Elders to raise $550m in share placement

Rural services provider Elders Ltd says it will raise as much as $550 million
through the issue of new shares but the restructuring of a separate debt package
means no dividends will be paid until 2012.
Elders on Friday also announced an annual loss after tax and minorities of $415.4
million.
The result included non-recurring items after tax of $388.5 million arising from a
restructuring of the group and effect of market conditions on asset valuations.
The underlying loss after tax from continuing operations was $26.9 million, down 132
per cent on the prior year.
Elders said underlying results were affected by market volatility and buyer
uncertainty across all divisions, with prices, margins and volumes all substantially
lower than in the 2008 financial year.
In a statement, Elders said net proceeds from the equity raising and asset sales
previously announced would be used to repay debt and recapitalise Elders' balance
sheet.
Elders said it had completed a $400 million conditional placement at 15 cents per
share, which had received strong support from existing institutions and new
investors.
Elders will seek to raise another $150 million via a share purchase plan, also at 15
cents per share, that opens on September 14.
It also said that it had received commitments from its lenders to restructure its
debt funding, with the bulk of the term debt on a three-year term.
The refinancing is subject to certain conditions, including entry into definitive
documentation.
Under the debt package, dividends on ordinary shares cannot be paid until after
March 31, 2012 and upon satisfaction of several conditions.
Distributions to hybrid investors have been suspended for two years.
Elders shares have been in a trading halt since September 1 and last traded at 39
cents.
Both the conditional placement and share purchase plan are conditional upon
shareholder approval at an extraordinary general meeting to be held on October 15.
Elders also said on Friday that it expected to realise gross proceeds of more than
$700 million from asset sales by the end of the 2009 calendar year.
Proforma net debt was expected to fall from $997 million, as at June 30, 2009, to
about $200 million after the asset sales and equity raising.
"The recapitalisation and refinancing will secure our future, providing us with the
strong balance sheet required to achieve our near-term and longer-term objectives,"
Elders chief executive Malcolm Jackman said.
"Completion of the equity raising will provide the capital injection necessary to
secure the longer-term financing we have been seeking, thereby removing the
uncertainty which has weighed on our business over the past 12 months."
QBE Insurance Group Ltd is to subscribe for $55 million worth of new shares as part
of the conditional placement, making QBE a key cornerstone investor in Elders, with
a shareholding of about 8.2 to 9.2 per cent.
The company's 2010 financial year would start on October 1, 2009 and finish on
September 30, 2010.
Elders said it had reviewed its financial performance outlook during the course of
its refinancing, with the help independent accountants.
The review had confirmed the group's expectation of a strong recovery in the
generation of earnings before interest and tax (EBIT) in the key rural services
division as well as improved earning outcomes from the group's automotive and ITC
forestry divisions.
"Financial projections made at this stage are necessarily subject to change given
the variation that can arise from factors such as seasonal and economic conditions
and MIS (managed investment scheme) sales over the next 13 months," the company
said.
"Subject to these factors and as set out in the prospectus, Elders expects
underlying EBIT to turn around in 2010 from $16.8 million to $84.2 million.
"Underlying NPAT (net profit after tax) from continuing operations is forecast to be
$55.7 million."