Elders Limited (ASX code: ELD) announced today it will realise all its hybrids on the 30th of March 2017, by way of resale to Elders Management Services Pty Ltd (EMS), a wholly owned subsidiary of Elders Limited.
EMS currently owns ~75% of these hybrids and will need ~$45.5 million to complete the full purchase, which will be funded by the balance of the July 2016 capital raising and the company's free cash flow. As a consequence of resale, holders will receive net proceeds of sale, comprising of the issue price ($100.00) plus the unpaid amount of distributions ($8.48).
The company will then move to redeem all hybrids and terminate the Hybrid trust. Management indicated that the redemption of these hybrids will simplify the company’s capital structure into just fully paid ordinary shares, and aid initiatives to fund shareholder returns. The company also plans to resume dividends on these ordinary shares in December 2017.
After incorporating the resale, the company's leverage and interest cover ratios are still within respective internal targets (2.0-2.5x and atleast 5.0x).
