Nufarm to tap the market for $250m

Nufarm Limited (NUF) said this morning it would head to the market to raise an extra $250 million via an Entitlement Offer. Nufarm said that its significant shareholder, Sumitomo Chemical Company, would take up its full entitlement in the equity raising to ensure that its maintains its 20% stake in the agricultural chemical company.

Under the details of the offer, Nufarm said it would offer one new Nufarm share for every five currently held by investors at $5.75 per share.

Nufarm shares closed Monday at $7.75, representing a 35% discount to the most recent closing price.

Managing director, Doug Rathbone, said the equity raising would be used to pay down debt, strengthen Nufarm’s balance sheet and allow the company to pursue growth opportunities if they arise.

"There is a significant medium to long term benefit arising from the company’s ability to pay down debt from proceeds secured in the capital raising,” Mr Rathbone said.

"A stronger, more flexible balance sheet will ensure Nufarm is better positioned to support the ongoing growth of the company.”

Mr Rathbone also committed to retaining his current holding in the company for at least the next six months, however reiterated his previous statement that he would eventually sell down his stake in Nufarm. He also said he expected to remain as CEO for ‘several more years’.

At the same time the company reaffirmed its previous guidance, saying that it expected a gradual improvement in glyphosate margins over the remainder of the year, with average climatic conditions expected.

Nufarm shares are currently halted.