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Elders heralds end of an era with AWH sale

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Elders heralded the end of the asset sales process which has dominated its course for the last four years as it sold its stake in logistics service group AWH to container terminal operator DP World Australia.

The Australian agribusiness group said it had agreed to sell its 50% stake in AWH - originally known as Australian Wool Handlers - for Aus$30m, plus half the cash in the business's bank accounts, but with a negative adjustment for some wool-buyer payments.

The sale, on which Elders said it expects to show a "small profit to book value", is the latest in a series since a slump in the group's performance in 2009, when it unveiled a Aus$415.4m loss - beginning a spree of losses which has totalled more than Aus$1.6bn.

The latest programme began two years ago, when the group even attempted the sale of its core rural services business, but failed to receive a bid it deemed adequate, and ended up selling its Futuris car parts business.

End of an era

The sale "represents substantial completion of Elders' programme to sell non-core assets and reduce term debt," Mark Allison, the Elders chief executive since May, said.

Other assets the group has sold in the last five years include banking, forestry and insurance assets and, this year, its New Zealand division and its Carlton Feedlot beef operation in Victoria, Australia.

"Once the sale mechanics are finalised" for the AWH disposal "and the purchase price paid, the path will be clear for Elders to proceed with vigour to implement the Eight Point Plan we recently announced," Mr Allison added.

In July, Elders unveiled a "capital light" growth plan based on strategies ranging from recruiting high calibre staff to better exploiting Australian meat export sales to major Asian markets such as China and Indonesia.

Expanding enterprise

Elders termed AWH a "very well managed, profitable business", but one which had "ceased to be core to Elders' operations".

While started in 1998 as a wool logistics business, and still handles about half of Australia's national clip, AWH has expanded into a number of other sectors, many non-agricultural, such as steel, besides into industrial warehousing, controlling the equivalent of 90 hectares in space.

Elders' latest annual report attributes the AWH stake a value of Aus$49.67m. The business contributed Aus$4.28m to Elders' net profits for the year to the end of September last year.

Elders shares closed down 6.7% at Aus$0.21 in Sydney.


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