December 30, 2011

China and Namoi Cotton postpone joint venture plans

Namoi Cotton and a Chinese government-owned state enterprise had postponed the joint venture plans.

Namoi said the plans were on hold.

While talks with China National Cotton Group had been productive, ''the complexity of the proposed joint venture operations and the time frame associated with the oncoming 2012 season has resulted in the parties not being able to reach agreement on all facets of the joint venture'', the company told the ASX.

Namoi is continuing to talk with the Chinese business, ''with a view to a strategic alliance for the 2012 season''.

And in an effort to put a floor under its sagging share price, the chief executive of Namoi, Jeremy Callachor, disclosed that an independent valuation had substantially revised the value of the company, after record water storage in dams and a positive outlook for cotton crops.

''This valuation takes into account the significantly improved water outlook, increased ginning prices, ginning capacity volume certainty and financing metrics,'' he said. The board was considering adopting the valuation in the financial year end accounts.

Namoi has been in breach of its financial covenants since July. It said it was continuing to talk to its bankers, its current debt facilities remained in place and it was meeting its repayment obligations.