Wellard falls on debt call
Shares in live exporter Wellard have plunged after it revealed a default had triggered a hike in repayments on its debt of $15 million.
Wellard said it was considering options to meet a doubling in monthly redemptions to $US1 million and an interest rate rise from 14 per cent to 21 per cent.
They included a restructuring of its balance sheet, including the possible sale of a ship.
But the company, led by executive chairman John Klepec, warned there was no certainty such opportunities could be completed in the short term.
Its share price closed down 0.6¢, or 15 per cent, to 3.4¢
Wellard said on April 1 it had agreed to a standstill with noteholders in respect of certain defaults existing under its notes.
The standstill period was scheduled to end on September 30, and during that period Wellard was to grant certain security to the noteholders.
However, in an announcement to the ASX yesterday, Wellard said it had not been able to provide security, so the standstill period ended lastFriday.
The move means noteholders are entitled to demand immediate repayment of the outstanding notes worth $15.5 million.
“The noteholders have reserved their rights, but they have said they will continue to negotiate in good faith with Wellard to achieve a mutually acceptable solution,” the statement said. “The end of the standstill period has triggered an increase in the note interest rate to 21 per cent per annum and an increase of the monthly redemption amounts to US$1 million, and Wellard will be discussing these with the noteholders.”
Wellard said defaults on the notes also constituted cross defaults under some of its other financing arrangements.
Wellard said it was communicating with its other financiers in respect of the situation, and remained up to date on all payments to them.
The company also advised the market yesterday that former chief executive Mauro Balzarini was no longer a director of Wellard.
Although Mr Balzarini’s term as chief executive ended last week, he had not been running the business since 2017.
Wellard said Mr Balzarini’s departure was made possible after it negotiated the removal of certain “key man” clauses and their consequences, contained in a vessel finance agreement with Italian bank Intesa Sanpaolo.