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Highlights
- Major Asset Sale: Wellard Limited to sell its remaining livestock vessel, M/V Ocean Drover, for US$50 million (~AU$81.2 million).
- Shareholder Returns: Proceeds from the sale, approximately AU$0.15 per share, will be returned to shareholders, pending approval.
- Future Uncertain: Following the sale, Wellard will explore restructuring options, including a potential delisting from the ASX.
Wellard Limited (ASX:WLD) has announced the sale of its sole remaining livestock vessel, the M/V Ocean Drover, for US$50 million (~AU$81.2 million) in cash. The buyer, Meteors Shipping SA, is controlled by Turkey’s agribusiness giant Göktaşlar Et-Et Ürünleri Yan Sanayi ve Ticaret Limited Şirketi, a longstanding business partner of Wellard.
This strategic move marks the sale of Wellard’s primary revenue-generating asset, fundamentally altering the company’s future trajectory.
Details of the Sale
Pending shareholder approval, the transaction is set to complete by July 2025. The sale follows the signing of a binding contract and will require the execution of a Norwegian Shipbrokers’ Association’s Memorandum of Agreement (MOA), a standard international procedure for ship sales.
As part of the agreement, the buyer will pay a 5% deposit by January 17, 2025, followed by another 5% upon MOA execution. The vessel, which has confirmed charters until June 2025, will continue operations until the sale is finalized.
Upon completion, Wellard will gain US$50 million (~AU$81.2 million) in cash, boosting its financial reserves. The company plans to return the proceeds—approximately AU$0.15 per share—to shareholders, along with surplus cash on hand.
Strategic Shift and Challenges Ahead
The sale marks a significant pivot for Wellard, which will no longer have a revenue-generating asset. The board is now considering shutting down its shipping operations division and associated infrastructure, which will incur costs.
Additionally, the board is weighing a potential delisting from the ASX, citing the costs of maintaining its public listing in the absence of substantial income. Should the company delist, it would likely transition into a public unlisted entity, subject to regulatory and shareholder approval.
Brett Cattle Company Class Action
Wellard’s financial future also hinges on the outcome of the Brett Cattle Company Class Action, in which it is a class member. Although the Federal Court of Australia ruled in favor of the class in June 2020, the final compensation amount remains uncertain due to government opposition to the claim’s total quantum. As a result, Wellard has not accounted for this claim as an asset.
Market Reaction
Following the announcement, Wellard’s share price skyrocketed by 105%, reaching AU$0.15 per share as of January 14, 2025.
This price jump reflects investor optimism regarding the significant shareholder returns promised by the sale.
