Grain Products Australia finds a buyer

07 Mar, 2013 03:01 PM

UPDATED: GRAINCORP'S flour and baking subsidiary, Allied Mills has come to the rescue of liquidated specialist starch processor Grain Products Australia (GPA) at Tamworth in North West NSW.

But at least two thirds of the workforce will be left without jobs following the sale which is set to be finalised later this month.

The long-established plant, which went into receivership threatening the jobs of all 68 workers late last year, closed its starch facility in December but kept operating its caramels and dextrose processing lines while a new owner or financial supporter was sought.

Only 20 positions are now expected to remain at GPA, at this point, leaving up to 48 employees seeking new work.

Partner with receivers McGrathNichol Murray Smith said the asset purchase price had not yet been disclosed but the sale would enable a substantial payment to be made to the secured creditor and was anticipated to cover most employee entitlements.

He said Allied Mills had made approximately 20 job offers at this time and therefore other employees had been given termination notices from the receivers.

"Some terminating employees will work through their notice period until the sale to Allied completes," Mr Smith said.

"Others will not be required to work during their notice period."

The GPA factory in the heart of Tamworth has operated on the site since 1938 and recently underwent an $11 million upgrade following a management buyout separated it from starch producer Penfords Australia in 2009.

The plant pioneered world-leading wheat gluten separation techniques in the 1930s.

GPA's recently upgraded operations were to meet strong demand for modified starches from Japan but the business was caught by a big jump in wheat prices last spring, compounding a 75pc increase in power costs in the past three years and the carbon tax.

GPA already has a close relationship with Allied Mills, which owns the long-established (former Fielders) flour mill in Belmore Street.

Allied, Australia's biggest flour miller, is a 60-40 joint venture between GrainCorp and US-based agricultural commodity trader and processor Cargill.

It has milling operations Australia-wide as well as bakeries in Queensland and Victoria supplying par-baked products to the a wide range of retailers.

The GPA purchase agreement follows a competitive bidding process for the Tamworth plant.

"This is a very pleasing result reached in a relatively short period of time and paves the way for GPA - a business vital to Tamworth - to continue operating, and to preserve as many jobs as possible," Murray Smith said.

"The patience of GPA employees, customers and suppliers while we conducted an urgent appraisal of the business, stabilised it and prepared it for sale is greatly appreciated."

Member for New England Tony Windsor said GPA's sale to Allied Mills was an excellent result.

"The continued operation of one of our largest employers is also great news for local people and the wider region.

"While this has been a troubling time for the plant's workers, I'm pleased that the uncertainty is now over and the plant has been saved."

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7/03/2013 4:28:42 PM

Unfortunately 40 jobs to go. Many terminated today with the news of a buyer. Relatives of mine effected after holding hope a sale would occur and they would keep jobs, but isn't the chase.
Jock Munro
8/03/2013 3:44:29 AM

And the winners are Graincorp and Cargill and we are left with one less player in the market place. Liberal and Labor were warned that the big and the powerful would monopolise the wheat industry under deregulation but chose not to listen to the vast majority of producers. Graincorp will be even more ripe for a takeover by foreign interests and what a prize it will be-a license to gouge growers.
happy farmer
9/03/2013 6:16:33 AM

Get over yourself Jock. What would the alternative be? Liquidation = fire sale, no jobs & less money distributed to creditors. They have been trying to sell this business for months without luck. Its a great outcome for Tamworth. Its a shame comrade Munro cant move on from the past.
Jock Munro
11/03/2013 4:19:00 PM

Happy Farmer has no concept or grasp of market failure nor has he asked himself why GPA got into difficulty in the first place. Treating Cargill and Graincorp as white knights riding to the rescue is quite laughable.
11/03/2013 6:42:06 PM

great words Happy Farmer! agree - wake up JOCK!
12/03/2013 1:45:08 PM

NO you 'happy farmer' and 'not a jock' are the ones who need to wake up. Tamworth gets to keep 20 out of 78 jobs woweee. What about the other 58 including at least one young couple with a family? Wouldn't be a case of mind over matter would it? You don't mind and they don't matter?
Jock Munro
12/03/2013 6:48:11 PM

Don't worry daw. There is none so blind as those that do not wish to see!
12/03/2013 9:55:03 PM

Daw - or should I say DAFT... I'm the cup is half full sort. Better 20 people have a job than all 78 gone. You have another bright solution? Jock, you're still a muppet.
Happy farmer
13/03/2013 10:54:16 AM

Jock, How the hell can you draw a parallel with GPA's demise to the single desk. It only reflected the price not set it. Also it never controlled the dollar which would have hurt the company more than the wheat price. Also well said notajock
Jock Munro
14/03/2013 4:59:57 AM

Happy Farmer does not know that under the single desk national pooling arrangement all exportable wheat grown in Australia was priced. Therefore there was a stability in the market place that no longer exists. One of the reasons cited for GPA's demise was the rapid escalation in grain prices. Under the orderly marketing arrangements that were abolished by the Rudd Government and the Liberal party there was far less volatility and all players in the industry benefited from this. The only players that benefit from the current state of affairs are the powerful middlemen merchants.
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