August 20, 2013
The financial woes that have hit the Peanut Company of Australia in recent years appear to have eased with the announcement today by Board Chairman Ian Langdon that the company has negotiated a $32 million debt-for-equity swap with the National Australia Bank.
On the basis of the new arrangement, the Kingaroy-based peanut processor is now asking growers to support a 25 per cent increase in peanut planting to take next year’s harvest to about 30,000 tonnes.
Mr Langdon said the NAB had agreed to swap approximately $32 million of debt for equity.
“I am pleased to be able to inform you that The Peanut Company of Australia has secured its future after reaching agreement for a debt for equity swap and new debt facilities with NAB,” Mr Langdon wrote to shareholders today.
“The significant strengthening of the balance sheet secures the future for PCA and provides a base for future substantial growth.
“This development provides security for our suppliers, customers, the industry and PCA staff – all of whom stayed loyal to the business during recent difficult times.”
Rumours over PCA’s financial health have been circulating in recent weeks after delays in the release of the company’s latest annual report but growers were assured at a recent update meeting that there would be good news soon.
PCA’s debt woes are linked to losses it incurred due to its unsuccessful expansion bid into the Northern Territory.
PCA recorded a $20.01 million loss in 2010 due to write-downs associated with its NT properties.
In 2011, PCA recorded a loss of $6.3 million followed by $6.4 million for the year to the end of March 2012. The company sold its three properties near Katharine in December 2012 to sandalwood grower Tropical Forestry Services.
The easing of its financial restrictions is expected to allow PCA to resume its previous focus on providing value-added products to the Australian food processing industry.
“PCA has had a vision for many years to increase its involvement in value-adding sectors of the market,” Mr Langdon said today.
“The agreement with NAB means PCA now has the financial capability to implement this vision and make growth a key plank of the company’s future.”
Mr Langdon said the debt-for-equity swap will require shareholder approval with a meeting of shareholders to be held in late September.
“The NAB will also provide PCA with a new two-year core debt facility and a two-year multi-option facility that includes seasonal finance to enable the company to increase the intake of Australian peanuts,” Mr Langdon said.
“An increase in our leasing facility will also be provided.
“During recent years NAB supported PCA as the company improved processing efficiency, and maintained the expensive but vital commitment to a Plant Breeding Program and its commitment to meet key customer demands by importing peanuts, often at a loss.
“Such commitments were necessary to ensure continuity of future domestic capability to efficiently farm peanuts and maintain a domestic market base.
“With the debt burden substantially reduced, PCA will be more attractive to prospective investors and the company intends to seek to raise additional equity for direct investment in processing capability.
“Meetings with shareholders and growers will be held at Tolga (September 2), Bundaberg and Kingaroy (September 3) to explain the recapitalisation agreement and the company’s future plans.
“Details of these meetings will be posted to shareholders and growers and made available on the PCA website.”
