As criticism mounts over Nufarm's poor earnings transparency and continuous disclosure records, yesterday the company ''clarified'' its banking-covenants position.

The farm chemicals group said it would temporarily break by a ''small margin'' its interest cover ratio covenant, which measures how readily interest payments can be met.

''Nufarm has bilateral banking arrangements with a number of providers and has commenced discussions with those lenders to seek a temporary adjustment to the interest cover ratio,'' the company said.

It did not mention the breach when it announced its earnings downgrade to the Australian Stock Exchange on Wednesday.

When asked about the impact of the profit downgrade on Nufarm's banking covenants, the company's managing director, Doug Rathbone, said it was a minor issue.

''We will need a slight temporary adjustment to our interest cover covenants, but that's a minor technical adjustment,'' Mr Rathbone said.

Shares in Nufarm emerged from a trading halt yesterday and plunged 28 per cent to $3.75.

Standard & Poor's reduced Nufarm to junk status after lowering its long-term credit rating by two notches to BB.

''The ratings downgrade reflects our belief that Nufarm's business profile has deteriorated and the company will be unable to achieve a financial profile commensurate with our view of an investment-grade rating,'' the S&P credit analyst Richard Creed said.

Nufarm will need to refinance about $600 million worth of debt in the next six months, and low sales have caused its net debt to blow out by $100 million, to $450 million. A Nufarm spokesman said yesterday that the company had ''no reason to raise equity in the near future''.

Any cost of reaching an agreement with its lenders over its covenant breach was likely to be immaterial, he said.

While about half Nufarm's highly seasonal annual earnings comes in its final July quarter, adverse weather and depressed glyphosate prices worldwide have been well known.

An RBS Morgans analyst, Belinda Moore, said the downgrade was another blow to management credibility. ''It's interesting that a lot of those issues [Nufarm] addressed as a cause [for the downgrade] were well known out in the market and analysts were downgrading their forecasts quite severely,'' Ms Moore said.

An analyst at Credit Suisse, Rohan Gallagher, said there had been no accountability over Nufarm's ''disastrous operational performance''.