Elders defiant after rejecting sale bid

Elders chief executive Malcolm Jackman says the debt-laden company can trade itself out of trouble and denied the failure to sell its rural-services business meant the group was closer to administration.

Elders chief executive Malcolm Jackman says the debt-laden company can trade itself out of trouble and denied the failure to sell its rural-services business meant the group was closer to administration.

Elders announced on Tuesday it had rejected an offer for its rural-services business because it fell short of expectations.

"The bid delivered nothing to shareholders and hybrid holders and required banks to take a haircut, so it was clearly way off the mark," Mr Jackman said. The news caused shares in Elders to plunge 2¢, or 22 per cent, to 7¢ after it emerged from a trading halt.

While it had previously been under pressure from lenders to sell both its rural-services arm and its car-parts business Futuris by September, Mr Jackman said the banks were supportive of Elders exploring alternatives.

"Our financiers are supporting us," he said. "We have some work to do with them, clearly, in terms of working through how the next 12 to 18 months play out.

"It's not that we're in a distressed business, we're in a business where everybody prefers we have less debt."

Mr Jackman has been fighting to stave off receivership for five years, but a tough year of adverse weather and underperformance in Futuris has meant he has been forced into asset sales to pay off mounting debt.

"We've got a very detailed timeframe in terms of what we need to do in the next few weeks," Mr Jackman said. "The banks are clear they want to do things quickly but we are under no pressure from the banks per se."

The 174-year-old company slumped to a $303 million loss at its most recent half-year result in March, and its shares have lost more than three-quarters of their value in the past six months.

Mr Jackman said the rural-services industry, as a whole, had suffered due to hot and dry weather, and was banking on a turnaround in performance.

Elders declined to provide any details on the bid it rejected, but it is understood Ruralco's bid was worth about $250 million, which would have forced Elders' financiers - which include ANZ, Commonwealth Bank and NAB - to take a loss.

Elders said it had made progress with the sale of Futuris, which is expected to attract a price of around $75 million, despite the blow of major customer Ford ceasing production in Australia.

"Elders has entered into a short period of exclusive negotiations with one of the three parties that made final binding offers," the company said.