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Updates: Nufarm Makes Changes Ahead of AGM

On Tuesday 30 November 2010, 9:12 EST

Struggling crop protection group, Nufarm, is taking steps to appease shareholders and its nervy banks ahead of this Thursday's AGM which could still end up a fiery affair.

The company yesterday revealed that the long time board member and deputy chairman Doug Curlewis will retire immediately after the AGM.

And investment analysts at UBS put a buy on the stock. Merrill Lynch also issued a favourable report on the industry and Nufarm.

The upshot was a 6.2% jump in the share price to $4.53, before the shares faded to end up 5%, or 21c, at $4.45.

Thursday's AGM is expected to see an update on the lengthy strategic review and news on more board members, although chairman Don McGauchie would only say yesterday that plans were "well underway" to fill several vacancies on the board.

"We see Board renewal as an important component of the strengthening of the business and we want to ensure the Board has the right mix of skills, experience and fresh insight to help guide the company back to a position where it can generate strong shareholder value," the chairman said in yesterday's statement.

Shareholders are upset at the blowout on debt, and the weak earnings, all of which caused the shares to collapse from around $14 to a low of $3.20 in the past year.

The company is under pressure from its banks to come up with a meaningful new approach to doing business (which should be make good profits, pay off debt and drive up the weak share price).

The four banks, Rabobank, ANZ, NAB and HSBC -- are insisting the board make changes. That was after Nufarm breached two banking covenants in July with debt blowing out unexpectedly.

The banks gave Nufarm waivers from the breaches until mid-December, in exchange for the strategy review and the boardroom changes.

The attitude of major shareholder Sumitomo to the company's review and changes will be pivotal to boardroom stability and the company's business recovery.

It paid $14 a share for the 20% stake and recently hired Societe Generale to advise on future strategy.

Nufarm is working with advisors, Deloitte and Gresham.

There will be an awful lot of meetings no doubt held to thrash out something positive for the banks, and for shareholders.

Dare part of the strategy be replacing long time CEO, Doug Rathbone, who has 6% of the company, but that has reportedly been pledged to banks for loan cover?

Quite a few small shareholders believe it should.

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