Cash injection and debt reduction positions Elders for growth
Elders has today announced an equity raising and new banking facilities which will enable the growth of its rural services business.
Elders Chief Executive Officer Mark Allison says the $57 million equity raising and new banking facilities is positive news for Elders clients, employees, shareholders and the wider agricultural community.
“Unlike the past few years, all future cash flows can now be directed to improving and growing the Elders business, as we will no longer be distracted by a conglomerate business structure, asset sales or debt repayments,” Mr Allison said.
“Clients can expect to see us invest in improving and growing our product and service offering, particularly in the farm supplies and agency areas; through the use of innovative online platforms and exploring opportunities in overseas markets,” he said.
“A greater investment in our people will help farmers grow their businesses through technical expertise, production advice and the latest market information.
“Our strengthened and stabilised financial position also enables us to continue our turnaround and work towards our strategic target of achieving $60 million earnings before interest and tax (EBIT) and 20 percent return on capital by 2017.
“The underlying improvement already seen in this financial year highlights the benefits of changes already underway at Elders and we look forward to delivering on the earnings potential of this 175 year old business in the years ahead,” Mr Allison said.
Completion of the $57 million equity raising, proposed new banking facilities and the expected receipt of proceeds from the recent sale of Elders’ investment in AWH, may see the elimination of proforma term debt which at 31 March 2014 was $118 million.
The equity raising consists a fully underwritten $47 million 3 for 5 traditional non-renounceable entitlement offer to all shareholders at $0.15 per share and a placement to institutional and sophisticated investors at the same price raising $10.2 million.
Further details of the Elders equity raising and new banking facilities are available in the company’s ASX announcement, available at http://www.elderslimited.com/news/asx-announcements.