Ambushed agribusiness, Rural Funds Management, has issued a nine-point rebuttal to allegations by US share market short-seller, Bonitas, confirming it is preparing for legal action following research report claims about the rural property company's financial status.
Its Rural Funds Group's share price has also bounced back, gaining almost 40 per cent to about $1.90 in early trading, after being savaged by selling activity when the Bonitas report dropped early this week.
Among other claims, Bonitas Research believed the rural group had artificially inflated its reported financial performance.
Its accusations sent Rural Funds' share price into a nosedive, sinking from $2.35 each to $1.36.
It forced the company to seek a halt to trading while it prepared a response, which was released on Thursday morning as trading resumed.
Bonitas is a short-activist with an acknowledged financial interest in our declining security price- David Bryant, Rural Funds Group
Rural Funds Group (RFG) has more than $1 billion in almond, cotton, macadamia and vineyard cropping land, poultry farms and beef grazing and feedlot country in Queensland, NSW, Victoria and South Australia leased to leading farm sector operators such as Treasury Wine Estates, Select Harvests, Olam International and beef processing giant, JBS.
Managing director, David Bryant, said Bonitas was "a short-activist with an acknowledged financial interest in our declining security price".
The Bonitas document admitted it had a "short interest in Rural Funds Group's stock and stands to realise significant gains in the event the price of such instrument declines".
Rural Funds Management said it would not provide further detailed responses to any existing, or possible future, allegations made by Bonitas.
Ernst and Young had been engaged to independently investigate the matters raised and assess RFG's rejection of each of the claims made in the document.
Management had relied on the investment group's PwC-audited financial statements and confirmed their accuracy.
It still intended to release its 2018-19 profit results as planned on August 27.
Guidance on its financial performance for the financial year remained unchanged.
While entirely without foundation, Rural Funds Group is seriously addressing the allegations made by Bonitas and will vigorously defend the business in the interests of all its unitholders- David Bryant
In addressing the Bonitas Research claims, Mr Bryant said Rural Funds Management rejected entirely the unfounded allegations of financial impropriety and irregularity.
It was obtaining legal advice in respect to those matters.
"While entirely without foundation, Rural Funds Group is seriously addressing the allegations made by Bonitas and will vigorously defend the business in the interests of all its unitholders," he said.
RFM's responses to specific Bonitas claims included several pointing to the US research being incorrect and defending the rural investment group's accounts as audited and accurate.
One particular Bonitas claim referred to former company secretary, Andrea Lemmon having "abruptly resigned" in 2018 after 21 years of working with Mr Bryant since RFM was founded.
RFM's said Ms Lemmon advised Mr Bryant of her retirement intentions in 2015 and worked with other staff to plan and manage her succession over a two-year period prior to her departure last October.
She remained a significant unitholder in Rural Funds Group.
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