Crop technology specialist Plant Impact (PIM) is putting itself up for sale, after warning on trading and cash resources for the 2018 financial year. The announcement prompted a dramatic 75 per cent share price fall on Wednesday morning.
The problem lies in the group’s relationship with Bayer CropScience (BCS), the Brazilian marketer of the group’s flagship soybean product, Veritas. As announced in July, the organisations had agreed a purchasing plan for the 2017-18 soybean growing season. They also discussed restructuring their contract, bringing greater inventory purchase flexibility to BCS and more predictable earnings visibility to Plant Impact.
But, with challenging market conditions in Brazil, BCS now says it cannot meet the commitments laid out in the plan and will defer the purchase of further Veritas volumes. This will have a “material adverse effect” on Plant Impact’s FY2018 performance. Revenues are now expected to be around £6m; less than half the £13m estimate given within the full-year results in October.
Moreover, with cash resources looking precarious, the group will need more funding before April 2018. But which shareholders would be willing to cough up after this update?
