Farm chemical maker, Nufarm, is poised to announce details of another capital raising after seeking a trading halting for its shares on the Australian Securities Exchange.
The Melbourne-based international manufacturer and crop seed breeder, which only recently spent about $810 million buying generic chemical production rights in Europe, is rumoured to be looking to raise at least $200m.
It is also juggling the cost impact and impairment implications resulting from a slump in crop chemical sales because of extreme dry weather in eastern Australia and restrictions on its neonicotinoid products in Europe.
Late last year Nufarm raised almost $450m from the share market to help fund its $118m purchase of FMC’s European off-patent product range which complemented its core phenoxy herbicide franchise in Europe.
Nufarm also spent up big in October-November with the $691m purchase of the Century branded herbicide, fungicide, insecticide and seed treatment lines offloaded by Adama Agricultural Solutions, which is owned by ChemChina.
ChemChina had just bought European-based chemical giant, Syngenta and was shedding some of its range to avoid breaching competition regulatory laws in Europe.
Nufarm’s share price closed at $6.70 on Monday, having been weathered by the drought in recent months, slipping from a $9.51 high in early June.
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The full extent of the eastern state’s drought impact on winter crop chemical sales was flagged by the company in late July.It confirmed the poor cropping season had resulted in substantially higher than expected chemical inventory levels in in store across the farm sector which would likely continue, particularly if forecasts of a dry spring were correct.
A dry spring, leading to a below-average summer cropping conditions during the forecast El Nino weather cycle were expected to constrain sales and margins in 2018-19.
Nufarm has advised the ASX it will have details about the outcome of the institutional component of an accelerated entitlement offer by next week (October 1), or later this week.
It requested a four-day trading halt to assist in managing its disclosure obligations and to maintain an orderly market in the trading of its shares.
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