CBH picks holes in IPO plan

CBH has used its annual meeting to fire a broadside at Australian Grains Champion and its GrainCorp-backed plan to corporatise the giant co-operative.

Chairman Wally Newman told yesterday’s meeting in Perth the AGC proposal lacked detail and would give GrainCorp a blocking stake in a listed entity controlling CBH’s assets.

The meeting attracted a crowd of about 260 people amid intense interest in a proposal AGC says could put $1 billion in cash as well as shares into the coffers of CBH’s 4145 grower members.

CBH banned media from a question and answer session with Mr Newman and chief executive Andy Crane following their opening remarks.

AGC board members Clancy Michael and Brad Jones were in the crowd but there were no fireworks.

Mr Newman told the meeting there appeared to be significant implications associated with the AGC proposal, debt financed by convertible notes of $300 million issued to both ASX-listed GrainCorp and New-Zealand based Morrison & Co, representing Australian superannuation funds. “These centre around the leakage of significant value, GrainCorp having a blocking stake in CBH, loss of grower control and lack of necessary detail in the proposal,” he said. “GrainCorp would have the opportunity to become a shareholder at a discount to the market price. Normally a strategic stake is purchased at a premium. We must ask what GrainCorp’s long-term intentions are for AGC. Is it GrainCorp’s intention to buy 100 per cent of AGC?”

CBH also wants AGC to place a value on Australia’s biggest co-operative, something missing from the proposal amid analyst calls it should be about $3 billion.

Speaking outside the meeting, Mr Newman said: “Our growers would never agree to sell off the family farm without setting a reserve price.”

CBH and AGC representatives met privately before the meeting and CBH handed over a letter asking for much more detail on the proposal.

AGC is pressing CBH to sign a process agreement by March 18 that would create a timetable for a grower vote on the proposal by the end of October. It needs the support of 75 per cent of growers for the plan to succeed.

The agreement would restrict CBH to dealing exclusively with AGC. It includes a clause for CBH to pay AGC about $16 million if it considered other offers or approached third parties about alternative deals.

GrainCorp said it sees “enormous strategic merit” in the proposal for growers.