AGC looks at options after CBH rebuff

AGC looks at options after CBH rebuff


Agribusiness
Brad Jones ... we're not gone yet.

Brad Jones ... we're not gone yet.

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

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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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