ELDERS Ltd will proceed with its $550 million recapitalisation plans after shareholders approved the proposals at an extraordinary general meeting in Adelaide today.
“Elders now has the financial strength and flexibility to address the earnings improvement opportunities that we see in our business," Elders chief executive, Malcolm Jackman, said after the meeting.
"We can now turn to vigorous pursuit of our initiatives to expand and improve services, lift market share and increase returns to shareholders.”
At the meeting, separate resolutions were approved for:
• A fully underwritten $400 million conditional share placement to institutions.
• A $150 million Share Purchase Plan (SPP) (underwritten to $75 million).
Completion of the institutional placement and SPP, together with the asset sales identified in the prospectus issued for the SPP are expected to raise approximately $989 million, assuming the SPP raises the full $150 million.
This would result in Elders reducing its pro-form net debt as at 30 June 2009 to approximately $200 million and pro-forma gearing to 14pc.
Elders’ chairman Stephen Gerlach told shareholders that approval of the resolutions would enable Elders to move ahead with its recapitalisation and refinancing process.
“Elders will have the balance sheet strength and financial security needed to implement our strategy of capitalising on the strength of the Elders brand and network and the productive capabilities of the Australian farming sector,” Mr Gerlach said.
Chief executive Malcolm Jackman said that the recapitalisation and refinancing would give Elders the financial platform to support its objective of generating improved returns for shareholders.
"The uncertainty and demands of the refinancing and recapitalisation process have weighed heavily on our business for most of calendar 2009," he said.
Elders anticipates turnaround and significant improvement in underlying net profit after tax in FY10 with the prospectus forecasting the result improving from a loss of $26.9 million in the twelve months to 30 June 2009 to a profit of $55.7 million in the twelve months to 30 September 2010.
Goldman Sachs JBWere and Royal Bank of Scotland are underwriting the discounted equity raising - which included a $400 million placement and $150 million SPP - at 15¢ a share.
Elders will receive the funds from the conditional share placement on October 19.
The SPP remains open until 5pm on October 23, with funds from the SPP being received by the company on October 30.
Over 4,350 shareholders with holdings totalling some 309 million shares voted on the resolutions.
Institutions who participated in the $400 million conditional placement, including many of Elders’ largest institutional holders, were ineligible to vote.
Proxies lodged prior to the meeting were decidedly in favour of both resolutions, over 83pc of shareholders lodging proxies supported the conditional placement, with 12pc lodging open proxies and just 4pc opposed to the conditional placement. These proxies respectively accounted for 62pc, 2pc and 36pc of the shares voting.
The SPP attracted slightly stronger support, with 85pc of proxies received supporting it, 12pc of proxies being open and 3pc opposed to the resolution. These proxies respectively represented 64pc, 2pc and 34pc of the shares voting on the resolution, and meant the resolutions would both easily have been passed by the required majority on a poll.
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