NUF Nufarm Limited

[winner69]

Biggest hit I have ever taken. Lesson for me in this one is that Rathbone has not been frank and honest with shareholders. Numerous times. I should have bailed after the first time.

Rathbone isn't doing any more or less than he has done for decades so a bit tough on him making that statement

NUF (or Fernz as it was known) was the pariah of the markets 10 years ago ... same sort of disappointments about company performance and its shareprice and Hoggard and Rathbone were in charge then

NUF just got lucky for a few years in times of booming markets where nothing could go wrong

Fundamentally what has happened recently with NUF was in all probability going to happen anyway at some point in time.

Thats why market sentiment (like what you can glean from the charts) nearly always rules over fundamentals

Penfold .... take notice of some of the comments Phaedrus makes on this and the PGW thread

[Balance]

More warning bells ringing.

Nufarm downgraded to 'junk' by S&P.

Company now at the mercy of its banks.

CFO shut discussion of its breach of banking covenant down at results presentation when analysts asked.

http://www.theaustralian.com.au/business/nufarm-talks-to-banks-on-possible-breach-of-lending-arrangement-clause/story-e6frg8zx-1225892381509

[Balance]

First rule of investing - "If you don't trust management, don't invest."

Sounds familar? Last one was PRC.

Good questions being asked here with the end conclusion being that the major shareholders are hell-bent on maintaining contril rather than looking after all shareholders.

Excerpts :

"One cannot say the same of Nufarm. You know a deal stinks when the perpetually business-friendly Matthew Stevens of The Australian describes it as “puzzling”. “The forces that shaped Nufarm's unanticipated first-half loss were so much a product of management and boardroom decisions it is hard to see how the company can believe it has fulfilled continuous disclosure obligations ... Addressing shareholders gathered yesterday ... Nufarm chief executive Doug Rathbone said the business would make an interim loss of about $40 million ... This news came as something of a shock to the market, which thought it had been conditioned by Rathbone for a result south of last year's $66m interim profit but for a first-half profit nonetheless. Rathbone went on yesterday to forecast a second-half profit of up to $140m and therefore a full-year headline profit between $80m and $100m.”

Stevens goes on: “Nufarm insisted yesterday that it had only recently formed a firm view of the losses incurred in the US glyphosate business ... It argued, too, that the decision to sell US inventories at prevailing market prices created a predictable flow of losses, but there were other unforeseeable impacts that made it very, very difficult to provide earlier guidance ... Those factors included decisions to support troubled US customers by taking back product, and to absorb some customers' credit costs.”

As Bryan Frith of The Australian points out “...the problem is that Nufarm shares were selling at around $11 when the deal with Sinochem was announced last September and the share price was still around $10.50 when the Sinochem deal was terminated ... Since then Nufarm's share price has weakened, and it plunged a further 28c, or almost 3 per cent on news of the latest downgrade. Sumitomo's $14 offer price is a premium of 48 per cent to Nufarm's present market price, but of course that is only for 20 per cent of each holding ... If it is assumed that the share price factors-in $14 a share for 20 per cent of each shareholding, then that assumes a price for the remaining 80 per cent of only $8.33 a share ... Sinochem's rejected offer price of $12 a share is 27 per cent above Nufarm's present market price and 44 per cent above the implied see through price of $8.33. Many shareholders may consider they would have been better off receiving Sinochem's proposed full bid of $12 a share.”

Try all shareholders. This column has been a major fan of Nufarm over the years. It was one of the few Australian agribusinesses to make the leap into a globalisation strategy. Notwithstanding Stephen Bartholomeusz's ironic question “... did China’s Sinochem have a better understanding of Nufarm’s business than Nufarm itself when it lowered its offer”, this looks like a management focused on maintaining control, with insufficient regard for the company’s reputation and owners. Governance is a major component of value, which makes Nufarm look like a 'sell'."

Read the arrogant and dismissive replies from Nufram holders to the above warning I wrote on 5 March 2010.

Share price was over $9.00 then.

Excerpt from SMH this morning :

"The problem facing McGauchie is that while the company would prefer to see its issues as structural, they have moved far beyond that. Its credibility is shot, primarily because of a massive failure of corporate governance.

A personal fiefdom which attracted minimal criticism as it rode the boom in weed-killer prices is now being stress-tested.

The company obviously still doesn't understand. Most in similar positions provide as much disclosure as possible to ensure the market can see the issues, but not Nufarm, which refuses to release details of its debt covenants.

Asciano, AWB, Elders et al provided all the key ratios when they were (or, in the case of Elders, still are) under financial stress. Nufarm declines to do so.

That leads to confusion, as in Wednesday's analyst call, when chief financial officer Kevin Martin stepped in to clarify an issue when Rathbone was correctly highlighting interest cover as one covenant to have been breached.The words used were "need modification".

While the issue was clarified further into the analyst call, Nufarm was forced to issue yet another explanation to the ASX on the issue yesterday. "

[COLIN]

And surely Sumitomo will be suing somebody/ies for multi-millions. I can't believe that they would be easily hoodwinked, so there must have been serious misrepresentation.

[Jay]

I see on depth someone wants to pay $4.20 for some shares with the lowest sell at 2.40

[Balance]

$3.63 now. At this rate, it will be under $3 by end of next week.

Rights issue at $1.50?

[Balance]

So 2 Chinese companies did due diligence and WALKED AWAY. Alarm bells were ringing.

Yet the clever Japs jumped in at $14 for 20% of the company.

They could have control of the company for just a few hundred millions today - if they just waited.

I guess shareholders should be grateful for management to find such a sucker for them to sell 20% of their shares to.


Covenant capers

THE ASX should be asking questions about Nufarm's announcement yesterday on its "clarification" revealing it was in the hands of its bankers.

On Wednesday, after close of trade, Nufarm halved its earnings guidance for the year to July -- its fifth downgrade in the past 18 months -- and disclosed that its net debt had risen by $100m to $450m. No reference was made to debt covenants.

In response to a media question chief executive Doug Rathbone said Nufarm had no difficulty with its gearing covenants and was in compliance with its gearing and net debt covenants. On a further question he said the company may need a temporary change to its interest covenant.

Before the start of trading yesterday Nufarm issued a clarification to the ASX that its bank facilities included net debt to equity (gearing), net debt to EBITDA and EBITDA to net interest covenant ratios.

After the earnings downgrade Nufarm would remain in compliance with the first two of those covenants but would not achieve the interest cover covenant "by a small margin".

Nufarm had started discussions with its bankers to seek a "temporary adjustment" to the interest cover ratio.

Despite its attempts to downplay the situation, failure to comply with an interest cover ratio is the sort of breach that, if not remedied, could put a company into receivership. Nufarm will need either a waiver or to refinance its debt and it will be talking to bankers, which must be wondering what confidence they can have in the board and management after yet another earnings downgrade.

The ASX should be concerned as to why it took a media question to reveal the breach of the interest cover ratio, and why that information was not in Wednesday's announcement. That Nufarm made the "clarification" yesterday morning concedes that the information was price-sensitive, and therefore should have been disclosed to the ASX.

Not surprisingly, when trading in Nufarm resumed yesterday its shares plunged $1.49, or 28 per cent, to $3.75.

China National Corp decided not to proceed with an offer of $17.25 a share for Nufarm 2 1/2 years ago, after conducting due diligence, and in December Sinochem reduced a proposed offer for 100 per cent of Nufarm from $13 to $12 a share, also after conducting due diligence.

[Balance]

Down another 27 cents so far today.

Market cap now = $982m.

But hang on a minute! The company raised new capital of $550m in the last year! $300m in May 2009 at $11.25 per share and then, $250m via the 1:5 rights issue at $5.75.

And it is now siting on $500m of debt!

Gotto to be another capital raising on the way.

[winner69]

Down another 27 cents so far today.

Market cap now = $982m.

But hang on a minute! The company raised new capital of $550m in the last year! $300m in May 2009 at $11.25 per share and then, $250m via the 1:5 rights issue at $5.75.

And it is now siting on $500m of debt!

Gotto to be another capital raising on the way.

Thats sad reading eh Balance .... whers's it all gone

Looking at the long yerm chart of NUF ... the 15 year one .... I couldn't help but notice the similarity with the NPX chart .... like steady but nothing spectacular through the late 90's and early 00's and reaching what has turned out to be irrationale highs in 2008 ... and now back to turn of the century prices.

Similarities don't seem to end thre either .... both run out of Auckland for zonks ..... both start a global expansion about the same time ... everything collapses about the same time ... both were almost a one man business .... who stayed at the helm for too long and didn't realise they couldn't handle a changing world ... and maybe a few other things

The other observation is that those fantastic rises in share prices wasn't reallt the company's making .... they just went up with the market taking advantage of market conditions where they couldn't really do any wrong anyway.

The sad thing is that when an opportunity came to allow shareholders cash in at the highs that were not justified they wouldn't allow it.

Best case ever of extarcting the full value of an iverhyped shareprice was Baycorp .... remmeber them ... trading at 20 times sales (yes sales) and Mclaughlin managed to get some Aussie to buy them at thst proce and the rest is history

Doing the best for shareholders is maximising the returns and sometimes when the writing is on the wall for a long time business model (they did need to start doing something different didn't they) the best thing to do is to hock the company off to some other fool .... but Hoggard and rathbone failed msierably .... and shareholders have suffered and will continue to suffer

But the charts say nobody should be in tears anyway .... just a lost opportunity

[winner69]

The new chairman obviously doesn't believe the numbers and has told the finance guy to go back and do some honky dory stuff so they look better



The new chairman DID make them go back and look at the numbers again ... made them work all night .... and by gosh they still came up with a disaster ,,,, wonder how bad the first version was ..... another downgrade to come?

Seem to have some funny systems (jeez it has nuances) .... almost puts Allan and Jeans system in good light

This from tardingroom.com.au



In response to a query from the ASX on the timing of the release of the profit downgrade, Nufarm said on Friday it first became aware after the close of business on July 13 that earnings would be more than 15 per cent lower than the previous guidance.

"Preliminary indicative updated July forecasts for the Australian business, based on preliminary financial data for June, were analysed by senior management in the afternoon of 13 July, 2010," Nufarm said.

"A board meeting was held in the late afternoon on 13 July, 2010, prior to the receipt of further preliminary indicative updated July forecasts for Nufarm's global businesses based on financial data for June.

"At the board meeting on 13 July, 2010, it was decided that the company would request that its securities be placed in trading halt prior to commencement of trade on 14 July, 2010 to allow Nufarm to appropriately process and consider all preliminary indicative updated July forecasts, and update the market."

Nufarm said that during the evening of 13 July and the morning of 14 July, more data related to updated year-end forecasts was collected from Nufarm's regional managers.

Given the time differences involved, these talks took place overnight(Europe) and early the following morning (North and South America).

"A further board meeting was held in the morning of 14 July, 2010 while the company remained in a trading halt," Nufarm said.

"Senior management continued to gather and analyse further information from regional managers, including in relation to the outlook for the remainder of the financial year, during the course of the day on 14 July, 2010.

"This culminated in the trading update, which was released to ASX at approximately 4pm."

Nufarm told the ASX that determining sales and other data for the key May-to-July quarter in the company's fiscal year was not as simple as checking warehouse inventory levels and matching inventory to a standard price list.

"Nufarm operates through a network of distributors who, in turn, have relationships with farmers - those relationships involve terms and conditions for things such as rebates and returns," the company said.

"Further, these networks, relationships and nuances differ significantly between each of Nufarm's key geographical businesses."

Nufarm said data and other information from regional managers in May did not specifically indicate that there would be a departure from the previous guidance.

"This is particularly because there is typically a significant degree of variability within the key selling period as to when the bulk of the sales actually takes place."

By Trevor Chappell

[winner69]

Getting closer to that $3 mark

[Balance]

OK - looking at some valuations coming in - $3.52 to $4.10.

Short-coverings expected to keep sp above $4.00 today, then a fall below $3.00 to be expected by end of month.

Talked to a couple of brokers about the share price fall - real fear out there that the banks are going to require NUF to refinance at least $200m of its debt by way of capital raising before waiving covenant breach.

Sumitomo will show their true colors - will they underwrite the rights issue or like the Chinese, will they WALK AWAY?

[Balance]

Concerns about what the banks will do mount.

Meanwhile, Rathone has met Sumitomo in New York (???!!!). They are going to want their pound of flesh if Nufarm needs a capital raising.


Warning for Nufarm bargain hunters
DAVID SYMONS
20 Jul, 2010 11:13 AM

Bold traders looking to pick a bounce in the Nufarm share price after the stock fell 28 per cent following Wednesday's profit downgrade should take a moment to read last night's release from Standard & Poor's.
While Nufarm management understatedly spoke of an ''amendment'' being required to just one covenant following this week's profit downgrade, the credit analysts are less sanguine. It seems Nufarm's lenders are now key stakeholders at the underperforming agricultural chemicals business.

The ratings agency lost no time in cutting Nufarm's corporate credit rating to junk. Along with the BB rating came observation of ''a structural change in the global glyphosate market, which faces conditions of oversupply and intense price competition that we believe are likely to persist over the medium term''.

As a result, S&P considers the company faces a ''significant refinancing challenge as the group rolls over its seasonal debt facilities''.

With management credibility running on empty, Nufarm would be hard pushed to tap institutional equity markets if the banks prove troublesome.

This could leave the company looking to the major shareholder Sumitomo Chemical, hoping that its interest in the business hasn't cooled as market conditions worsen. Sumitomo played Santa Claus to Nufarm shareholders when it bought 20 per cent of the company at $14 a share this year but, with the stock trading yesterday at $3.75, its next purchase is set to be at a materially lower level.

It's inevitable that talk of takeover interest in Nufarm will emerge in coming days with shares trading at historic lows.

On that front, it's notable that Sumitomo has made a commitment not to use its 20 per cent shareholding as a blocking stake if a third party offer for the company emerges. However, in a further twist, that obligation doesn't kick in until early next year, 12 months after the Japanese conglomerate's original investment in Nufarm.

[percy]

Chalkie has done an article on NUF this morning.Interesting."Doug Rathbone has during this time sold large dollops of shares while making forecasts which have turned out to be optimistic."

[Balance]

Chalkie has done an article on NUF this morning.Interesting."Doug Rathbone has during this time sold large dollops of shares while making forecasts which have turned out to be optimistic."

Excerpt from a recent article :

"Rathbone has made an art form of selling into capital raisings. In March 2008 he raised $60.4m by tipping 4 million of his holding into a $200m company share placement at $15.10 a share. In May last year he raised another $19.7m by selling a further 1.75 million shares at the same time as a $300m institutional placement at $11.25 a share."

He sold 3m shares at $8 on 29 March 2010 = $24m plus $80.1m above = $104.1m.

Then, there's the shares he sold to Sumitomo as well as selling down his rights in the retail rights issue - estimate $98m.

In total - $202m.

[Balance]

Because he long ago signified his intention to sell down his 16m odd shares!

It's a renounceable issue so he will receive some value for his rights and keep faith with the market. Not every seller is trying to put one over us little guys!

Puts his selldown in some perspective now.

[Balance]

$12 per share from Sinochem versus $5.68 (.2*14+.8*3.60) and losing $2.15 per share (37%) in 2 months for the 1 for 5 rights issue.

Looks like Rathone played this one well - one foot in each camp?

Raised $202m from selling his shares, bringing Sumitomo in to keep his job as CEO but weakening Nufarm with the wrong partner in the global markets.


Nufarm backed wrong horse with Sumitomo.

http://www.smh.com.au/business/how-nufarm-backed-the-wrong-horse-in-sumitomo-and-what-it-must-do-now-20100722-10n37.html

July 23, 2010
The strategic review that the new chairman of Nufarm, Donald McGauchie, is leading after a string of profit downgrades and a 68 per cent share price slide should conclude that Nufarm chose the wrong horse in December when it dumped the Chinese state-owned Sinochem in favour of Sumitomo of Japan.

The wrong horse, in that even after it lowered its offer price by $1 a share last December, Sinochem was still prepared to take every Nufarm shareholder out at a price of $12: Nufarm closed at $3.61 yesterday.

But wrong also because the decision to walk away from Sinochem and introduce Sumitomo as a 20 per cent shareholder through a $14 a share tender offer kept Nufarm and its shareholders in a war that it has little hope of winning without heavy restructuring.

Nufarm's biggest problem is that it is a manufacturer of glyphosate, the world's weed-killing chemcial of choice, at a time when China has emerged as the dominant, lowest-cost manufacturer of glyphosate Technical 95, the crystalline feed-stock of all liquid glyphosate formulations. Nufarm imports its Technical 95 from China, and then formulates it into Glyphosate 450, the most common form of the weedkiller. It also manufactures other agricultural chemicals here and overseas, including the number two weedkiller in the world, 2,4-D.

But the new global price leaders in the herbicide market are smaller firms that import either fully formulated ''Glyphosate 450'' weed-killer or 2,4-D weed-killer directly, most often from one of about 20 export-quality factories in China.

Their edge has improved after China's decision this month to end a 9 per cent tax rebate on exports of Glyphosate Technical, the feed-stock that Nufarm imports. That is because the Glyphosate Technical export price took the rebate into account, and should rise now that the rebate is gone. There was no tax rebate for Chinese exports of Glyphosate 450, so the cost base of Nufarm competitors bringing in the finished product has not changed.

Nufarm has manufacturing facilities around the world that are under pressure from the new-generation production coming out of China. And by shunning the Sinochem offer, it elected to stay under pressure.

It has plans to pump up the sale of non-glyphosate lines that account for about two-thirds of revenue. That makes sense, and it will be likely be endorsed by the review. But glyphosate is crucial to Nufarm. It accounts for about two-thirds of herbicide sales globally, and its future is assured, because the big genetically modified crops are designed to be glyphosate-resistant.

All of which makes the decision in December both curious, and challenging. If the board had accepted Sinochem's $12 a share offer, shareholders would have received a handsome goodbye payment and Nufarm would have had a secure future, not as a manufacture of the world's most popular weed-killer but as a distributor of it: Sinochem would have pushed its low-cost glyphosate production out to the world through Nufarm's sales and distribution network.

Sumitomo does not offer the same option. There may be some gravy for Nufarm if Sumitomo introduces the Australian group to the heavily protected Japanese market.

But Sumitomo is actually smaller than Nufarm in the glyphosate business, and cannot act as Nufarm's new low-cost manufacturer. The Australian group has to come up with a plan to solve the dilemma.

[winner69]

Concerns about what the banks will do mount.


Whoops .... receivavables blow out and wrorking capital goes throught he roof ... or at least v the last forecast


Net debt to be $620 million v forecast of $450 million some 6 weeks ago --- holy **** thats $170m more.

All because of higher receivables they say ..... but July sales were largely in line with company expectations ..... so how come they got the debt figure so wrong

The banks will not be pleased ... even thought he affirmed that earnings will be what they said last time ... about $60m

These guys have no idea .... banks won't be impressed .... what do you think sgareholders will have to fork up with this time Balance?

[soulman]

Whoops .... receivavables blow out and wrorking capital goes throught he roof ... or at least v the last forecast


Net debt to be $620 million v forecast of $450 million some 6 weeks ago --- holy **** thats $170m more.

All because of higher receivables they say ..... but July sales were largely in line with company expectations ..... so how come they got the debt figure so wrong

The banks will not be pleased ... even thought he affirmed that earnings will be what they said last time ... about $60m

These guys have no idea .... banks won't be impressed .... what do you think sgareholders will have to fork up with this time Balance?

I licked my wound and sold out today. Another expensive lessons - Don't buy stock for T/O. Did sold my 20.8% for $14.00. One positives in many negatives.

[drillfix]

I licked my wound and sold out today. Another expensive lessons - Don't buy stock for T/O. Did sold my 20.8% for $14.00. One positives in many negatives.

No doubt a good move there soulman.

Hey shasta, take note and change the wording to suit Urans shamble of misleading condunct which IMO breaches the cororations act many times over (imo)

NUF seems to have a stench to it since now there is an immanent shareholder class action which is taken from here:

http://www.smh.com.au/business/nufarm-to-be-sued-for-misleading-the-market-20100902-14rs7.html



Nufarm to be sued for 'misleading the market'

Philip Wen September 3, 2010

TWO years of profit downgrades and poor continuous disclosure have left Nufarm facing an imminent shareholder class action over what lawyers have described as ''blatant'' misleading and deceptive conduct.

Nufarm's management credibility has taken a beating after five consecutive profit downgrades in the past two years, punctuated by two cut-price capital raisings. Most recently, it halved its earnings guidance in July to between $55 million and $65 million, despite reassuring investors in March it was on track to meet expectations. Shares in Nufarm have fallen 60 per cent since then, closing at $3.50 yesterday.

Ben Slade, a principal at law firm Maurice Blackburn, said Nufarm had intentionally misled the market by providing unreasonable guidance to ensure the success of its April $250 million capital raising, in actions amounting to ''egregious wrongful conduct''.

''Nufarm has fairly clearly breached its continuous disclosure requirements by making wholly misleading representations about its profit capacity,'' Mr Slade said.

Ben Phi, a senior associate at Slater & Gordon, said the earnings guidance Nufarm provided in March ''lacked a reasonable basis'' and had therefore misled the market.

Mr Slade said Nufarm would have been aware of the impact of sharp falls in glyphosate prices and tough competition provided by Chinese competitors producing low-cost generic product alternatives. He said Nufarm had failed to update its investors despite numerous opportunities, including when competitor Elders announced a heavy downgrade of its own in June.

Both law firms said they were advanced in preparations to file respective actions, and have ''significant'' support from institutional and retail shareholders.

The action is likely to focus on whether Nufarm had intentionally misinformed investors in March to ensure the success of the April raising, as well as the smooth sale of a 20 per cent stake of the company to Sumitomo Chemical in March. The Japanese chemicals giant paid $14 a share for its stake, structured as a tender offer to shareholders which enabled Nufarm's chief executive, Doug Rathbone, to sell $19.7 million worth of his own holdings.

Nufarm has maintained it has informed the market during the same period and that difficulty with its forecasting systems and the bias of the company's full-year results towards its final quarter result meant it could not release its profit update earlier.

Nufarm revealed on Tuesday that its net debt had ballooned to $620 million as of the end of July, 37 per cent higher than it forecast on July 14. The blowout has put the company in breach of its second banking covenant, its debt to gearing ratio, having already been in breach of its interest cover ratio.

The company failed to mention the interest cover breach in its initial announcement on July 14, only revealing the breach after fielding a question from the media during a conference call. The company issued a ''clarification'' the next morning, and blamed the omission on an ''oversight''.

Nufarm has been forced into talks with its banks to obtain a temporary waiver from its covenants. Nufarm has appointed Deloitte and Gresham Advisory Partners to carry out a review of its business operations.

[Balance]

Looks like another rights issue and capital raising on the way.


Nufarm out of index, on S&P credit watch
Rebecca Urban From: The Australian September 04, 2010 12:00AM

NUFARM'S woes have continued to worsen, dropped from a leading share market index and placed on high alert by a credit rating agency.

The recent admission by the debt-laden farming chemicals group that it had breached a second covenant of its banking arrangements has prompted Standard & Poor's Ratings Service to place the company on credit watch, reflecting concerns about liquidity and its ability to improve short-term profitability.

The warning comes as Nufarm, which is chaired by prominent company director Donald McGauchie, is facing escalating threats of litigation, with two legal firms ramping up their respective campaigns to launch class actions on behalf of disgruntled investors.

Slater & Gordon and Maurice Blackburn confirmed yesterday that they had been approached by institutional investors to investigate possible actions after Nufarm issued a profit downgrade in July that caused its share price to slump.



Both actions centre on allegations the company, which issued an earlier profit warning at a shareholder meeting in March, engaged in misleading and deceptive conduct and breached its continuous disclosure obligations throughout the four-month period.

Mr McGauchie did not return calls yesterday.

Nufarm issued a brief statement denying any allegations of wrongdoing. "Nufarm has complied with all of its legal obligations," a spokesman said.

"The information regarding possible class action proceedings was released by the plaintiff law firms some weeks ago, and the current commentary is a transparent attempt by those firms to stimulate interest via the press.

"Nufarm will defend vigorously any proceedings, if or when they are commenced." Shares in the company slumped 3 per cent to $3.39 yesterday. Nufarm has now shed almost 70 per cent of its market value since it rebuffed a takeover offer of $12 a share from Sinochem late last year.

The sharp decline has resulted in Nufarm's removal from the S&P/ASX 100 index following the latest quarterly rebalance, which was also announced yesterday.

Nufarm is now largely reliant on the co-operation of multiple financiers. After debt blew out to about $620 million at the end of July, it is currently requesting waivers from each of its lenders regarding recent covenant breaches.

It is also seeking to have its banking arrangements revised to allow for greater flexibility, and has appointed independent advisers, including Gresham Advisory Partners, to assist with a strategic review of the business.

Standard & Poor's credit analyst Richard Creed said a resolution of Nufarm's credit watch status was contingent on it obtaining near-term support from its lenders, either through waivers or a new funding package that would enable it to meet its peak debt requirements.

He warned that the company's current high-risk credit rating of BB could be cut further if adequate funding could not be accessed.

[Balance]

Finally, some shareholders' action on NUF.

Note that NUF may need a capital raising if NUF cannot secure support of its bankers and lenders.

The shareholders should have taken heed of the warnings posted on this site and avoided the grief in the first place?


Clock ticking for troubled Nufarm directors as cleanout mooted
Rebecca Urban From: The Australian September 11, 2010 12:00AM
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TIME could be running out for some of Nufarm's longest-serving directors, with institutions preparing to push for a boardroom clean-out.

This follows a disastrous run of earnings downgrades that has wiped close to $1.5 billion from the company's market value this year.

"I wouldn't want to be a Nufarm director facing re-election at this year's AGM," noted one observer this week.

"Board renewal. I suspect that it will be the first question that many of us will be asking about once Nufarm gets a proper handle on its issues."

Five profit downgrades in 18 months have raised serious questions about governance and management at the once-respected agricultural group.

The timing of the two most recent downgrades -- one three months after the board rejected a $12-a-share takeover offer from China's Sinochem, and the other following a $250 million equity raising -- has caused concerns about disclosure as well as threats of a multi-million-dollar shareholder class action.


Related Coverage
Nufarm out of index, on S&P credit watch The Australian, 7 days ago
Nufarm dives again Herald Sun, 16 Jul 2010
ASX queries Nufarm after profit warning The Australian, 16 Jul 2010
Ballard just the man for Elders The Australian, 16 Jul 2010
Nufarm talks to banks on breach The Australian, 15 Jul 2010

Add to that managing director Doug Rathbone's gradual reduction of his personal shareholding over the past two years and it's hardly surprising that investors, including some of Australia's top institutions, are fuming.

"It's probably one of the most disgraceful episodes I've ever seen," one experienced fund manager said of Nufarm's performance.

The company's new chairman, former Telstra chair Donald McGauchie, appears most at risk of copping much of the backlash.

His appointment to the role on July 14 -- the same day the group slashed its full-year earnings forecast by half -- may signal the start of a renewal process, but the Bendigo sheep farmer is hardly a cleanskin, having served as a director since 2003.

One industry insider, who declined to be identified, said the market had been surprised by Mr McGauchie's appointment.

"The guy has been there for seven years, so it could be argued that he has been part of the decisions taken that have gotten the company where it is now," he said.

"There's certainly criticism around that. They probably should have gone looking for an independent, which is exactly what Elders did when they appointed John Ballard as chairman."

Mr McGauchie was last re-elected to the Nufarm board three years ago and, according to the company's constitution, he and fellow director Gary Hounsell are due to face a shareholder vote at this year's annual meeting, on December 2.

The chairman has the added pressure of delivering a strategic review capable of convincing investors that Nufarm can achieve sustainable earnings growth in a changing marketplace.

As well, there is the issue of breaches of banking covenants, over which the company is negotiating waivers from a dozen lenders.

Mr McGauchie could be saved by an unwillingness among institutions to unsettle matters further, but two of his boardroom colleagues might not be so lucky.

John Stocker and Doug Curlewis have been on Nufarm's board for a combined 22 years.

Both were also non-executive directors at Sigma Pharmaceuticals, which was caught off guard by the deterioration of its generics business, leading to massive goodwill writedowns and a $389m full-year loss.

Both Mr Stocker, the drug-maker's long-serving chairman, and Mr Curlewis resigned from the board a month before a fiery annual meeting. Australian Shareholders Association head Stuart Wilson has been keeping a close eye on Nufarm's struggles and believes retail investors support the institutions' push for change.

"I'm sure retail investors would welcome some board renewal and would expect to see directors held accountable for the state of the company," Mr Wilson said.

"It's something that we will be discussing with the board and also sending a message to the company via our voting at the AGM."

Nufarm's other problem is the diminishing credibility of its management team, led by the veteran Mr Rathbone. Having turned a small local manufacturing outfit into a major player in global crop protection, the 64-year-old is undeniably viewed as a legend.

But that has been threatened by recent events.

Nufarm's problems have been caused by a combination of poor cropping seasons, which have reduced demand for its weed killers, and pricing pressure from cheaper generics made in China.

Yet it is the company's apparent inability to forecast the impact of these broader trends on its earnings that the market is struggling to comprehend. This is one of the issues being investigated as part of the strategic review.

The law firms preparing a class action are accusing Nufarm of misleading the market over its financial performance -- a charge it has strenuously denied -- but a former associate of Mr Rathbone doubts there has been any attempt by the company to withhold market-sensitive information.

"The real issue is that Doug was always very hands-on and across everything that was happening in the company," the associate said.

"But as the company has grown it gets more difficult to do that.

"Some people would say that he didn't build the management team around him that was needed to be a global company rather than an Australian company."

Mr Rathbone appears to be digging in his heels, and there is certainly support for him to stay.

Austock Group agricultural analyst Paul Jensz points to Nufarm's strong record for at least 10 years prior to its troubles.

"What any investor wants would be to put money with a company that can see both the opportunities and problems," he said.

"If management can prove that it can change to a more pro-active approach . . . then they are backable and investment grade."

Mr McGauchie declined to be interviewed this week, but corporate affairs manager Robert Reis confirmed that board renewal was on the agenda, with the company's 20 per cent shareholder Sumitomo Chemical to seek representation once it has received clearance from antitrust regulators in several jurisdictions.

Mr Reis said the board would carefully consider any feedback from investors, but he would not be drawn on speculation of a backlash at the annual meeting.

"I don't think that's something we would comment on," he said.

"I don't know whether shareholders would direct their concerns at the chairman and see that as an opportunity to make a statement."

Mr Reis also denied there had been calls for the managing director to step aside.

"Doug Rathbone does take responsibility for the performance of the company . . . and well understands the concerns in the market," he said. "His response to that is to knuckle down and do what he has to do to see a recovery in the business."

Nufarm investors are expecting an update next week on whether the company has secured the support of its lenders.

[macduffy]

The last post on this thread by Balance seems to have stopped it dead in its tracks. The "last post" so to speak.

But just because a stock has a bad run doesn't mean that there aren't profits to be made from trading it. In recent weeks, NUF has performed quite well SP-wise so I took a small position last week as a short term trade - which just might turn into a longer, recovery situation hold. Fully prepared to drop it like a hot scone if it doesn't work out!

[Balance]

Yes, a good article.

While Sinochem seem to have made a complete hash of their attempted acquisition I have a small niggling thought that maybe they found something they didn't like and that their apparently clumsy revised offer with unacceptable conditions was a way of withdrawing without formally doing so.

Would that be "saving face"?

:confused:

You were onto it, matey!

[macduffy]

I know we've heard it all before but NUF reckon things are on the improve.

http://news.smh.com.au/breaking-news-business/nufarm-says-h111-better-than-last-year-20101202-18hu1.html

[drillfix]

I know we've heard it all before but NUF reckon things are on the improve.

http://news.smh.com.au/breaking-news-business/nufarm-says-h111-better-than-last-year-20101202-18hu1.html


Well Mcduffy,

I think I used to post many charts in this thread a while back however, by looking at charts now, it seems this stock has bottomed.

If the stock breaks up past its 150 EMA I would even dip my toes in for a short while thats for sure.

A while back, it has been a ski slope, but now starting to shape up making higher highs, and higher lows and the 13 EMA has crossed the 50 EMA creating the short term up trend to reTest the 150 EMA.

In brief, once both 13 an 50 EMA's cross the 150 EMA, it will completely jump onto many Insto's trade radar and a rally will or should follow, providing markets in general are health.

ps: No stock held or ever held.

[Balance]

The Japs must be wondering how they ever got sucked into this company - they paid $14 a share!

Well, could be an interesting law suit here against Nufarm by the Japanese?

Settlement Agreement on Class Action Proceedings
11:40am, 1 Aug 2012 | GENERAL
Nufarm Limited has entered into a conditional settlement agreement in relation to the class proceedings commenced by Maurice Blackburn and Slater & Gordon in early 2011. The settlement covers claims made on behalf of group members who acquired shares during the period from September 2009 to August 2010.

The settlement agreement was reached today, 14 months before the scheduled trial date in September 2013, as part of a court ordered mediation process.

Nufarm has agreed to pay $43.5 million, which covers the claims, interest, the costs of the litigation funders and applicants’ legal fees. The settlement is subject to court approval and, if court approval is obtained, the class action will be dismissed without admission of liability by Nufarm.

The settlement payment will be recorded as a material item in Nufarm’s 2011/12 full year accounts.

Nufarm Chairman Donald McGauchie said that in agreeing to the settlement, the Nufarm Board carefully considered risks and costs associated with a protracted litigation, and demand on management's time as the company implements its strategic growth plans.

"We are pleased to put this matter behind us and have the company fully focused on continuing to improve the operating performance of the business," Mr McGauchie said.

[macduffy]

Something here for patient NUF shareholders. Back in profit to the tune of $72.6m, dividend 3cps.

http://www.smh.com.au/business/nufarm-returns-to-profitability-20120924-26fx2.html

[macduffy]

A long time since there was any interest in NUF in these parts but if anyone is, long time CEO Doug Rathbone has resigned.

http://www.smh.com.au/business/cbd/fresh-blood-needed-at-nufarm-after-chairman-donald-mcgauchie-cuts-ceo-doug-rathbone-loose-20150204-136bbj.html