Hopefully this week will see the future of the embattled rural services group, Elders, clarified once and for all.
But don’t hold your breath. Like a soap opera there are a few episodes to play off in what amounts to the drawn out liquidation of the company.
Sorting out the worth of bids for the company’s main businesses looks like taking more time than expected, but we should have a better idea from tomorrow.
The company and its advisers have spent the weekend checking the merits of several offers it has received for various parts of its business, with Ruralco (RHL), which is 23.5% owned by Washington H Soul Pattinson and Co.
Ruralco confirmed on Friday that it lodged a bid for Elders rural services businesses and market reports at the weekend said it would be looking to raise around $150 million in a new equity issue to help finance that bid.
Ruralco has approval from the competition regulator to buy Elders’ rural services business. But the company wouldn’t comment other than to confirm it had mad a bid.
Elders said on Friday that it had received "one or more final, or near-final bids" for its two operating businesses, Elders Rural Services and Futuris Automotive, which have been on the market since late last year.
Elders is trying to temper any expectations that a deal is imminent, requesting that its shares be halted from trading until tomorrow.
"As those bids require analysis, consultation with secured lenders and consideration by the board. Elders is not in a position to make an immediate announcement in connection with those bids," the company said in a statement to the Australian Securities Exchange on Friday.
It warned that further negotiations with bidders regarding "key terms" could also take place.
Elders’ shares closed the week on 9c. That was up 4.6% and just under 10% over the week.
Elders shares’ 52 week high is 30c, the low 6c.
2Y ELD – Final days are approaching
Analysts point out that holders in the Elders’ hybrids and ordinary shareholders will be lucky if they see any money from the sale.
That’s because Elders owes its bankers around $385 million and will have to be repaid first.
At the end of May, Elders posted a $303 million interim loss, largely due to the significant writedown of the value of Futuris Automotive which counts Ford Australia as a major customer.
Futuris is now in the books at just $75 million. Elders Rural Services has a value of $455 million, but it seems Ruralco might make an offer much less than this.
The rural business had revenue of more than $1.8 billion last financial year and produced underlying earnings before interest and tax of $29.5 million.
Ruralco’s shares closed up 4c at $3.34 on Friday.
