CBH may go it alone with listing

The CBH board is expected to consider a sharemarket listing under its own steam as part of its response to a corporatisation offer backed by GrainCorp which was revealed yesterday.

There is also speculation that others might enter the fray now that the shadow boxing over the giant WA grower controlled co-operative is over.

Australian Grains Champion, a private company formed by two former CBH directors and prominent growers, lodged a proposal with CBH yesterday that would see it converted to a listed entity, with GrainCorp as the biggest shareholder.

The proposal has the potential to put $1 billion into the pockets of Wheatbelt farmers. They would also receive shares in AGC once it became a listed company controlling the grain receival, storage and handling network in WA.

An initial cash payment of $600 million to growers would be funded equally by cornerstone investors GrainCorp and Morrison and Co, acting for Australian superannuation funds.

The payments would be debt-funded through convertible notes in AGC issued to GrainCorp and Morrison. Growers would also be able to sell issued shares to a value of $400 million ahead of a public listing.

CBH said the “complex and highly conditional” proposal would take weeks to assess. It will take advice from Deutsche Bank and consider the merits of sticking with its non-distributing co-operative structure.

It will also look at a public listing and whether growers would retain more value by doing that without AGC and GrainCorp.

Any move to corporatise or list CBH must be put to a vote of its 4145 grower members. It needs a 75 per cent majority of those who vote to succeed.

AGC wants that vote to happen before October. It has asked CBH to sign a process agreement by March 18 that would lead to growers getting a detailed analysis of the proposal.

AGC director Samantha Tough said the proposal was developed by growers and was backed by cornerstone investors who met the requirements of being Australian, deeply involved in the grain industry and in it for the long haul.

“This is the only proposal of its type CBH members have seen and may well be the only proposal they ever get to see that is shaped by their own,” she said.

GrainCorp has an option to take $300 million in shares after listing. Based on what is known about the proposal and estimates, a listed entity might be worth $3 billion.