AGC looks at options after CBH rebuff

23 Mar, 2016 01:00 AM
Comments
9
 
Brad Jones ... we're not gone yet.
Brad Jones ... we're not gone yet.

AUSTRALIAN Grains Champion (AGC) is reconsidering its options as CBH moves towards an internal structural review, fed by grower input.

AGC director Brad Jones confirmed on Monday that the new entity was not beaten yet.

But he wouldn't elaborate on the "numerous options" available to the group.

The AGC's proposal was rejected by CBH last week, several months after the news broke of the grower-driven restructure plan.

The CBH board opposed what it labelled "an unsolicited, incomplete and conditional corporatisation proposal that would destroy value for CBH grain grower members and their world-class strategic network".

The co-operative has since announced it will embark on a roadshow to meet with growers to discuss CBH's future and strategic direction.

However, Mr Jones said it was counter-productive for CBH to now hold its own review and restructure process after shooting down the AGC proposal.

He said the full details of the AGC proposal would have allayed concerns, including the need for detail for a network strategy and the value of CBH, but the refusal by CBH to enter into a Process Agreement phase and reveal its financial information had stone-walled the proposal.

"Why would CBH go to all this extreme to defend itself when we haven't even put a proposal out there?" Mr Jones asked.

"They're defending nothing at this stage."

Mr Jones said the AGC directors including himself, Clancy Michael, Sue Middleton, Samantha Tough and John Corbett, would complete their planned grower meetings throughout the Wheatbelt before meeting to plan their next step.

Meanwhile, CBH's next step is already underway, with meetings commencing at key locations and feedback being invited via grower directors.

CBH chief executive officer Dr Andy Crane said the consultation process was expected to last for six months and engage with more than 4000 WA growers.

"For decades CBH has delivered real value to WA grain growers and we want to ensure we deliver growth for generations to come," Dr Crane said.

"Growers are keen to understand the trade-offs which may accompany the different structural options available to them.

"This is about having informed, very open discussion so growers can make informed choices about the future."

Dr Crane said the consultation would focus on key topics of interest to grower members including value, governance and strategy.

Questions being asked will cover how do growers currently realise the value of their CBH membership and how do they want to realise that value in the future.

The structure of the board and the method in which the business delivers value in the future will also be discussed.

"These are critical areas of interest for CBH grower members and it is crucial they have a say in determining the path ahead for the business," Dr Crane said.

"We have informed members that we will take the time to properly consult about the options and report back on that consultation by 30 September 2016.

"This will be a comprehensive consultation process.

"We will use a range of ways to ensure we engage with all our grower members and allow them to have a say in CBH's future.

"The future of CBH is firmly in the hands of our growers."

Another item on the agenda at this round of grower meetings will be the CBH Group's network strategy, with growers seeing first-hand the network of the future.

"The plan will detail the focus of significant capital and maintenance expenditure over the next five years, plus site consolidation that will deliver a low cost, efficient grain supply chain and increased tonnes to port when our exporters need it," Dr Crane said.

"After two years of analysis, looking at supply chain optimisation, asset management and an engineering review we have found cost efficiencies along the way and are now in a position to share with growers the details of this plan."

Mr Jones said it was positive to see CBH looking at its future, but disappointing it was avoiding the AGC proposal, which was driven by growers who want to continue to deliver to CBH into the future.

"They're saying they're being self reflective," he said.

"Can they be when they're actually just having growers come to board members for feedback?

"Really they should be having a third party there that compiles all that information and that feedback from growers and then they make their decision from there."

Mr Jones said the move to internally review and consider a restructure was purely a "defence strategy".

He said any future options, particularly if those options included other parties as alluded to by Dr Crane, would cause growers to lose the control the co-operative was claiming to protect by rejecting the AGC proposal.

"The difference between other parties and us is we are a restructure that the majority of ownership stays with WA growers where other parties would be a complete takeover and which means a total loss of control," Mr Jones said.

"At this stage we are still the majority shareholder and it's a good business.

"We have growth strategies we want to enable and to do that it would be a good investment to have into the future.

"We're not gone yet.

"If they had spent as much money on due diligence as they have on defence, the people would have a very transparent view of their cooperative by now and the fact that they haven't done that, well what don't they want growers to see."

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READER COMMENTS

The Shearing Shed Wall.
23/03/2016 7:57:50 AM, on Farm Weekly

It is inevitable that CBH will eventually become a publicly listed company as the present grower co-operative structure will become unsustainable in the medium to long term. What isn't publicised and perhaps not realised is that a public listing retains grower owner ship, while at the same time casting the ownership net to all investors wether individual or corporate. This will have the effect of broadening the financial base of the CBH group, enabling it to continue to invest in its ever increasing infrastructure. The CBH board can't yet see it, but the thinking grower and investor can.
Rural Realist
23/03/2016 1:06:31 PM, on Farm Weekly

Wow Brad. For an astute mind I feel you might have got completely lost within yourself. So many outlandish claims will only serve to undermine the support you had. The fact is that AGC deliberately held back detail regarding share dilution, which meant directors and Graincorp were getting a very good deal, and pulling the wool over growers. If this company is going to float it will be on grower terms. Not Graincorps.
Privatisation is the end
23/03/2016 2:28:00 PM, on Farm Weekly

I am completely against CBH privatisation. There is a reason our forefathers created the co-operative and when you break down the figures, there is no reason why the structure needs to change at all. And currently there is no other company in the country that can compete with CBH for the distances that they move grain. Graincorp is over twice the cost of CBH on the east coast.
Brad Jones
23/03/2016 4:36:06 PM, on Farm Weekly

Sorry Rural Realist but by signing the process agreement we could put all in front of growers via an information memorandum so that they could make an informed decision on what best suits their individual business. If you don't like it vote no. Please qualify the outlandish statements you are claiming that I make.
Deregul8
24/03/2016 9:56:26 AM, on Farm Weekly

Fact is there is a major competitor about to target somewhere along the standard guage rail. And when that happens, CBH is officially under attack and nobody is going to look at its business model without a serious discount applied. 9mmt on offer. The AGC offer will be the last chance growers get to access the equity that is there now. And to the simpletons going the man in Brad Jones, I have only known him a very short time but one thing is obvious to me. He is a leader and a man passionate to drive CBH to realise its full potential. Congratulations on your courage to lead Brad.
Halfcocked
25/03/2016 7:47:42 AM, on Farm Weekly

I find it amusing that AGC didn't front the advertised meeting at Cranbrook on Tuesday ,where we were waiting to here their side of the story and be asked a few questions .no show no go!!
Halfcocked
25/03/2016 7:50:31 AM, on Farm Weekly

I find it amusing that AGC didn't front the advertised meeting at Cranbrook on Tuesday ,where we were waiting to here their side of the story and be asked a few questions .no show no go!!
Gerry Atric
27/03/2016 9:21:29 AM, on Farm Weekly

Sorry Brad, but it's not in my best interests for CBH to be locked into negotiations with AGC. If you had given detail from the start, at least the board would know what they were voting on. How did you expect them to approve it with no detail?
Brad Jones
29/03/2016 7:49:59 PM, on Farm Weekly

Half Cocked- We gave notice that we couldn't make the Tuesday and have offered to come down after Easter. Please contact me and arrange a date and we will come down. Gerry Atric- We removed the exclusivity part of the process agreement and the board were well aware that a lot of information cannot be given until due diligence is done. The only approval we wanted was for them to enter into a process agreement so that an information memorandum can be accurately produced and you then get an opportunity to view it and vote on it, you can vote anyway you like. D8- Thanks for your support

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