In an update to the ASX yesterday, Elders said it had agreed to terms with its existing financiers to renew and extend its syndicated finance facilities to 31 December 2014 “as part of a comprehensive plan to secure the repositioning and sustainability of the Company as a pure agribusiness”.
The facilities will include a mixture of term debt facilities of up to $144 million, working capital and contingent facilities of up to $87 million and a debtor securitisation facility of up to $183 million, Elders stated.
Elders said it will be repositioning the group as a “pure agribusiness, focused on its branch network and trading operations operating within and from Australia and New Zealand”.
It has completed the sale of Futuris Automotive, partially sold down its holding in Elders Insurance, and the final wind-down of Elders forestry assets – first flagged in 2011 – is due to be completed before the end of this year, the group stated.
Grower votes last week approved the wind-up of all remaining retail managed investment scheme forestry projects. Divestment of the final assets is due within weeks, Elders stated.
The reorganisation and new business model will involve the “reduction of about 10 per cent of employee numbers” while “a small number of rural and regional branch offices will be closed or consolidated into larger nearby branches to ensure sustainability of the network operations in the long-term”.
Elders expected the changes to reduce annualised operating costs by more than $25 million from April 2014.
Despite the stated plans to refocus Elders as a pure agribusiness, the release did not outline any changes to the Elders Financial Planning business, which currently has 136 authorised and corporate representatives, according to the ASIC database.
An Elders spokesperson told InvestorDaily there are no immediate plans to scale down or divest the group’s financial planning offering.
Elders said it currently anticipates an underlying net profit after tax for the 2013 financial year of $32 to $39 million.
“In the coming weeks, we will have wound down the vast majority of the forestry business, made final payments to managed investment scheme investors and ‘killed’ the forestry cash burn,” Elders Limited managing director Malcolm Jackman stated.
“Since we announced the wind down of Elders Forestry in October 2011 we have worked diligently to optimise the return to all stakeholders. Completion of the wind-down is a remarkable achievement, considering the total collapse of the MIS forestry sector in Australia over the last few years.”
The Elders team is now “very well placed to focus on the day-to-day needs of rural, regional and international clients and to regain momentum as a business”, Mr Jackman said.
