Grains champion concedes defeat

The private company formed by two former CBH directors and some of WA’s biggest farmers has conceded defeat in its bid to corporatise CBH.

Australian Grains Champion formally withdrew its proposal on Monday after the corporatisation campaign failed to gain traction with CBH’s 4145 grower members.

The AGC bid, backed by GrainCorp and First State Super, faced fierce opposition from the board of Australia’s biggest co-operative and many of its growers.

CBH recently launched a review of the existing non-distributing co-operative structure, but refused to open its books to AGC or to put the unsolicited offer to a grower vote.

AGC, formed by a group that includes former CBH directors Clancy Michael and Samantha Tough, planned to offer growers a cash windfall and shares in a new corporate entity controlling grain storage and handling in WA.

In total, $600 million in cash would have gone into the pockets of grain growers. The cash injection would have been debt-funded through convertible notes issued to cornerstone investors GrainCorp and First State Super.

Growers would also have had the chance to sell their shares into a pre-initial public offering facility limited to $400 million.

AGC expected the $400 million to come from institutional and other investors as part of a book build.

The proposal would have required the support of 75 per cent of growers in a vote to succeed, but never got close to reaching those levels of support.

ASX-listed GrainCorp advised the market after the close of trading on Monday that the AGC proposal had been withdrawn.

AGC director Brad Jones said the proposal had been withdrawn because the feedback from growers was that they wanted the CBH structure review to reach its “natural conclusion” and focus on the coming harvest.

“If CBH fails to meet growers’ expectations, and there is a groundswell of growers prepared to fight for change, AGC may review its current position,” he said.

“AGC was able to attract an initial $600 million of potential investment into WA agriculture, a $600 million injection into rural WA that could have occurred almost immediately if WA grain growers had been able to vote for our proposal.”

The involvement of GrainCorp, criticised by some growers in the Eastern States for its storage and handling service, was a stumbling block for many CBH members, who also feared losing control of their co-operative. Paterson Securities recently estimated that CBH would be worth $2.56 billion as a listed entity.

Mr Jones said the AGC proposal had saved growers $400 million because it led to CBH slashing the costs of a major network rationalisation.

CBH had denied its lower budget was a result of the AGC campaign.

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

“The board was unanimous in its view that the proposal did not represent value for WA grain growers and it would have delivered a strategic blocking stake in CBH to East Coast grain handler and competitor GrainCorp,” he said.

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