Nufarm secures new one-year A$900m banking facility

Tuesday 30th November 2010

Agricultural chemicals company Nufarm says a new A$900 million (NZ$1.16 billion) one-year syndicated bank facility will refinance its existing facilities due to expire on December 15.

Nufarm has about A$200 million in other bank facilities which will continue.

The company said the new facility "includes more flexible covenant ratios that better reflect the seasonal pattern of Nufarm's operations."

The banks providing the new facility are Rabobank, HSBC, ANZ Bank and National Australia Bank.

Nufarm said the interest margin "will be broadly consistent" with what it has been paying on the expiring facility and all costs will be expensed over the next 12 months.

In September, Nufarm's banks granted it a waiver from covenants it had breached and extended its facility through to December.

That followed Nufarm slashing its earnings forecasts and ratings agency Standard & Poor's first cutting Nufarm's rating from "BBB-" to "BB" and then putting it on negative credit watch after its debt blew out to A$620 million in the year ended July 31 from an earlier estimate of A$350 million.

Nufarm said it has asked Rabobank to finalise longer-term debt including a A$300 million asset-backed securitisation facility and a A$600 million medium-term syndicated bank facility that will, in combination, refinance the 12-month facility just announced.

"We are simplifying our banking arrangements to a smaller group of relationship banks through which we can establish a more efficient long-term banking structure," said managing director Doug Rathbone.

With it in place "we can now focus on managing our global business and rebuilding returns to shareholders," Rathbone said.

The company will update shareholders on its first quarter performance and the progress of its strategic review at the annual meeting on December 2.

While Nufarm shares now trade only on the ASX, it has $251 million of debt listed on the NZX which last traded at 85 cents in the $1, unchanged from yesterday. Its shares rose 18 cents to A$4.63 in morning trading, up from the A$3.20 low it hit in July.

BusinessDesk.co.nz

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