AUS
NZ
UK
CA
USA
IND
Consumer staples company Wellard Limited (ASX:WLD) refuted a media article today that claimed that the Commonwealth Bank of Australia âis about to withdraw supportâ from the company.
Wellard explained that the Commonwealth Bank had provided a $30 million working capital facility to Wellard which was undrawn at 30 December 2018 and 31 December 2017. And the impending change to Companyâs finance arrangements was explicitly detailed in Chairman John Klepecâs address at the Companyâs Annual General Meeting in November 2018 when he said:
The Commonwealth Bank has extended its trading facility to February 2019 and will not be renewed. The company is in the final negotiation phase with alternate specialist financiers which will replace CBA to provide agribusiness-focused trading facilities.
The company claimed that this information was provided to the media company but was not included in their article.
Moreover, the company reaffirmed that it is in detailed negotiations for a replacement working capital facility and will update the market once those negotiations are completed.
The media article also claimed that Wellard had been forced to source cattle from South America due to high beef prices in Australia.
But the company debunked the media claims as incorrect. In support of this, Wellard stated that it had not sourced cattle from South America for more than a year, which was noted in various public announcements, apart from one profitable shipment of breeding cattle from South America to China.
The article also said that âgiven the quality of the Wellard fleet, some say that the company would be better off hiring out its fleet as a transportation service for cattle globally.â The company told that as stated in the Fiscal 2018 annual report, 70% of Wellardâs shipping capacity was chartered to third parties in FY2018 compared to 15.6% in FY2017.
Before releasing clarification on the media article, the company announced a temporary pause in the trading of its securities. However, the temporary trading halt was lifted later during the trading session which witnessed a plunge of 8.511% in the stock price of Wellard. The stock last traded at $0.043 on 4 February 2019.
Over the past 12 months, WLD has fallen by 71.52% despite a positive price movement of 9.30% over the past three months.
Outlook FY2019
The company expects to see an adverse impact on the price and volume of its livestock ahead of drought conditions in Australia. The severity of the drought is different across regions, and hence its impact is expected to vary depending upon the animal type, location, and weight. The company stated that it is likely that the current liquidation phase, particularly in Queensland, has helped increase live export volumes over the past several months.
As on the date of the companyâs Annual Report FY2018, Wellardâs team had already fixed external charters for a significant proportion of its shipping capacity for the first half of the financial year. Going forward, the company aims to secure contracts for the remainder of the year, with the objective of reducing risks on the bulk of the Companyâs shipments.
Disclaimer
This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. Kalkine Media does not in any way endorse or recommend individuals, products or services that may be discussed on this site. Our publications are NOT a solicitation or recommendation to buy, sell or hold. We are neither licensed nor qualified to provide investment advice.
