Don Agro shares hit 16-month high after proposed sale of crop, milk businesses

SHARES of Don Agro International hit a 16-month high on Wednesday (Jun 28) when it resumed trading, after the group said it has proposed to sell its crop and milk production businesses. This move will leave flour milling as its remaining revenue-generating business.

The Catalist-listed counter rose as much as 89.5 per cent or S$0.17 to S$0.36 as at 9.08 am on Wednesday. The last time it closed near this level was on Feb 25, 2022.

The counter later closed 73.7 per cent or S$0.14 higher at S$0.33. There were no married deals recorded on ShareInvestor.

On Tuesday, the Russia-based agriculture company said its wholly-owned subsidiary, JSC Tetra, will dispose of between 99 per cent and 99.99 per cent of its stakes in four subsidiaries for 6.2 billion roubles (around S$113 million).

These subsidiaries – Don Agro LLC, Volgo-Agro, Happy Cow and JSC Don Agro – operate in the agricultural industry and focus primarily on crop and milk production.

Tetra has entered into a conditional sales and purchase agreement with Russian agribusiness Volgo-Don Agroinvest, which produces crop and livestock. As the proposed deal is considered a “major transaction”, it requires shareholder approval.

The move comes as the company looks to restrategise the group’s financial and capital resources, said Don Agro. Upon completion of the proposed disposal, the group plans to explore new business opportunities in both the current and new industries, it added.

Assuming the deal was completed on Dec 31, 2022, Don Agro expects the proposed deal to raise its net tangible assets per share to S$1.0012 from S$0.4846; and its earnings per share to S$0.4106 from a loss per share of S$0.0118, based on pro-forma estimates.

The sale consideration of 6.2 billion roubles comprises a 150 million roubles security payment, which Tetra has received. Around 5.88 billion roubles in payment for Don Agro shares shall be paid in the form of a letter of credit, while the remaining will be wire transferred to Tetra.

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The purchaser will also make an additional payment of about 700 million roubles which covers the sale of goods produced by the subsidiaries, certain expenses and other adjustments.

The group expects to record a gain on disposal of about 3.5 billion roubles from the proposed transaction.