Elders parent props up unprofitable NZ unit

Elders parent props up unprofitable NZ unit
Elders Rural Holdings Ltd. relies on its battling Australian parent for financial support and may have to sell assets if that support is withdrawn, notes to the NZ company’s accounts say. Adelaide-based Elders Ltd., which owns 50% of rural services group Elders Rural, has pledged 12 months’ support, according to notes to the NZ firm’s accounts. That support makes up for a forecast shortage of cash flow at Elders Rural, which posted a net loss of $8.98 million in the 15 months to Sept. 30, the second straight loss reports Scoop. Elders Australia made an unsecured $63.6 million advance to Elders Rural in the latest period, charging 7.25% interest. Elders Rural is launching its Just Shorn branded wool into the U.S. market, one of several initiatives to squeeze more margin out of the fibre in a divided industry that has walked away from research as returns dwindle. Rival Wool Partners International, which has Theresa Gattung as chairwoman, owns the Laneve mark. Both groups are inking supply deals with U.S. manufacturers. Elders of Australia posted a loss of A$466 million in the latest 15 months, reflecting writedowns on assets and a downturn in business. Its ability to support its local unit “is dependent on (the parent’s) ability to achieve revenue forecasts which is uncertain,” the note says. Elders Australia managing director Malcolm Jackman says the clause is standard given the losses and cash flow shortfall and his firm’s accounts have carried a similar tag.  “We’re very committed to NZ. It is a long-term investment.”

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