November 29, 2006

AWB Australia to split wheat export unit

Australian wheat exporter AWB would separate its wheat export business from the main company.

The company has been facing a government inquiry over allegations that it had deceived the UN over payments to secure wheat deals in Iraq.

The move to quarantine the wheat export monopoly from the rest of the company comes ahead of a decision by the Australian government next week on possible changes to the monopoly, known as the "single desk".

The split proposal would enable AWB to become a more efficient and commercially focused organisation with a standard commercial constitution that would facilitate the transition to a more competitive environment, said the company chairman Brendan Stewart in a statement to the Australian Stock Exchange.

AWB's shares fell over 4 percent to A$2.70 (US$2.1) after the announcement, which confirmed earlier newspaper reports. The shares have lost over 60 percent of their value since January.

Stewart intends to render his resignation when shareholders approve the split, expected in 2007.

Upon approval, AWB would become two separate companies, a wholly grower-owned single desk manager and a purely commercial agri-business company.

The Australian government has also been considering other options including handing over the company to other Australian grains groups, or moving a veto power on applications for wheat exports from AWB to the government body, the Wheat Export Authority. It also does not rule out entry of international grains giants.