GrainCorp syndicate withdraws from CBH bid

20 Sep, 2016 06:10 AM
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GrainCorp's plans to support corporatisation of West Australia's Co-operative Bulk Handling have been scuttled because of inadequate grower support for Australian Grains Champion in WA.
GrainCorp's plans to support corporatisation of West Australia's Co-operative Bulk Handling have been scuttled because of inadequate grower support for Australian Grains Champion in WA.

Big West Australian grain business Co-operative Bulk Handling (CBH) has greeted news of the collapsing bid to commercialise the $2.5 billion co-op with an off-hand acknowledgment.

GrainCorp has pulled out of the Australian Grains Champion (AGC) partnership, which announced yesterday it was withdrawing its proposal to commercialise CBH as a listed company.

The eastern states grain giant confirmed to the Australian Securities Exchange (ASX) it and consortium partners, including First State Super, would respect the AGC decision.

The eight-month AGC campaign was initiated by a number of prominent WA growers, but was poorly supported by most of the WA co-op’s 4100-grower membership.

In particularly CBH directors rejected the proposal saying it threatened to deliver rival GrainCorp a strategic “blocking stake” in the WA business.

CBH chairman Wally Newman said three quarters of growers had wholeheartedly supported the board’s decision to reject the AGC offer back in March.

He simply “acknowledged” the latest news from GrainCorp and its consortium to conclude their agreement with AGC.

GrainCorp managing director, Mark Palmquist said while he felt the AGC proposal was unique and attractive to CBH, the cornerstone backing arrangement always left any decision on the AGC deal to WA growers.

Mr Palmquist said it was now “appropriate to afford WA growers time and space” to address important issues about CBH’s future and their own business priorities.

“CBH is conducting its own review of its structure and governance which will take some time to finalise,” he said.

“At the same time growers are working to ensure their farm businesses are prepared for what is shaping up to be a historically large harvest.”

GrainCorp remained open to considering opportunities “to support the growth and transformation of Australian agriculture”.

AGC was formed by a rebel farmer group in January with the aim of giving co-op grower members the chance to sell their shares into a company which was then to be listed via public offering.

CBH was estimated to be worth almost $2.6b as a listed entity, according recent analysis by Perth investment firm Paterson Securities.

?However, chairman, Mr Newman, said directors unanimously believed the proposal did not represent value for WA graingrowers and welcomed AGC’s withdrawal.

“We surveyed our members and they were very clear - 78 per cent supported the board’s rejection of the proposal,” he said.

“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.”

Grower meetings in the past three weeks were being followed up with a membership survey 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,” Mr Newman said.

“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.”

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FarmOnline
Andrew Marshall

Andrew Marshall

is the national agribusiness writer for Fairfax Agricultural Media
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READER COMMENTS

boris
20/09/2016 8:02:15 AM

This is the consequence of the rise of the soft totalitarian on the CBH board over a decade or more. The members no longer have a democratic say, the board and upper management own CBH to their benefit. The grower is just the peasant providing the throughput for the elites to feast.
Jock Munro
20/09/2016 6:10:32 PM

Boris, You cannot be serious- come over to the East and see what a mess GrainCorp have made of their company and how they have gouged growers and ran down their assets. The audacity of GrainCorp in trying to persuade WA growers to sell off their co op! Fortunately WA growers can see through them. Well done.
Macker
21/09/2016 6:21:29 AM

WA growers should be wary about commercialisation. In the eastern states we have seen recently the Murray Goulburn debacle where objectives for investors and management differed from the farmer suppliers thereby hurting many. Meanwhile graincorp hasn't exactly set the world on fire with its suppliers. Its ALL ABOUT money for GRAINCORP at the expense of growers. Look at your facilities vs east coast. Get your cooperative to work otherwise the corporates will put you over a barrel every opportunity they get.
wheatgrower for 53 yrs
22/09/2016 9:42:28 AM

We have a co-op and they are gouging us too. Best solution to any situation where costs are exploding is to open up the landscape for competition. Of course, it would be preferable if we had our equity to stop the current CBH board spending itself into insolvency. Not enough return coming back to growers. All going to mad ideas on how to turn non core profit by a board lacking the skills to do so.
beacon boy
22/09/2016 9:51:12 AM

budget update the other day ... we will be going backwards after we have banked this record crop. cbh will record another record profit guaranteed.
Jock Munro
23/09/2016 11:06:41 AM

Wheatgrowerfor53years, Don't fall for the corporate spin- check out the costs in the East first before making any comments.
central wheatbelt
23/09/2016 1:14:08 PM

Totally agree "Wheat grower" , growers need to step up and elect a professional board who are forward thinkers. Not a flat earth thinking board. Time to give what equity growers will have in CBH now, in 30 years the family farm will be in the minority and the corporate and overseas growers will control CBH.
LTF
25/09/2016 6:29:36 AM

When good systems do not deliver, "wheat grower for 53 years", it is caused by either the members who are running it or the members who are running it down. It is usually not the system. As JFK once said, ask not what your co-op can do for you but what you can do for your co-op!
ATB
26/09/2016 2:48:42 PM

Hey Jock, costs of execution on the East are now at or below the CBH system. You now officially have nothing to complain about, apart from Rankins Springs Silo shutting down
LTF
27/09/2016 5:37:01 AM

I think central wheatbelt is holding CBH responsible for matters way outside of their control. CBH is basically a WA based service provider to the grain industry. Every independent report or study ever done has shown CBH to have out performed all other Australian bulk handlers, in both service and cost. To suggest the Board has failed growers prosperity is grossly misunderstanding the local and global grain industry. Your own local growers disagree in all surveys that CBH is to their liking. I suggest a broader look at your industry central wheatbelt.
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