NZ Farming Systems Uruguay's beleaguered shares got a 5% lift on Monday after the group said that, thanks to a land sale, it would be able to pay some of a NZ$18m loan due to PGG Wrightson.

The group said it had sold off 2,500 hectares of land at its Tobay dairy farm in eastern Uruguay at $3,400 a hectare, a price more than it had paid for the plot.

About $5m of the $8.5m raised will go towards paying down a NZ$18m loan from PGG Wrightson, the New Zealand farm supplies group which has an

relating to a performance fee incurred in 2007-08.

John Parker, the NZ Farming Systems chairman, said last month that the cash-strapped company would be able to pay off "a fair lump" of the loan by Wednesday's due date.

Double whammy 

The land sale is the third by the company, following the disposal of 830 hectares last June and 2,000 hectares in October for $6.85m, a sum per hectare similar to that achieved in Monday's deal.

The group, which is attempting to replicate in Uruguay the farming techniques which have turned New Zealand into the world's biggest dairy exporter, suffered in much of 2008 and 2009 from both the slump in dairy prices and a drought which left it facing huge feed bills.

The company also faces a drain on its meagre cash resources from developing its 31,000 hectares of farmland, including expanding irrigation on its remaining 13,000 hectares of dairy land.

Shares rise 

NZ Farming Systems said the Tobay land being sold had been used in the main for grazing dry cattle, which would henceforth be turned out onto pasture rented from "selected producers".

The 1,500 hectares of the farm left included two milking sheds on which the group has spent much of its Tobay investment.

NZ Farming Systems shares rebounded 5.3% from a year-low to close at NZ$0.40.

Shares in the group, whose investors also include funds run by UK hedge fund guru Crispin Odey and farm investor Eclectica, touched NZ$2.00 in May 2008.