PFG/SCORPIO, page-6

I can only assume there are quite tight covenants and security on the funding from the banks. They previously only had funding from ANZ, they either made the covenants, security and interest rates prohibitive so they looked at other banks and NAB took the risk. I have no idea what the terms are but in my experience the security would be very strict and tied to something specific and tangible (eg farms). Beston is obviously under pressure to either meet the covenants or scheduled repayments and as a result needs to sell the farms they currently own - I don’t buy the growth opportunities as the real driver. They never set out to actually operate farms, only own them, derive revenue from leasing them back to either previous owners or other farm operators, and secure milk supply. Entering into sale and lease back arrangements is the exact opposite and highlights the need for cash. The initial plan for farms still solid, but only if you secure a lease to another operator and secure the supply. They mention how hard the dairy farm industry is at the moment with the drought and high feed prices yet are looking to grow their portfolio of farms to manage.
They don’t have a genuine strategy that they adhere to; they have compliance obligations dictating a scattered approach depending on what if most urgent at the time.