Nufarm reaches deal on breached covenants

Monday 27th September 2010

Nufarm, which had its credit rating cut to junk in July after its debt blew out, has until mid-December to restructure its finance arrangements after it reached an agreement with its lenders to extend the waivers on its banking covenants.

The maker of glyphosate weedkiller, best known for the Monsanto brand Roundup, will have to meet milestones over the next three months after its lenders agreed to meet all maturities falling this calendar year as part of the deal.

Nufarm will have to meet milestones and other requirements as it sets up a new banking structure that will be finalised by the middle of December.

The firm won't pay a dividend this financial year, and will pay the distribution in respect to its Step-up Securities on October 15, a week early.

Nufarm's audited result for the 12 months ended July 31 will be released tomorrow.

In September, the agricultural chemicals maker part-owned by Japan's Sumitomo Chemical said its forecast net debt would rise to A$620 million in the year ending July 31 from a previous estimate of A$450 million.

This had already been revised from an estimate of A$350 million. It slashed its guidance for full-year operating profit to between A$55 million and A$65 million, down from a previous forecast of A$110 million to A$130 million.

Nufarm blamed adverse weather conditions, particularly in North America and Europe, which sapped demand for crop protection products. In the Australian market, tough competition had hampered the company's ability to raise prices.

The shares rose 1.5% to A$4.11 on the ASX in trading today, and have slumped 61% this year.

Businesswire.co.nz

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