Agribusiness

Elders announces $57 million equity raising

Sheep Central, September 15, 2014
Elders chief executive officer Mark Allison.

Elders chief executive officer Mark Allison.

Elders has this morning announced the details of a $57 million equity-raising process designed to help reduce debt.

Elders said it has completed a $10.2 million share placement and a $47 million entitlement offer, under which shareholders subscribed for three new Elders shares for every five shares held, at 15 cents per share.

Elders said completion of the equity raising and recently completed asset sales would cut pro-forma term debt as at March 31, 2014 from $118 million to $21 million.

A statement issued by Elders to the ASX this morning detailing the equity raising reads as follows:

“Elders Limited (Elders) has this morning announced a fully underwritten $47 million ‘three for five’ traditional non-renounceable entitlement offer to all eligible shareholders at $0.15 per share (Entitlement Offer).

The Company has also completed a share placement to institutional and sophisticated investors at the same price raising $10.2 million.

Placement shares will participate in the Entitlement Offer. Funds from the Placement and Entitlement Offer will be used to repay term debt.

Completion of the equity raising and recently completed asset sales will see proforma term debt as at 31 March 2014
reduce from $118 million to $21 million on a proforma basis.

Following the expected receipt of proceeds from the recent sale of Elders’ investment in AWH, Elders’ term debt may reduce to zero.

Elders’ new banking facilities provide sufficient flexibility and headroom to grow the business during normal seasonal fluctuations.

The recapitalisation of Elders provides a sound platform to generate value for all stakeholders. The Board and management will now be totally focused on efficiency improvements, growth and improved ROC.

Elders Chief Executive Officer Mark Allison says “We welcome to our share register a range of local and institutions.”

“Elders is no longer the complex and highly geared conglomerate it once was and the recapitalisation and new banking facilities will help management optimize future performance. Elders balance sheet now provides us the funding flexibility to deliver our capital light business model and will allow us to take advantage of the tremendous opportunities in the Australian and international agricultural sector.”

“The equity raising and new banking facilities will have a very significant positive impact on Elders. Unlike the past few years, all future cash flows can now be directed to improving and growing our rural services business. It will also be a tremendous boost to staff and customer confidence.”

“We will no longer be distracted by a conglomerate asset structure, asset sales or debt repayments”.

“Our strengthened financial position enables us to continue our turnaround and work towards our strategic target of achieving $60 million EBIT and 20% return on capital by 2017,” Mr Allison said.

Elders FY14 underlying EBIT outlook is in a range of $23 million to $28 million, reflecting a turnaround of up to $77
million on the FY13 results.

“The underlying EBIT improvement in FY14 highlights the benefits of changes already underway at Elders. We look
forward to delivering on the earnings potential of this 175 year old business in the years ahead.”

Elders will announce its FY14 results on Monday, 17 November 2014.

Details of the Entitlement Offer

A 3 for 5 traditional non-renounceable entitlement offer of fully paid ordinary shares in Elders (New Shares) to raise
approximately $47 million (Entitlement Offer).

The offer price for the Equity Raising will be $0.15 per share which represents:
• a 28.6pc discount to the last traded price of Elders shares (being $0.210 on 10 September 2014);
• a 28.0pc discount to the 1 month VWAP of Elders of $0.208 per share; and
• a 17.9pc discount to the theoretical ex-rights price (TERP) of $0.183 per share.

Under the Entitlement Offer, eligible shareholders will be entitled to subscribe for 3 new fully paid ordinary shares in

Elders for every 5 existing shares held at 7.00 pm (AEST) on Friday, 19 September 2014 (Record Date) at the offer price (Entitlements). Fractional Entitlements will be rounded up to the nearest whole number of shares.

Top up facility

The Entitlement Offer is jointly underwritten by Bell Potter Securities Limited and Morgans Corporate Limited.

The Entitlement Offer will include a top up facility under which eligible shareholders who take up their full Entitlement may apply for additional shares in the Entitlement Offer from a pool of those not taken up by other eligible shareholders.

There is no guarantee that applicants under this top up facility will receive all or any of the shares they apply for under the facility.

Key dates

  • Announcement of the Equity Raising 15 September 2014
  • Ex-date 17 September 2014
  • Allotment of Shares issued under the Placement 18 September 2014
  • Record date (7.00 pm Sydney time) 19 September 2014
  • Entitlement Offer opens 24 September 2014
  • Entitlement Offer closes (5.00 pm Sydney time) 7 October 2014
  • Allotment of New Shares under the Entitlement Offer 14 October 2014
  • Securities commence trading on a normal basis 15 October 2014
  • Despatch of holding statements 17 October 2014

New banking facilities
Elders has obtained a credit approved commitment letter and term sheet under which three core financiers commit to
provide loans and other banking facilities to Elders for the purposes of refinancing or retiring its existing senior debt
financing arrangements and to finance the general corporate and working capital requirements of Elders. This remains
subject to the satisfaction of standard conditions precedent, including the receipt of funds by Elders from the capital
raising and the entry into of formal documentation reflecting the commitment letter and term sheet. Key features include:
• New syndicated working capital facilities with 3 core financiers.
• Working capital facilities will have tenure of between 12 and 36 months and limits structured to adequately meet
anticipated requirements.
• New structure does not include any term debt facilities.
• No mandated asset disposals or associated amortisation events.
• Financial covenants appropriately structured for a facility of this nature with adequate headroom to cater for
seasonal volatility.

The equity raising presentation lodged with the ASX today sets out further details in relation to the new banking facilities.

More information

The Entitlements will be non-renounceable and will not be tradeable on ASX or otherwise transferable. Shareholders
who do not take up their Entitlements will not receive any value for those Entitlements that they do not take up.
Shareholders who are not eligible to receive Entitlements will not receive any value for the Entitlements they would have
received had they been eligible.

New Shares issued under the Equity Raising will rank equally with then existing shares.

Elders will notify shareholders as to whether they are eligible to participate in the Entitlement Offer.

Eligible shareholders will receive an Offer Document including a personalised application and entitlement form which will
provide further details of how to participate in the Entitlement Offer. Elders will also notify each holder of options about
the Entitlement Offer.

A presentation on the equity raising has been lodged with the ASX and can be viewed on www.asx.com.au.”

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