Elders rejects ‘inadequate’ offer for rural services business

Elders, the ASX-listed agribusiness company, has rejected an offer from Ruralco Holdings for its rural services business, which includes a half stake in New Zealand’s Elders Rural Holdings.

The Australian company put its Rural Services division up for sale last October. Its board reviewed various proposals for both the rural business and its Futuris Automotive unit over the weekend, it said in a statement to the ASX.

“The Elders board has determined that the offer made is inadequate with respect to value, execution risk and other considerations,” the company said.

Elders “continues to have the support of its banking syndicate to consider alternative strategies for ERS, including continuing discussions with interested parties and other options for the company such as restructuring and refinancing alternatives,” it said.

Ruralco, a rival agribusiness company, holds about 12 percent of Elders and had antitrust clearance for a purchase. Its shares fell 0.9 percent A$3.36 on the ASX.

A sale of Futuris, a specialist automotive interiors company, is still on the cards. Elders has entered into “a short period of exclusive negotiations with one of three parties that made final binding offers” and expects it will lead to a sale, with proceeds used to repay debt.

Last month Elders posted a A$301 million first-half loss, reflecting A$166 million of pretax impairments against Futuris, and $62.3 million against Rural Services. It had gross borrowings of A$386 million as at March 31 and said at the time it had funding arrangements in place to see it through the sale of the two businesses.

Elders New Zealand had its accounts for the year ended Sept. 30 tagged by its auditor because of uncertainties including its ability to continue to rely on financial support of 50 percent owner Elders.

The local business posted a loss of $5.89 million last year, narrowing from $10 million a year earlier.

Shares of Elders Ltd traded unchanged on the ASX at 9 Australian cents after coming off a halt for consideration of the offers, valuing the company at A$40.5 million, and have dropped 63 percent in the past 12 months.

The other 50 percent of Elders Rural New Zealand is owned by closely held Sredle New Zealand, whose owners include Elders Rural director Stuart Chapman.

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