Rubicon confident it can cover ArborGen financing plan amid litigation uncertainty
Rubicon [NZX: RBC], the NZX-listed forestry biotech company, is confident it can cover financing needs of its part-owned seedling company ArborGen, which has a US$53 million litigation cloud hanging over its head.
The Auckland-based company will have to roll over its $20 million banking facility for an extra six months past its July 1 expiry to ensure it can meet the likely funding needs for ArborGen this calendar year, it said in a statement. Rubicon is one of several defendants, including its ArborGen partners International Paper and WestRock, who've been ordered to pay US$43 million in damages and US$10 million in costs and interest to nine former employees of the seedling company in a South Carolina court.
The parties are appealing the decision, which Rubicon said could take several years to conclude, and that the litigation has affected ArborGen's financing plan.
"Following the surprising initial ruling, the partners have each been assessing go-forward alternatives in order to determine the most appropriate immediate ArborGen financing path," Rubicon said. "A decision on this later in Q2 of this calendar year in the most likely timeframe."
Rubicon today reported a profit of US$4 million in the six months ended Dec. 31 from zero earnings a year earlier, on largely flat revenue of US$210 million. The bulk of that was derived from subsidiary wood mouldings maker Tenon, which this week reported a trebling of its profit to US$6 million.
Tenon delivered dividends totalling US$2.75 million to Rubicon as a 60 percent shareholder, which it said was important to "meeting the annual ArborGen partner funding requirements."
The shares were unchanged at 22 cents, and have dropped 23 percent this year. The company made the announcement after the close of trading.