Nufarm’s Brokers Search Buyers For $75m Shortfall

Nufarm Limited

Nufarm Limited (ASX: NUF) is in the business of developing and selling of crop protection products in Asia, Australia, Latin America, Europe and New Zealand. According to the recent news, the company’s brokers, Macquarie Capital and UBS are trying to find buyers for 12.8 million shares of the company which are worth $75 million. The brokers are contacting different funds to buy the remaining institutional portion of Nufarm’s entitlement offer. The shortfall book is representing a big portion of the recent equity raising of $303 million through the entitlement offer and it came before the retail offer. On 26 September 2018, the company had announced a $303 million pro rata renounceable entitlement offer to strengthen the balance sheet and to fund the continued growth of the company.  The funds are expected to be used for taking advantage of new opportunities and add long term value. All shares which were offered under the Entitlement offer were to be issued at a price of $5.85 per new share which is representing a 10.4% discount to the dividend adjusted theoretical ex-right price of $6.53. The company is facing several drought conditions in Australia due to which Nufarm’s short performance is getting impacted and also the long winters and dry spring/summer is Europe has impacted the working capital due to delayed sales and collections. 

In FY 2018, the revenue of the company grew in all regions except Australia due to Drought conditions. The company reported a net loss after tax of $15.6 million compared to the profit of $114.5 million in FY2017. FY 2018 Net loss includes material item of $114 million which is mainly comprised of Australian impairment charges and European business acquisition costs. Net debt of the company was $1,374 million which was $680 million in last year. The funding of European acquisitions of $335 million and higher year end net working capital impacted the net debt of the company. The underlying earning per share decreased by 40% to 28.2 cents. Company delivered a good earning growth in North America and Latin American Businesses. The board declared an unfranked final dividend of 6 cents per share which has resulted a full year dividend of 11 cents. The final dividend will be paid on 2 November 2018.

The company’s share traded at $6.7 with market capitalization of $2.54 billion as on 28 September 2018 (AEST 1:30 PM).

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