Australian Grains Champion withdraws CBH proposal

Grain Central, September 20, 2016

A push to commercialise Australia’s biggest grain exporter, the WA based cooperative CBH Group, has been abandoned.

Earlier this year a group of Western Australian grain growers, backed by GrainCorp and the First State Super superannuation fund, launched a bid to corporatise the CBH.

The bid was launched under the name Australian Grains Champion (AGC).

However, the group announced yesterday it was formally withdrawing its proposal to commercialise CBH.

“It was a good Proposal, was properly funded, and it could have provided substantial benefits to Western Australian growers,” the group said in a statement yesterday.

“Unfortunately the CBH board denied growers the ability to view the Australian Grains Champion in full and a chance to exercise their right to vote on a proposal that could have injected $2.56 billion onto farm balance sheets and into the WA rural economy.”

The $2.56 billion figure is from an independent valuation of CBH conducted by Patersons Securities released on 19 July 2016.

Following advice that AGC was withdrawing its proposal, GrainCorp and its consortium partners have agreed to conclude their agreement with AGC.

GrainCorp managing director and chief executive officer, Mark Palmquist, said in a statement that any decision on AGC’s proposal should be one for Western Australian grain growers.

“While we believe the proposal designed by AGC was unique and attractive, CBH is conducting its own review of its structure and governance, which will take some time to finalise,” Mr Palmquist said.

“At the same time, WA growers are working to ensure their farm businesses are prepared for what is shaping to be an historically large harvest.

“In this light, it is appropriate to afford WA growers time and space to address these other important priorities for their businesses.”

CBH welcomes AGC withdrawal

CBH Chairman Wally Newman said growers had wholeheartedly supported the Board’s decision to reject the AGC offer back in March.

“The Board was unanimous in its view that the proposal did not represent value for Western Australian grain growers and it would have delivered a strategic blocking stake in CBH to east coast grain handler and competitor GrainCorp,” he said.

“We surveyed our members and they were very clear, 78 per cent of growers supported the Board’s rejection of the proposal.

“We are currently working in close consultation with our members, undertaking a structure and governance review and implementing a number of strategic programs. These include the network strategy, new services for harvest, the expansion of Interflour and Blue Lake Milling establishing a facility here in Western Australia.”

Following on from a round of grower meetings over the last three weeks, CBH is currently surveying its members in one of the largest surveys in the co-operative’s history, to gauge the preferences of growers on a number of structure and governance options.

“This is central to the way we run our business, informing and focusing on growers, and ensuring we understand what is important to them. We look forward to our members sharing their views in the survey over the next few weeks,” said Mr Newman.

“We will then be back to communicate directly with growers on the next steps, as well as focusing now on receiving, moving and exporting the coming harvest.”

AGC has already benefited WA growers: director

Australian Grains Champion Grower director Brad Jones said the Australian Grains Champion Proposal had already achieved a number of benefits for WA grain growers.

“Australian Grains Champion was able to attract an initial $600 million of potential investment into Western Australian agriculture, a $600 million injection into rural Western Australia that could have occurred almost immediately if WA grain growers had been able to vote for our Proposal,” he said.

“We have saved growers $400 million in network rationalization charges by forcing CBH to reduce its planned gold plating of the storage and handling network from a proposed $1.15 billion to $750 million, and we have forced CBH to review its structure and governance.”

The feedback from most growers has been that while the CBH structural review process is underway, they want that process to reach its natural conclusion and that they are focused on the coming harvest. As a grower-led movement Australian Grains Champion respects that feedback.

“If CBH fails to meet growers’ expectations, and there is a groundswell of growers prepared to fight for change, Australian Grains Champion may review its current position,” Mr Jones said.

Source: Australian Grains Champion, GrainCorp, CBH


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