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Market gives Elders a 63% stamp of approval
PHILIP HOPKINS
September 8, 2009

THE market has thrown its support behind the new Elders. Even though the share price tumbled 37 per cent, it still closed at a hefty premium to last week's $550 million equity raising.

Elders' shares finished at 24.5¢, 63 per cent above the 15¢ being offered under the company's equity raising - a $400 million fully underwritten placement to institutions and a share purchase plan of up to $150 million for retail shareholders - that requires shareholder approval.

The closing price was 14.5¢ below the 39¢ price when Elders' shares went into a trading halt 10 days ago, but 15¢ became the new benchmark as the equity raising will quadruple the company's current 819 million shares.

Elders plans to chart its future as a rural services provider after paying off its huge debt with asset sales of $700 million. It will be a ''one stop shop'' providing banking, insurance, real estate, farm supplies, advice, marketing, sales and risk management.

After recording a headline loss of $415 million in 2008-09 due to significant items and discontinued operations, Elders has forecast a profit of $55 million to $59 million this financial year.

Chief executive Malcolm Jackman said Elders would retain the forestry arm ITC, which manages 170,000 hectares of plantations. ''It gives us some time to make sensible decisions about it. We have got a lot of shareholder value tied up with those assets,'' he told BusinessDay.

''To get forced to do something in the current environment, given the problems with Great Southern and Timbercorp … you don't want to be making rash decisions at the moment, and we don't need to.''