SunRice ASX float hopes still on ice

A proposal to list a portion of the farmer-owned business on the Australian Stock Exchange (ASX) to attract extra shareholder capital was put on ice early this year just as the plan was about to go to SunRice’s shareholders for approval.

Initially uncertainty about potential ownership structure changes within one of the company’s international partnerships prompted SunRice to put the brakes on its ASX listing ambitions last summer.

Now management is concerned about the uncertainty surrounding its majority-owned Papua New Guinea joint venture, Trukai, which could lose its big market share almost overnight if the PNG government pushes ahead with an ambitious plan to support local rice industry self sufficiency.

PNG can take about a third of the Australian export rice crop in a typical marketing season, although sales have lately been hurt by poor economic conditions and exchange rate volatility.

“The board is committed to the proposed capital restructure and believes it is in the long term best interest of SunRice,” said chief executive officer Rob Gordon.

“However, it does not consider it is prudent to proceed while there is uncertainty regarding the potential implementation of restrictive import quotas by PNG’s government and issues related to one of SunRice’s subsidiary joint venture partners.”

The company is giving no hints as to when the capital restructure vote might eventually go ahead.

Meanwhile, SunRice is celebrating the NSW government’s extension of the rice company’s vesting powers over the state’s export crop.

It says the decision will ensure the industry’s ongoing strength and benefits delivered to growers, businesses and local communities.

SunRice runs the rice export single desk on behalf of the NSW Rice Marketing Board which has just been granted a continuation of sole and exclusive export licence (SEEL) arrangements.

The NSW government has confirmed current export monopoly export marketing arrangements will stay until 2022.

“Maintaining the arrangements will provide certainty for rice growers and enables Australian rice to compete effectively in global markets,” said SunRice chairman, Laurie Arthur.

Renewal of the vesting arrangements received strong support from growers and other rice industry participants when submissions were called for a few months ago.

Although an emerging North Coast rain-grown rice industry is keen to go alone and break into export markets outside the SunRice marketing pool, the Department of Primary Industries’ review of the single desk arrangements attracted more than 90pc support for current export arrangements in the submissions received.

Most submissions were from the mainstream irrigated rice growing areas in southern NSW where grower-owned SunRice is based.

Commenting on the government’s decision Mr Arthur said it was “a meaningful and reassuring vote of confidence” in the industry and would provide considerable benefits for the state.

“In particular, rice vesting and the SEEL maintain a competitive advantage for NSW rice, delivering price premiums to growers totalling $315 million in the past four years,” he said.

“We achieved this by exporting rice as high quality, branded consumer products.

“The vesting arrangements ensure our rice industry has global marketing strength, supply chain efficiencies and can support investment in research and development in collaboration with government.”