Forestry deal close, says Elders
Elders is closing in on a deal to shed its troublesome forestry interests as the drive to clear massive debts hits top gear.
The historic Australian company yesterday completed the sale of its Futuris automotive division to US private equity firm Clearlake.
The $69 million sale will slash Elders' net debt and managing director Malcolm Jackman said he expected the disposal of the forestry interests within months.
Mr Jackman said reducing debt remained a top priority for Elders as it moved to focus solely on its rural services business.
"Some of our banks would prefer not to be our banks, some are happy to be our banks," he said.
"So it is really important to keep debt moving down. With a little more work this year it will be getting down to a sustainable level."
The forestry interests, which include blue gum plantations near Esperance with 11,000ha of freehold land and 46,000ha of standing trees, have been a millstone around the company's neck.
The managed investment scheme plantations are being bulldozed with no prospect of a harvest and prepared for a return to pasture or cropping. Mr Jackman said he had had talks with a possible buyer with WA links at Elders' headquarters in Adelaide yesterday.
"We are at a stage now where I expect that by the end of September we will be close to concluding all issues around forestry," he said.
"We are getting ready to take a proposition to growers for them to vote on."
Elders rejected an offer for its rural service business from rival and major shareholder Ruralco in June.
It is believed the offer, reportedly about $250 million, fell well short of Elders' expectations.
The two companies compete head-to-head in rural communities across WA.
US company CHS Inc took a 50 per cent stake in Ruralco's grain marketer Agfarm late last month.
Ruralco said the deal did not rule out it taking another tilt at Elders.
Mr Jackman said Ruralco was "part and parcel" of everything Elders needed to do to recapitalise the company.
"They are still our largest shareholder and we will continue to have a close working relationship with them at a corporate level but compete like hell with them in the bush," he said.
Mr Jackman said the Futuris sale, which came 11 months after it was put on the market, was a positive result for the business, its employees, customers and the Australian automotive industry.
Elders shares gained 0.9Â¢ to 8.8Â¢.
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