Elders digs in after sale plan shelved
Elders chief executive Malcolm Jackman says the debt-laden company can trade itself out of trouble and denies the failure to sell its rural services business means the group is closer to falling into administration.
The company announced on Tuesday it had rejected an offer for its rural services business because it fell short of its 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.
Shares in Elders plunged 2¢ (22 per cent) to 7¢ after it emerged from a trading halt. Mr Jackman said that while originally Elders was under pressure from its lenders to sell both its rural services arm and its car parts business Futuris by September, the banks now supported Elders investigating 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 the past 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 time frame in terms of what we need to do in the next few weeks," he 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.
But Mr Jackman said the rural services industry as a whole had suffered because of hot and dry weather, and was banking on a turnaround in performance.
Elders declined to provide any detail on the bid it rejected, but it is understood Ruralco's bid was about $250 million, which would have forced financiers, including 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 about $75 million, despite the blow of major customer Ford ceasing production in Australia.