new blood required to revive nufarm

http://www.theaustralian.com.au/business/opinion/new-blood-required-to-revive-nufarm/story-e6frg9if-1225935663838


NUFARM chair Don McGauchie has called in the headhunters as his company attempts to fight through its present crisis of confidence.
Management changes were part of the demands required by the banks when they granted the company a temporary reprieve last month after it breached its debt covenants.

Heads were then tipped to roll and eventually they may, but the problem at Nufarm is more a small, highly skilled team stretched too thinly and in some cases taking on roles that arguably are beyond some. This means the first priority is to get skilled support for those who are there and then assess future changes.

As noted previously, high on the list would be a new chief financial officer and/or a team to help out the incumbent, Kevin Martin.

The aim is to keep the boat afloat, to maximise the chance that any new equity investor will pay top dollar, and that includes 20 per cent owner Sumitomo.

By month's end, Deloitte should be well advanced on its work, pointing to just where the gaps exist in the company's financial systems and how they can be plugged.

Since the emergence of Perennial as a substantial shareholder earlier this week, Nufarm has added 4 per cent in value at yesterday's closed of $3.77 a share.

This is better than the July 19 price of $3.25 a share, but somewhat short of the $14.25 a share price in May last year and the $14 a share paid by Sumitomo.

Slowly but surely, the banking syndicate is being rationalised and reworked, with CBA and Spanish-based Santander now off the list and the top four consolidating around Rabo Bank, ANZ, HSBC and NAB. The banks have Colin Nichol working the books from their side of the fence.

While all this is going on there needs to be external evidence of a cultural change, which is no easy matter for a company that for close to a decade exceeded every forecast it ever made and seemingly hit gold on every turn.

Chief executive Doug Rathbone, who just last year was all set to hand the keys to the front door to two potential Chinese acquirers, is now driven to restore the company's fortunes.

This, of course, is also partly driven by self interest, given his own large shareholding in the company and his desire to restore his own corporate reputation.

Rathbone externally sees nothing but blue sky, which isn't so evident from the other side of fence.

His relationships with global majors means he has built a store of registrations for new genetic molecules just as they come off patent.

Nufarm was caught in the perfect storm in the glyphosate price bubble, which exposed a brittle management and governance structure not designed to cope with snafus of any kind.

Just whether it can recover remains to be seen, and this will, at the very least, take time