CBH faces renewed push to demutualise

 

 

Privately-owned Western Australia-based Cooperative Bulk Handling Ltd. (CBH), the nation's biggest grain company, faces a renewed push from some of its 4,700 grower members to demutualise and list on the stock exchange.

 

Member support for the renewed push will be tested at a Monday (Oct 19) meeting organised by members of a free-market lobby, the Pastoralists & Graziers' Association (PGA), at Wongan Hills in the heartland of the Western Australian wheatbelt northeast of Perth, meeting convener Gary McGill said Wednesday (Oct 14) by telephone.

 

Former CBH chairmen Alan Watson, Robert Sewell and Tony Critch will speak in favour of the proposal at the meeting, said McGill, a long-time member of PGA, who sits on the group's executive and finance committees.

 

A vote in 2000 to demutualise fell short of the 75 percent threshold of members attending the meeting needed to pass the resolution, but McGill said the industry has changed since then.

 

CBH is the only cooperative left in the Australian grains industry, the dynamics of which changed in July 2008, when bulk wheat exports were deregulated, unleashing new commercial forces within the industry, he said.

 

Western Australian growers will be more receptive to a new commercial competitive environment following the successful deregulation of wheat exports, which he said is the catalyst for the renewed push.

 

McGill wants CBH to be nimble enough to seize opportunities in the new environment, but he believes the ownership structure is limiting the cooperative's ability to compete.

 

Previous attempts to commercialise CBH had been "sabotaged," and a plan by ABB Grain Ltd. to merge with CBH and create a southern Australian grain giant last year was rejected by CBH's board, which didn't consult grower members, he said.

 

Canadian-based Viterra Inc. completed its A$1.6 billion takeover of ABB Grain in September.

 

McGill said he wants to be able to access the equity he has as a member of CBH, but which he can't liquidate. One CBH shareholder he knows, a big grain grower, holds equity potentially valued at A$2 million in CBH that he can't access without demutualisation - the process involved in transforming a cooperative into a joint stock company.

 

Despite strong grower support, McGill expects a battle with CBH's board, who were opposed to the deregulation of bulk wheat exports, and who want to retain control of CBH as a cooperative.

 

Asked what would it take to get CBH's board to agree to a shareholder vote on the issue, a spokeswoman said the signatures of at least 25 shareholders are needed to call an extraordinary general meeting or a vote.

 

However, whatever is put forward to the board needs to be specific and must address the Bulk Handling Act 1967 and Articles of Association; the board will then assess whether any motion fits the criteria, she said.

 

CBH operates 200 upcountry grain storage sites and four coastal export terminals in Western Australia, holds a half share in Interflour, one of the largest flour millers in Asia, markets grain and - since bulk wheat exports were deregulated - has emerged as Australia's biggest wheat exporter.

 

In its most recent annual report, for the fiscal year ended September 30, 2008, the 76-year old cooperative declared total assets of A$1.7 billion, net assets of A$976.6 million, revenue of A$1.10 billion and a net profit of A$40.1 million.

 

US$1 = A$1.08759 (Oct 15)