Elders Enters into New Arrangements with Rural Bank; Provides Earnings Guidance for the Full Year of 2018
November 28, 2018 at 12:34 am EST
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Elders announced that it has reached agreement with Rural Bank, on the terms of a new exclusive relationship which, subject to satisfaction of certain customary conditions precedent, will take effect from 4 March 2019. From 4 March 2019, the current agreement between Elders and Rural Bank will be replaced with a new relationship agreement with a 9 year term. Termination for convenience rights exist for both parties at the end of years 3 and 6. Rural Bank will make a payment to Elders based on certain fees received by Elders from Rural Bank as at the date of termination or expiry if Rural Bank terminates for convenience or due to a material change in the law, and at the end of the term. The new agreement will see Elders' accredited branch staff continuing to handle deposits and provide transactional banking services to Rural Bank customers. More complex banking needs, including term and seasonal loans, will be fulfilled by approximately 95 Agri Finance relationship managers and support staff currently employed by Elders but who, under the new arrangements, will be employed by Rural Bank. While no longer employed by Elders, these staff will continue to operate from Elders' branches and provide local agri-banking services to Rural Bank clients. Elders and Rural Bank are working towards a well-managed transition to ensure minimal impact
to existing client experience and service.
For first full year of annualized earnings before interest and tax from its relationship with Rural Bank is expected to be in the range of 5% to 10% greater than earnings from that relationship in fiscal year 2018.
Elders Limited is an Australia-based agribusiness company. The Company's feed and processing business operates a top-tier beef cattle feedlot in New South Wales. Its business includes rural services, real estate, insurance and home loans. The Companyâs segments include Branch Network, Wholesale Products, and Feed and Processing Services. The Branch Network segment includes the provision of a range of products and services through a common distribution channel, including agricultural retail products, agency services, real estate services and financial services. The Wholesale Products segment includes the Australian Independent Rural Retailers (AIRR) business based in Shepparton, Victoria, supported by a network of eight warehouses to supply independent retail stores throughout Australia. The Feed and Processing Services segment includes Killara feedlot, a beef cattle feedlot near Tamworth in New South Wales. The Company also owns livestock and real estate agency business.