A rich agenda has been prepared by the managers for the the General Meeting of Shareholders of Neochim scheduled for for June 20. They offer no dividend distribution for 2013 after harvest of the last two years when each received respectively 0.3 lev for 2011 and 0.4 lev for 2012.
The decision of such sparingly distribution of the financial result seems logical since the fertilizer plant ended last year with consolidated net loss of 5 million levs and previously reported a loss of 8.8 million levs in 2012. It is envisaged that the loss be covered with retained earnings from previous years.
The company has not start well this year, either. The negative result for the first quarter was 1.6 million levs against a profit of 11.7 million levs in the corresponding period of 2012. Sales revenues decreased by over 28% annually, provided that traditionally almost 50% of sales of Neochim are generated in the first quarter since it is in spring when the wheat and barley fields need being fertilised.
As a way to support the financial improvement may be considered the proposal shareholders to vote for the sale of 68,394 own shares at prices between 52.285 and 68.57 levs per share. The package of 2.58% of the share capital has been collected after redemption procedures in recent years. Such sales did for example MONBAT last year. The success of the deal this time would bring at least 3,575,970 levs in cash to Neochim. Thus the company expects to form the missing working capital for the main production activity. By earning money from shares instead of taking a bank loan the company will be able to make savings from the interest payments.
According to the report accompanying the proposal for the sale, the shares will be sold at a price not lower than the value of their acquisition – that is 52,285 levs. Following a market valuation the price range has expanded to possibly 68.57 levs per share.
The package is significant – both in volume and in value, which means it might be expected to attract an important partner. The management of the company already attracted a European leader in the production of fertilizers – Austrian Borealis, and Bahrain Bank First Energy Bank. They entered as shareholders in the fertilizer plant after on December 21 their joint-venture company Feboran bought out the shares from the Lebanese Karifert International Offshore which controlled 20.30 % of the capital of Neochim. With this deal its distribution channels abroad will now expand, and on the other hand – an important foreign investor enters the country. There is also enhanced potential for growth also in the domestic market and the region.
The sale of 2.58% of the capital of Neochim is an opportunity for investment also for the existing shareholders, and also for some institutional investors such as pension funds in the country.
Currently the three largest shareholders have almost equal shares. Feboran SA holds 20.30%, Eco Tech AD – 24.37%, and Euro Fert AD – 24.03% of the capital. Agrofer International Establishment of Liechtenstein has 7.68% of the shares with voting rights.
The BANKER
