Elders calls for trading halt to consider offers for its Rural Services and Futuris divisions
15 June 2013
Australian agribusiness company Elders Ltd has suspended trading in its stock as it considered offers for its Rural Services and Futuris divisions.
According to the company, it received one or more final offers for those businesses, and wanted to analyse and consult with its lenders, and among the board.
The company said further negotiations might be required on those offers, and had requested that the trading halt continue until there was either an announcement of a sale, or when trading resumed next Tuesday.
The Australian competition regulator, recently granted approval to rival company Ruralco, to pursue a takeover of Elders Rural Services, which had been for sale since last year.
Elders recently reported a $303 million interim loss, due mainly to poor performance of its Futuris Automotive division.
It has valued the Rural Services business at $455 million, a figure analysts said it would struggle to secure.
Ruralco was to confirm yet whether it was behind one of the offers.
Elders has not identified the companies behind the offer.
Last month, Elders had taken a $303 million first-half hit, after taking heavy write-downs on the two businesses - Elders Rural Services and Futuris Automotive - it was trying to offload.
The agribusiness group said in a statement to the Australian Securities Exchange that it had received "final or near final bids" for the two groups.
"As those bids require analysis, consultation with secured lenders and consideration by the Elders board and potentially further negotiations on key terms, Elders is not in a position to make an immediate announcement in connection with those bids," the group said.
The debt-hit group reported a $303.163 million loss after tax for the six months to 31 March, a 744 per cent drop against the $47.1 million profit in the previous corresponding period.
The group took a $166.5 million write-down on its automotive business, Futuris Automotive, following a key customer, Ford Australia, pulling out of manufacturing in Australia from 2016. Additionally, it also took a $52 million write-down on its rural services arm.
The group had been looking to sell its rural products business since 2012.
Its rural products business suffered a sharp drop in EBITDA to a $69.9 million loss for the six months to 31 March, as against the $19.6 profit in the previous corresponding period.
According to the group, EBITDA declined on "challenging seasonal and market conditions impacting the agribusiness sector".