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Livestock firm flags proposal to split

NZ NewswireNZ Newswire 16/05/2016 Jonathan Underhill

Livestock firm flags proposal to split © Dean Treml/Getty Images Livestock firm flags proposal to split Livestock Improvement Corp, the farmer-owned co-operative that focuses on dairy herd genetics, farm software and automation, has proposed splitting into two businesses and allowing outside shareholders to invest for the first time.

LIC, as the business is known, will embark on a nationwide roadshow starting on June 7 to discuss proposed changes to its capital structure.

The split would create a genetics/farm management co-operative, working with New Zealand's dairy farmers, and a new agri-technology company that would put LIC's existing agri-tech activities into a new corporate structure and "invest in new and innovative products, servicing customers in New Zealand and offshore."

The roadshow will also discuss "the potential for non-cooperative shareholders to invest in a portion of the agri-technology company," chairman Murray King said in a statement.

"This would be subject to a shareholder vote in 2017 should the LIC board decide to proceed with this aspect of the proposal."

King said LIC has been talking to shareholders for some time about the need to review the capital structure,

LIC posted a 46 per cent drop in first-half profit in February, reflecting the lower dairy payout and reduced spending by farmers, and the cooperative said it was focusing on reducing operating costs while maintaining services to its farmers.

Net profit in the first half fell to $15.9 million and revenue was $145 million, down 9 per cent.

King said the result was a reflection of this season's lower forecast milk price creating challenging financial situations for many dairy farmers. Shares are currently priced at $3.80 and have fallen by a third when compared to a year ago.

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