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RLF AgTech (ASX: RLF) has settled a dispute with longstanding major shareholder and former CEO and managing director Ken Hancock, more than a year after he was unceremoniously dumped by the Perth-based plant nutrition company's board.
Hancock had led the seed priming technology group for more than two decades when he was fired on 4 June 2024, having steered it through the initial public offering (IPO) process just over two years prior for its ASX listing in April 2022.
His sacking was swiftly followed by a review of the company's previously announced revenue guidance of $15-16 million for FY24, which then-chairman David McLay - who has since left the group - later noted was "unlikely to be achieved".
Within a week of Hancock's departure the group downgraded its expected revenue by 40 per cent to around $9 million as sales in China fell well short of forecasts, the acquisition of fertiliser company LiquaForce's assets was delayed, and a soil carbon credit pilot scheme with the Commonwealth Bank of Australia (ASX: CBA) had a slower than expected uptake from farmers.
The final figure revenue ended up being slightly higher at $9.75 million, representing a fall on FY23, along with a statutory loss of $8 million.
In late July Hancock's board position was also terminated via a general meeting resolution that got over the line, with a far from overwhelming 52.94 per cent vote in favour of his removal.
The day before the meeting Hancock sought an injunction in the Supreme Court to prevent the vote from going ahead, but his application was dismissed.
The request formed part of proceedings with claims from Hancock that RLF "invalidly terminated the agreement under which the consulting services were provided", and the company responded that it intended to "vigorously defend" the matter.
Hancock's managing director and CEO roles with the company were on a consultancy agreement basis on a base salary of $250,000 per annum.
The agreement was with Kenneth Hancock and Huntington Investments Pty Ltd, as trustee of the Constellation Trust, through which Hancock provided consulting services to RLF AgTech.
Today the group has revealed that it has agreed terms for the settlement of the proceedings, including its own counterclaim against the former executive.
"The key terms of the deed [of settlement] provide for a full mutual release and discharge of all Claims between the parties with each party to bear its own costs," the company states.
"The Hancock parties will continue to be bound by various clauses in the consultancy agreement, including, among other things, the confidentiality provisions, which ensures the protection of the company’s intellectual property.
"The settlement of the proceedings and counterclaim removes any uncertainty in relation to this matter and more importantly, it enables RLF to apply all endeavours to its operational and strategic priorities, including the continued growth of its product portfolio and expansion into domestic and international markets."
Under the leadership of Gavin Bell as CEO, RLF's path to recovery has involved raising capital to pay down deferred debt and fuelling expansion, regaining full control of the manufacturing and sale of its products in Australia, complemented by new distributor deals with the likes of Elders (ASX: ELD) and National Rural Independent, and strategic alliances with such companies as Carbon Ag Solutions and DIT AgTech.
More recently, RLF entered an exclusive distribution agreement with French biotechnology company AXIOMA Biologicals SAS for the marketing and sale of AXIOMA’s advanced biostimulant products in Australia, China, and across Asia.
RLF's most recent quarterly results for the period ending 31 March showed a 17 per cent year-on-year uptick in cash receipts to $2.5 million, and a doubling for the financial year to date to $17.16 million.
The company's China business delivered products to more than 200 customers with a gross margin of 47 per cent, and new orders were secured Vietnam and Cambodia. The group had a cash balance of $2.1 million at the end of March, down $3 million on its balance at the end of 2024.
The company had just over a month's worth of funding available at the end of March, but expected this situation to be alleviated in the June quarter after a seasonal low in the agricultural calendar is followed by an increase in cash flows. In April RLF also secured short-term funding of $700,000 via convertible notes, and entered loan agreements to support working capital requirements in China.
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