Hot stock: Don Agro surges after plans to sell 92.3% group assets for 4.5 billion roubles

SHARES of Don Agro International surged in early trading on Monday (Apr 29) after the group announced that its wholly owned JSC Tetra is selling all stakes in four subsidiaries based in Russia for a total of 4.5 billion roubles (S$66.4 million).

As at 9.21 am, the counter rose 55.2 per cent, or S$0.08, to S$0.225, with 15,000 shares changing hands. The last time it traded above S$0.20 can be traced back to October 2023.

The Catalist-listed agri-player in the Commonwealth of Independent States said before market opened on Monday that its unit Tetra had entered into preliminary sales and purchase agreements last Friday with two companies separately.

These are to set out the key terms on main sale and purchase agreements to dispose all of Tetra’s stakes – between 90 and 99.99 per cent – in Don Agro LLC, Don Agrarian Group, Don Muchnov and Volgo-Agro. All four units operate in the agricultural industry and have a total of 65,000 hectares of land banks in Russia under their control.

The total net asset value of the four proposed disposals stood as 92.3 per cent of the group’s net asset value, based on its latest FY2023 financials. 

Tetra entered the preliminary agreements with Moscow-based Agroholding Prostory for the proposed disposal of its 99.99 per cent of the shares in Don Agro LLC, 99.99 per cent of the shares in Don Agrarian Group and 90 per cent of the shares in Don Muchnov for an aggregate consideration of 4.45 billion roubles.

Separately, Tetra entered the agreements with DonTK, a Russian investment fund manager, to sell off all its 99.99 per cent stake in Volgo-Agro for 50 million roubles.

Don Agro noted that the proposed disposals, whose aggregate consideration represents 304.9 per cent of the group’s market capitalisation, will unlock value in the four units and re-strategise its financial and capital resources.

Assuming that the proposed disposals of all four subsidiaries had been completed on Dec 31, 2023, the group’s net tangible assets per share for FY2023 would be increased 148.2 per cent to S$0.9461, from S$0.3812.

Had the proposed disposals been completed by Jan 1, 2023, the group’s FY2023 net loss of S$4 million would be reversed to S$9.6 million net profit.

Don Agro added that Happy Cow will be the remaining subsidiary of Tetra, which is not an operating business, upon completion of the proposed disposals.

While the group will not have any operating businesses following the disposals, it intends to explore new suitable business opportunities in both the current and/or new industries.

“The company will review and determine the best use for the proceeds from the proposed disposals, including but not limited to potential acquisitions and/or distributions back to shareholders,” Don Agro added.

Shares of Don Agro rose 37.9 per cent to S$0.20 as at 9.55 am.