Plant Impact, the UK-based developer of products to enhance the yield and quality of agricultural crops, has appointed financial advisers to explore its strategic options, following a likely cashflow shortfall related to the distribution of its flagship soya product in Brazil.
The Veritas soya pod-fixing treatment has been distributed in Brazil by Bayer Crop Science since August 2014. While the partners say Veritas sales are growing for soya and dry beans, and should be extended to cotton next year, an overstocking problem since mid 2017 has led BCS to withdraw from the current purchasing plan “to further accelerate destocking” and delay any new contract until Q1 2018 “at the earliest”.
Plant Impact says it believes that “a revised, mutually agreeable contractual arrangement would be preferable to a termination of BCS’s Brazilian rights (a contractual option at the end of March 2018), and is actively working with BCS to find a way forward”.
But the deferral of Veritas purchases will reduce Plant Impact’s 2017/18 revenues to an estimated £6 million from the £8.5m to July 31st 2017, leaving the business short of some £7m to fund ongoing R&D and commercial operations.
Accordingly it is exploring all options from refinancing or the divestment of certain assets to a sale of the whole company. It is already discussing a sale with certain parties, which could be agreed as soon as early 2018.