Australian Agricultural Company (AACo) directors face a potential public grilling next week from perplexed and disgruntled shareholders wanting answers following managing director Jason Strong’s sudden resignation.
Mr Strong, the second chief executive officer to exit the company in four years, announced his departure from the historic beef business late last week.
Officially, however, he stays employed and “serving out his notice”, partly at work, until early 2018.
He makes a final public appearance for AACo at next week’s annual general meeting.
Unusually, however the AGM will be in Darwin – rather than the normal venue in Brisbane, or even Sydney – which is likely to diminish shareholder attendance numbers.
What’s going on?
Given other vacancies have also opened up in AACo’s management team this year, industry leaders and shareholders are querying who is running the big vertically integrated business, and what is going on?
Mr Strong has been widely regarded as a good leader who restructured and lifted the company’s performance, including getting its long-awaited Northern Territory abattoir working effectively.
However, AACo’s board has not authorised a dividend to shareholders for almost a decade.
Chairman, Donald McGauchie, gave no details to explain reasons behind Mr Strong’s resignation except to say “he felt it was timely to hand over at this point”.
AACo’s share price did not like the news, reversing its rising trend of the previous week to drop from $1.64 to $1.51 by early this week, later regaining some ground.
With speculation mounting about an agenda being pushed by major AACo shareholder, the Bahamas-based billionaire, Joe Lewis, other investors and market analysts are keen to find out more.
The British-born businessman has lifted his Tavistock Group’s stake in ACCo to about 40 per cent since taking up extra shares worth $29.6 million for his AA Trust in a 2013 capital raising.
Tavistock also contributed to underwriting that $219.2m capital raising, which offered existing shareholders seven shares for every 10 they held, and entitled AA Trust, or related entities, to more discounted shares worth about $1 each.
Among the theories currently being touted is that Tavistock may want to re-privatise the 193-year-old AACo, which listed as a public company in 2001.
“There’s clearly a trend at AACo that reflects Joe Lewis’ increasing control influence on the business,” observed a former company official who, like most observers, wished to stay anonymous.
Directors, Neil Reisman and Shehan Dissanayake, are directly connected with Tavistock, with Dr Dissanayake also recently joining AACo’s management team as executive director, apparently to help the cattle production company’s increased focus on selling into premium export markets.
Given the record beef cattle prices of the past two years, other shareholders have hoped for some dividend reward flowing from the bullish beef market.
One industry analyst noted AACo was “one of those companies which has promised a lot”, but had many different operational dynamics to deal with “which can’t have been easy of late”.
AACo owns and operates 21 stations, two farms, two feedlots and its new Livingstone processing plant near Darwin, running 540,000 head over 7 million hectares.
It also works closely with partners to background, grain feed and process cattle.
Mr Strong became managing director three and a half years ago, about six months after David Farley departed without explaining his decision.
The next phase of our growth will be to continue the transformation into a globally-focused luxury branded beef business
This week Mr Farley, now principal of agricultural traders, Matrix Commodities, stayed tight-lipped about his move and was not speculating on internal power struggle rumours.
He was, however, “as interested as anybody about what’s happening at AACo”.
Mr Strong became managing director after initially joining AACo as marketing general manager.
“We have thanked Jason for his significant contribution to AACo and in leading the company as we transition from pastoral company towards a vertically integrated, luxury, branded beef business,” chairman, Mr McGauchie said.
Respected beef leader
“His depth of market knowledge and passion for the Australian beef industry has been of tremendous value to AACo.”
He left the business “a respected leader, colleague and friend”, having transformed the cattle company into a supply chain driven beef business.
“The next phase of our growth will be to continue the transformation into a globally-focused luxury branded beef business,” Mr McGauchie said.
Mr Strong said he, too, was “very proud of all we have achieved at AACo”.
“To have been able to achieve one of our best operating results in 193 years during the company’s transition is a testament to the business and everyone in it,” he said.
To achieve one of our best operating results in 193 years during the company’s transition is a testament to the AACo business and everyone in it
Mr Strong had not hinted his departure was brewing when representing the company at the Royal Queensland Show last week, or earlier at the big Yulgilbar Beef Expo and Forum near Grafton.
At “Yulgilbar” his speech outlined the “why and how” of AACo’s vertical integration shift from large-scale beef cattle producer to also become a diverse meat brand marketer and processor.
AACo has engaged executive recruitment firm, Egon Zehnder, to find a new managing director by December.
Executive director Dr Dissanayake has declined to be considered for the job, but will be part of the interim leadership team assisted by directors Mr McGauchie, Stuart Black and Tom Keene.
Jason Strong originally joined AACo from Meat and Livestock Australia where he had been the regional manager in Europe with responsibility for European and Russian markets.
His beef industry career has spanned 20-plus years, including owning a stud and commercial cattle property at Gunnedah in NSW and running high end butcher shops in Brisbane.