Dual-listed agri-chemical manufacturer Nufarm - staggering under debt and profit downgrades - has secured further debt covenant waivers from its banks.
However, its shareholders were told yesterday there would be no dividend for the year's trading to July.
Nufarm's share price has fallen more than 60% this year and its own estimation of its net debt has risen from $A450 million to $A620 million ($NZ586 million to $NZ808 million).
In July, it downgraded its net operating profit from a range of $A110 million to $A130 million down to between $A55 million and $A65 million.
Following a trading halt yesterday, Nufarm shares were later up 8c, or 2%, at $A4.13, buoyed by the news of the covenant waiver and the gaining of a new banking facility to take it through to mid-December.
While debt is at $A620 million and banking facilities cover $1.6 billion, Nufarm's market capitalisation at $A4.13 yesterday was $A1 billion.
Craigs Investment partners broker Peter McIntyre said Nufarm went on a "buying spree" in 2007-08, with debt increasing from $A372 million to $A960 million, which included company buyouts in the United States and United Kingdom.
In March 2008, its shares were worth $A16.40, offering a $A4 billion market capitalisation.
"Those shares are now a quarter of the value [$A4.13], and the market cap's down with the debt-to-equity ratio blown out," Mr McIntyre said.
Nufarm, which accumulated much of its debt from offshore acquisitions, then saw sales of its main weedkiller glyphosate slump this year.
Its share price has also seesawed, from a year-high of $A11.70 to a low of $A3.20 before retracing some losses to $A4.13 yesterday.
Nufarm managing director Doug Rathbone said aside from gaining waivers for the periods ending July and October, the company's lenders had also agreed to provide a funding facility through to mid-December.
"The funding facility is subject to satisfactory performance against interim milestones based on the company's own projections and objective," he said in a statement yesterday.
Craigs Investment Partners broker Peter McIntyre said yesterday's announcement was generally seen as positive by investors, "having removed some uncertainty" over the covenants.
"It has bought Nufarm a bit of breathing space, but mid-December is not that far off," he cautioned.
Nufarm would continue to pay interest on the step-up securities (tradeable debt investment with no maturity date and periodically rising interest rates).
Mr Rathbone said the agreement included an undertaking by Nufarm to provide security over its assets.
The waiver agreement addresses all maturities falling due during the rest of 2010.
• Nufarm's full-year results are scheduled to be released today.
