Sydney storms cause $50,000 wipeout at Abundant Produce’s greenhouses

Damaged greenhouses in the agricultural area are seen after Hurricane Irma passed through Florida in 2017. Pic: Joe Raedle

Last week’s chaotic Sydney storms have caused $50,000 worth of damage to Abundant Produce’s (ASX:ABT) greenhouses and may delay its research and development programme by up to nine months, the company has warned.

The fruit and vegetable seed maker said the storms “did not leave us unscathed” in a letter to shareholders this morning, saying its greenhouses, located at Sydney University’s Plant Breeding Institute, would require repair costs “in the vicinity” of $50,000.

“Large hail stones punctured the plastic sheeting covering the greenhouses and damaged plants. Subsequent rainfall has inundated greenhouse flooring,” the company said.

“Plant damage will affect ongoing research and development. Management is currently assessing the time required to discard plants, conduct cleanup, repair and replant. Initial estimates indicate that the research and development program may be delayed by three to nine months.”

But it said seed to supply growers would not be affected thanks to plenty of stock in its inventory.

Abundant Produce (ASX:ABT) shares rose 9 per cent to 12.5c despite the bad news.

Ruralco takeover

Fellow agriculture stock Ruralco (ASX:RHL) is recommending shareholders vote in favour of a takeover by Canadian agriculture business Nutrien, which has offered $4.40 a share, valuing the company at $462 million.

In early February, the company told The Australian that it was backing its future, dousing speculation of a takeover — but on the penultimate day of February it said it had agreed to the deal, sending shares rocketing 44 per cent to match the offer price.

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Morgans analyst Belinda Moore this morning recommended holding Ruralco shares, saying the offer price was fair.

“It reflects the smaller size and hybrid ownership model and we see limited scope for a higher bid against a backdrop of challenging industry conditions,” Ms Moore said.

“Ruralco will report its 1H19 result on 14 May. The deterioration in conditions over February and into early March suggest there may be downside risk to guidance for a flat result.”