The future of Elders continues to remain up in the air.
Elders has said ‘no thanks’ to Ruralco’s offer to buy the company’s rural services business, and Ruralco later withdrew its offer and stopped its fund raising efforts, leaving Elders to rethink what it does with its biggest division.
As a result Elders shares dipped 21% (1.9c) to 7.1c, with half the fall coming after the Ruralco withdrawal.
But it remains confident that its Futuris Automotive division can be sold.
Elders said bids yesterday for both businesses had been reviewed over the weekend.
‘‘In relation to Futuris, Elders has entered into a short period of exclusive negotiations with one of the three parties that made final binding offers,’’ Elders said in a statement to the ASX.
‘‘Elders expects that shortly after the conclusion of this period of exclusivity, it will enter into a binding sale contract for the sale of the business.’’
And the proceeds from any sale will be used to repay Elders’ $385 million debt mountain.
At the end of May, Elders posted a $303 million interim loss, largely due to the significant writedown of the value of Futuris Automotive which counts the departing Ford Australia as a major customer.
Futuris is now in the books at just $75 million.
Elders Rural Services has a value of $455 million and last financial year when it had revenue of more than $1.8 billion and produced underlying earnings before interest and tax of $29.5 million.
But directors told the ASX yesterday the Ruralco offer made over the weekend was too low.
Elders didn’t detail the Ruralco bid and its size, but media reports this morning said it was about $250 million, which would have forced financiers, including ANZ, Commonwealth Bank and NAB, to take a loss.
Elders said that it had the support of its banking syndicate to consider alternative strategies for the rural business, including restructuring and refinancing alternatives.
The rejection leaves Ruralco with its 12% stake in Elders and no longer interested.
The best for Elders is to revamp the rural services business (which has already undergone considerable restructuring).
If Elders can get rid of Futuris, it may try to soldier on as a listed company based on this division.
