Rural Funds Management Limited (RFM), as responsible entity and manager of Rural Funds Group (RFF), is pleased to announce that it will undertake a $78.6 million Entitlement Offer. RFF will use the proceeds of the Entitlement Offer to initially reduce gearing from 42.7% to 29.5%, following the debt funded acquisition of two key assets over the past six months.

 RFM Managing Director, David Bryant said, "RFF has acquired $60.5 million of strategic new assets since December 2016 in sectors where RFM has existing expertise and knowledge. The assets are currently underdeveloped and contain a number of identified opportunities to improve productivity and drive long term income and asset value growth for RFF unitholders."

The Equity Raising will comprise a fully-underwritten 2 for 9 non-renounceable entitlement offer to raise $78.6 million. The fixed issue price of $1.70 per Unit represents

• 0% discount to RFF's last close price on 6 June 2017 of $1.77
• 8% discount to RFF's 5-day VWAP to 6 June 2017 of $1.79
• 3% discount to the TERP of $1.76
• forecast FY18 AFFO yield of 7.4% and FY18 distribution yield of 5.9% New Units issued will rank equally with existing Units in RFF and will be fully entitled to the distribution for the quarter ending 30 June 2017, which is expected to be 2.41 cents per Unit.

RFM holds approximately 3.39% of RFF Units on issue, has committed to take up its full entitlement under the Entitlement Offer equating to approximately $2.7 million. The Equity Raising is fully underwritten by UBS AG, Australia Branch, Bell Potter Securities Ltd and Wilsons Corporate Finance Ltd. The institutional component of the offer will be conducted today, and the retail component will open on 14 June 2017 and close at 5.00pm on 26 June 2017.

Further information can be found http://ruralfunds.com.au/