Pioneering cotton processor and marketer Namoi Cotton is on track for a full public listing of its almost 110 million co-operative capital units by July.
The co-operative is also looking to raise between $30 million and $35m from additional shares released to shareholders and new investors when the full float goes ahead.
Although growers and other capital unit holders are yet to vote on the co-op’s conversion to a fully listed company on the Australian Securities Exchange (ASX), meetings in the eight cotton growing regions serviced by Namoi have attracted “supportive feedback”.
Namoi, founded in 1962, has 12 operational ginning sites, plus lint marketing and cottonseed marketing services in NSW and southern Queensland.
It also operates a grain containerisation and marketing business and wants to expand its commodity packing activities and upgrade cottonseed and gin services.
The need for extra capital to fund its infrastructure plans and give the company more growth flexibility prompted its push to open its share register to new investors outside its grower base.
Since 1998 Namoi has had a dual-class listed share ownership structure, controlled by growers.
All 200 active co-op growers hold a stake in the business, while a further 109m capital units are listed on the ASX, owned by 1600 farmers, former growers and other investors.
The capital restructure, to be voted on within three months, proposes to temporarily limit share volumes held by each investor entity, ensuring farmers retain control of the business as it transitions from a co-op.
Chief executive officer Jeremy Callachor said the ceiling would operate similarly to that applying at former co-op, Bega Cheese, which publicly listed in 2011, initially with a shareholder cap at 5pc, rising to 15pc.
Significant Namoi unit holders include global commodities giant, Louis Dreyfus, a joint venture partner in the Namoi Cotton Alliance (NCA) marketing and grain handling business, holding 13 per cent.
Others are ASX listed, Australian Rural Capital (10.7pc); ports boss Chris Corrigan’s Kaplan Equity (7.9pc) and several former grower families with shareholdings of about 3pc each.
Trading in Namoi’s capital units has been spasmodic in the past decade, and hurt by several low yielding seasons and past debt issues, with the price ranging from about 70 cents a share to a 2012 low of 14c.
However, confidence in this season’s much improved business outlook has helped almost double the share price since October to about 46c this week.
Mr Callachor said Namoi expected to gin up to 1.2m bales when the current crop was picked – as much as 75pc more than last season.
The NCA partnership is set to market up to 700,000 bales of this autumn’s 1.1m-plus bale Australian crop, or between 18 and 38pc more than last year, and pack double last year’s chickpea volumes (about 240,000t).
Namoi’s cottonseed sales from the coming cotton crop are also expected to be up a third to about 260,000t.
The move towards a public listing saw Namoi study similar agribusiness market floats in recent years, including the option to retain a modified dual class structure similar to that adopted by Murray Goulburn in 2015 and also favoured by SunRice.
“We have well and truly canvassed the options and opinions of growers and other shareholders,” Mr Callachor said.
Shareholder and ARC chairman, James Jackson, who supports converting to a public company said he admired the Namoi co-op story and its achievements, but agreed listing should put it on a more solid capital footing.
Namoi’s infrastructure and business demands were capital intensive, he said.
The current dual class share system was not as attractive to most ASX investors at a time when the board wanted extra funds to develop growth opportunities.
“Getting equity from banks also tends to be easier for listed companies than co-ops as public companies can tap equity markets for extra funds if they need to support their borrowings,” he said.
“We think Namoi is a great company which has come a long way and a full listing could be a great facilitator for further growth.”
However, in southern NSW plans to seek grower approval to take former co-op SunRice to a partial ASX listing remain locked in the boardroom.
With global rice values at 10-year lows and SunRice’s business prospects in Papua New Guinea now confused by the threat of a nationalised rice market, shareholders have generally supported the board’s decision to delay a capital restructure.
Recent grower shed meetings discussed SunRice’s plan for an ASX-listed trust for non-farm investors, based on the Murray Goulburn co-op structure.
Chairman Laurie Arthur, said on balance shareholders generally strongly supported the existing co-op based shareholder model, including retaining one (A class) share for each grower shareholder.
At some meetings, however, it was suggested a production based model could work if share numbers held by large producers were capped, while other shareholders were unhappy some farming businesses already owned several A class shares under different names.