Nufarm chairman Donald McGauchie has been forced to defend chief executive Doug Rathbone after a debt blowout triggered a second breach of banking covenants and pushed the group's shares down nearly seven per cent.
Nufarm, Australia's biggest herbicide producer, is in talks with its 15 bankers for a formal waiver after its net debt ballooned to $620 million at July 31, the end of its financial year, compared with its forecast for $450 million made just two weeks earlier.
Nufarm blamed the $170 million blowout on product sales taking place later than expected, pushing payment into the 2011 financial year, The Australian Financial Review reports.
The increased debt has put Nufarm in breach of its covenants for a second time. In July it breached interest cover agreements after it halved its earnings forecast to between $55 million and $65 million because of softer sales and lower prices.
Investors pushed Nufarm shares down 6.75 per cent to $3.59, making it the S&P ASX 200's worst performing stock yesterday, despite confirming it would meet revised guidance when it reports on September 28.
Email a friend