CBH issues challenge over AWBI alliance

26 Feb, 2003 10:00 PM

CO-OPERATIVE Bulk Handling chairman Allan Watson has challenged AWB Limited to find a way over the constitutional and financial obstacles the wheat marketer says stand in the way of a CBH-AWB International alliance.

Negotiations continued last week between the to companies into the proposal by CBH to manage the supply chain in WA for AWBI, which the bulk handler estimated would save growers $40 million.

AWB representatives said they were concerned the constitution would not allow the venture, because AWB Ltd was charged with the responsibility for services to AWBI.

They also questioned the calculations used to estimate the $40m cost savings and said AWB's preferred option was a 50/50 deal between CBH and AWB Ltd.

Mr Watson did not believe it was unconstitutional to bypass AWB Ltd and contract services to outside operators. He called on AWB to find a solution.

"AWB has made it clear that its preference is for a joint venture but I want to ensure growers that the only negotiations underway are into the CBH proposal to AWBI," Mr Watson.

"You have to ask the question 'if AWBI's constitutional duty is to maximise returns to growers above all considerations - above share prices and commercial returns for AWB Ltd - then how can our proposal be unconstitutional.

"If they have concerns with the cost savings then they should prove to us where our figures are wrong.

"If AWB Ltd wants to improve its image with growers it will take a long hard look at our proposal.

"I think the AWB representatives got a clear message during their meetings that growers are not prepared to lose control of CBH facilities.

"No-one can argue that it is not in the best interests of the growers in WA. If they argue that it is not in the best interests of AWBL, they can't expect the support of producers."

Mr Watson said CBH had been conservative in the calculations of cost savings.

CBH estimated that it would save AWBI $12.5 million per year in charges.

It also guaranteed to provide savings of $28m throughout the supply chain - if it was allowed to control the system - from a range of areas, including reduced freight charges and handling and storage costs.

"The $28m comes from a study that was done into the integration of the three companies, CBH, Grain Pool and AWB," he said.

"The report put various options and estimated that there could be savings of between $27m to $38m, depending on the model, so we have taken the lowest figure. The cost savings could be higher.

"There is an expectation that a report will be tabled to both boards in March. We need to know, one way or the other because we have to get on with our business."


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