Nufarm's Rathbone sells 4.5m shares to Sumitomo

Nufarm's Rathbone sells 4.5m shares to Sumitomo

May 10 (BusinessDesk) – Nufarm Ltd. managing director Doug Rathbone has sold 4.5 million shares to major shareholder Sumitomo Chemical Company for A$5.28 per share, or A$23.76 million.

Nufarm shares jumped 33 cents, or 6.9%, to A$5.10 on the ASX in early trading after the announcement. The A$5.28 price paid was the average weighted market price between the three months ended April 29.

Rathbone said in a statement he needs the money to meet a personal tax liability that falls due this year but he has no current plans to sell his remaining 11.7 million Nufarm shares.

Sumitomo, which owned 20% of Nufarm before the transaction, is taking advantage of the “creep” provisions of the Australian Corporations Act which allows a shareholder with 20% or more of a company to increase its stake by up to 3% a year.

Sumitomo says Rathbone's shares will take its stake in the Australian agricultural chemicals company to 21.7% and it intends to lift its stake to 23% buy buying shares on market within the next six months.

“The decision to increase Sumitomo's ownership stake in Nufarm is a clear indication of Sumitomo's confidence in Nufarm's business and the strong growth prospects that exist for both Nufarm and Sumitomo,” the Japanese company said in a statement.

Rathbone's statement said Nufarm's agreement with Sumitomo means the Japanese company can't lift its stake beyond 23% without receiving approval from Nufarm's board or unless it makes a full takeover bid.

Sumitomo bought into Nufarm in April 2010, paying A$14 per share, or A$610.7 million, for 43.6 million shares and then immediately fully participated in a A$250 million rights issue, taking the total price it paid for the 20% stake to A$660.7 million.

Nufarm reported a A$22.7 million net loss for the year ended July 2010 compared with an $80.5 million net profit the previous year, reflecting difficult trading conditions, price competition and adverse climatic conditions in various countries.

Profitability recovered to A$4.4 million in the six months ended December.

Nufarm's NZX listed perpetual, subordinated, unsecured, redeemable exchangeable notes last traded yesterday at $98 per $100 face value, up from as low as $64 in September last year.

(BusinessDesk)

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