Australasian agricultural company Nufarm has released details of its $250 million equity raising, less than a week after Sumitomo Chemical acquired a 20% stake in the company.
The company has also confirmed it is on track to meet its previously announced full-year profit forecast of $100 million.
While Sumitomo paid $A14 a share for its 20% stake, the one-for-five offer has been made at a price of $A5.75 per new share, a 25.8% discount on closing price of Nufarm shares on the ASX yesterday.
Sumitomo has confirmed its intention to take up its full entitlement of shares, allowing it to maintain that 20% stake in the company, which was based out of New Zealand from the mid 1980s until early 2000, when its head office moved back across the Tasman.
Nufarm managing director Doug Rathbone said the equity raising would strengthen Nufarm’s balance sheet and place the company in a better position to pursue growth opportunities.
“There is a significant medium to long term benefit arising from the company’s ability to pay down debt from proceeds secured in the capital raising. A stronger, more flexible balance sheet will ensure Nufarm is better positioned to support the ongoing growth of the company.”
Mr Rathbone said he will renounce his entitlements as he sought to reduce his shareholding, but he said he had “no intention” of selling further Nufarm shares
within the next six months and was “fully committed” to remaining as chief executive at Nufarm for several more years.
The institutional component of the offer opens today and closes tomorrow, with the bookbuild on Thursday and the outcome released to the market before the start of trading on Friday, with its stock remaining in a trading halt until then.
The retail offer will open next Tuesday before closing on May 14.
With key selling seasons now underway in Australia and Europe, and about to begin in the United States, the company has confirmed its previous guidance of a $100 million full year profit, after plummeting to a net loss of $40 million for the first six months of the financial year.
It said it expects a recovery in earnings during the second half and that it had taken account of the most recent trading conditions in its latest guidance
“The guidance assumes at least average climatic conditions and subsequent demand in the key selling regions and a gradual improvement in glyphosate margins through the balance of the financial year.”