Elders looks to equity market

Peter WilliamsThe West Australian

Elders may turn to the equity markets for funds if it is successful in attracting investors to recapitalise the debt-ridden agribusiness company.

Managing director Malcolm Jackman said there was a mixture of domestic and foreign entities running the ruler over the company with a view to becoming strategic players or financial sponsors.

Mr Jackman said he expected momentum to build now that Elders had cleared the decks with a flagged $505 million annual loss in a result driven by writedowns.

"It's a matter of getting enough money on board to pay down some of the debt and those parts of the banking syndicate that would rather exit," he said.

Net debt stood at $255 million as at September 30.

He said the catalyst for the interest had been Elders' rejection in June of a takeover proposal by biggest shareholder Ruralco.

Recapitalisation would act as a catalyst to pursue an equity raising if the timing was appropriate, Mr Jackman said.

"The equity markets seem to be running pretty hot the last couple of weeks, but they do run hot and cold," he said.

The move follows Elders' long and difficult transition from a conglomerate to focus on its historical agricultural business.

The company suffered an underlying net loss of $63 million for the year ended September 30, which was blamed on chall- enging seasonal and market conditions.

Elders also said an investigation into accounting discrepancies in its universal live export business had uncovered inappropriate and potentially fraudulent activity. PPB Advisory found an overstatement of profit had carved about $24 million from earnings before interest and tax, Elders said.

The company may also attempt to recover bonuses paid to employees which were based on inaccurate 2011-12 results.

After five years in the job, Mr Jackman said it was likely he would step down once the recapitalisation left the business on safer ground.

"At the end of that there'll be a sensible watershed when it's time for me to move on," he said.

"Elders continues to survive. It's come back to being a pure play agriculture business which was the original name of the game. It's just taken longer with significantly more pain to get there."

Elders' shares closed down 0.5¢ yesterday to 11.5¢, valuing the business at $52 million.

'The equity markets seem to be running pretty hot the last couple of weeks.' " Elders managing director *Malcolm Jackman *

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