CBH proposal up to members

02 Mar, 2016 02:00 AM
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A DIRECTOR of Australian Grains Champion (AGC), the company that wishes to dismantle the CBH co-operative and list it on the stock exchange, said co-operative members, not the CBH board, should make the decision on the company’s future.

Clancy Michael spoke after CBH chairman Wally Newman said the CBH board would require more information from AGC before it would call a member’s vote on the proposal.

“The overwhelming feedback we are getting is that growers want to see the proposal in full, assess its merits and vote on it, and they are highly capable of doing that,” Mr Michael said.

Mr Newman said he believed the request for further information was fair.

“We want to assess whether this proposal is in the best interest of WA grain growers, in good faith and with an open mind,” he said.

In particular, he said more clarity was required on plans for the CBH grain storage network and other platforms of the AGC proposal, such as a grower loyalty scheme and a five year growth plan.

“For the sake of growers we need to have some clarity on the long term storage, handling and transport charges beyond the proposed five year CPI cap on charges, will they go up dramatically after that point?” he queried.

Mr Michael said Mr Newman and the CBH board were not required to make a recommendation on the proposal, simply sign the process agreement to allow it to go to the next stage.

“There is a difference between the CBH board signing our process agreement and finalisation of our proposal,” he said.

He said for now, AGC wanted the CBH board to sign the process agreement, which was more about the mechanics of a path to a vote, setting out a timetable so CBH members got all the information on the plan necessary.

“The process includes due diligence and an Independent Expert’s Report, so growers will receive a detailed booklet of information regarding the proposal before they vote on it,” he said.

“The process agreement does not commit the CBH Board to supporting the proposal, so they should not delay in signing it.”

Mr Newman said as well as operational concerns, the board was also seeking answers on whether there would be guaranteed production sector involvement on a new board, and what proportion of the business would be owned by AGC’s major backers, GrainCorp and HRL Morrison.

FarmOnline
Gregor Heard

Gregor Heard

is the national grains writer for Fairfax Agricultural Media
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READER COMMENTS

drowning in debt
2/03/2016 12:33:01 PM

put it to a vote!!! what are you all scared of. plenty of rhetoric about the importance of a coop but little evidence other than the odd rebate we are any better off without it. in fact the continued rises in s/h costs suggests this board has no clue how to manage the business and reduce costs, only spend and keep pressure on them rising. thats easy. bunch of farmers running a multi billion company, what a joke
Deregul8
2/03/2016 4:03:40 PM

This won't be the last offer but it certainly will be the last where growers can retain a very large degree of control over the company. Couple that with dividends to offset storage and handling fees, and capital growth on share value and you would wonder why we even need to have a discussion. Golden opportunity to create and own the next Wesfarmers.
Kanzi
3/03/2016 11:30:01 AM

16$ million breakout fee, 12$ million for AGC directors, we can already see where the money will really be going! There is no need to charge extra for handling, only to return it to growers after a heap of admin costs. Simply charge them less in the first place, as happens now. All that this proposal comes down to is some growers wanting to cash in on what generations of growers have created. Return the money to those who created it, if you are really serious and not just greedy. Otherwise a coop structure is just fine, as agreed all along.
Jock Munro
4/03/2016 6:28:25 AM

Well written Kanzi- Any one that believes that flogging off their co op is a good idea should come over to the Eastern States and see the mess for themselves. As for Graincorp- we have seen an exercise in corporate greed and poor management- the key handling assets run down and leveraged and city directors turning the system into a cash cow for themselves and their mates.
Consolidated
5/03/2016 5:28:22 AM

16 mill breakout fee is only if CBH walk away without good reason or if another takeover comes forward. CBH is likely paying this kind of money anyway to both Deutschebanks A-team to effectively implement strategy to thwart this offer. CBH is also paying big dollars in 'corporate relations'. The 12 mill is a negligible cost to flush out a higher bid and just rewards for taking on the risk of Bringing out the best or worst in the company. Sadly it is the latter which sees the old baseless spin machine keeping the sheepfleeced.
x
5/03/2016 4:16:35 PM

The AGC proposal is very unlikely to get up . so where to from here for CHH ? The current model is not suited to this millennium. As a WA grower we need all options on the table , Board structure and operation , alternative business models. etc. When is the Board going to show some real leadership instead of pandering to those in their back yard??
jamestheman
6/03/2016 12:27:53 PM

What are CBH frightened of? PUT IT TO A VOTE BY GROWERS. Don't make up costly alternate proposals - just get on with it. This is a win win for everybody.
X
7/03/2016 6:39:51 AM

If the Borad don't put it ( AGC ) directly to growers then I would predict that we will end up with an EGM
Consolidated
8/03/2016 6:23:47 AM

Growers need to understand CBH have hired Deutschebank to ensure this never gets to vote. These guys will then be paid a multimillion dollar fee for achieving this. If it goes to vote and the growers get the 'NO' vote up, it doesn't cost CBH a dime! FACT! Don't fall for the spin folks. Your storage and handling fees are going to Pitt St in Sydney in spades at the moment.
she told me to sell
8/03/2016 6:26:46 AM

I didn't listen to her on BHP but I will on this one. Give me a chance to vote, its time to lock away a good life. Look around you, the world aint travelling too well. Bunge just the first one, more coming to claim our tonnes. CBH has turned into a political bungling machine, forgotten about the core business
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