty Ltd.
Key reasons RFM is proposing to increase the Guarantee Unitholders include:
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Good sector: Australia possesses a comparative advantage in the cattle sector, one which RFM has direct operational knowledge.
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Good counterparty: The Guarantee is backed by a subsidiary of JBS S.A., the world’s largest meat processor with a market capitalisation of A$24.0 billion.
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AFFO accretive: A return of 10.23% (FY19) was generated by the Guarantee. RFM has increased forecast FY20 adjusted funds from operations (AFFO) to 13.5 cents per unit to reflect an approved increase of $7.5 million for the remainder of FY20.
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Consistent with REIT structure: The structure of the Guarantee quarantines operating risks, responsibilities and maintains RFF’s Real Estate Investment Trust (REIT) structure.
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Prior Unitholder endorsement: Unitholders approved the Guarantee on 10 August 2018, with 99.8% of votes in favour.
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Independent Expert assessment: The Independent Expert concluded that the Guarantee is fair and reasonable to the Non-Associated Unitholders of RFF under the requirements of Listing Rule 10 and Chapter 2E of the Corporations Act.
To view the announcement, download the attached PDF.
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