The Farm Pride Foods Ltd (ASX: FRM) share price is surging higher today. This comes after the company announced an update in regards to its business operations following the Avian Influenza outbreak.
During the late afternoon trade, shares in the vertically integrated egg producer are up 28.2% to 25 cents.
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What did Farm Pride announce?
According to its release, Farm Pride advised that it has received a Revocation of Quarantine Notice from Agriculture Victoria. The notice was in regards to its 2 previously affected sites. This follows the confirmed Avian Influenza outbreak that occurred in August last year at two of its farms.
The issued notice will be welcoming news for the company as the closure of both farms saw it lose 33% of its productive hen flock.
On being granted approval, Farm Pride has sought to quickly restock the two sites to their maximum capacity. The company will focus on cage-free and free-range egg production.
In addition to the positive news, Farm Pride stated that it conducted a strategic review of all operations soon after the outbreak.
To improve its margins and recover from the financial fallout, Farm Pride determined that its farm in Pittsworth, Queensland will be sold off. It noted that it does not consider the farm to be a core asset and important to its long-term strategy. As a result, Farm Pride launched an open market expression of interest (EOI) process. This was facilitated by CBRE Brisbane late last year.
More recently, an unconditional contract has been entered with Hall & McLean Pty Ltd to purchase the farm and its associated assets. The sale of the farm has been agreed to an amount of $3.1 million excluding expenses. Settlement is expected to occur sometime in the middle of March.
Farm Pride will allocate the funds to its working capital to support business development, capital expenditure, and to reduce debt.
Furthermore, the company revealed it will seek to take extra measures to shore up its balance sheet, and strengthen its working capital.
About the Farm Pride share price
Despite today's meteoric rise, the Farm Pride share price has been a poor performer. In particular, over the last 12 months, falling 18%.
The company's shares hit a multi-year low of 15 cents in March, before moving on a rollercoaster ride.
Based on the current share price, Farm Pride has a market capitalisation of around $13 million.
