UFC looks to restructure

30 Oct, 2007 09:00 PM
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UNITED Farmers Co-operative (UFC) has started assessing its opportunities to restructure and strengthen its business to continue growing its fertiliser and chemical businesses.

UFC issued a media release on Tuesday saying the move was made after formal approaches had come from a number of entities with CBH, Summit and ABB Grain believed to be among the interested parties.

UFC was also keen to clarify a state newspaper report last week which suggested it was on the verge of a surrender and had elected to go down the restructure path after another financial loss.

The release said the positive opportunities which had emerged from UFC’s discussions had encouraged its board to start a formal assessment of several of the proposals.

UFC members were issued with a letter in early last month telling them the assessment process would consider different capital options and alternate corporate structures or alliances.

“Given that United Farmers operating performance has been hurt by two consecutive poor cropping seasons in parts of WA, the board considered the discussions to be timely and likely to provide a great opportunity to add value to the member offering,” the release said.

The drought affecting many farming operations, particularly in the northern parts of WA’s Wheatbelt, has caused reduced fertiliser for all input suppliers during the past season.

As a result, UFC will record a second consecutive full-year loss.

This year’s final figures are still to be completed and audited because UFC’s financial year ended on August 31.

Formed in 1992 by a small group of disenchanted farmers looking for a better deal on farm inputs, UFC is one of WA’s biggest fertiliser suppliers with 15pc of the market share — third behind CSBP (60-65pc) and Summit (25pc).

UFC chairman Bowe Wilson said this year’s loss was likely to be bigger than the previous year’s when $3.6m was lost on revenue of $135m, the first major deficit in the co-operative’s brief history.

UFC said last year’s figure was unacceptable and it promised a back-to-basics strategy under recently appointed chief executive Kerry Browne.

Mr Wilson said the poor 2007-08 season would impact on the co-operative’s financial position.

He said it was important the board took proactive decisions about how to protect itself from future weather shocks and to also determine the best strategic direction for the future.

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