National rice marketer and processor, SunRice, has dusted off its three-year-old plans for a listing on the Australian Securities Exchange and will start briefing farmers next week.
The latest recommendation to shareholders would also involve a $20 million to $30m capital raising, if shareholders vote in September to support the move.
However, the dual class ASX share listing does not involve a major capital restructure, similar to the Murray Goulburn partial float proposal which SunRice initially proposal when it first touted moving from the National Stock Exchange in 2015.
SunRice directors have instead recommended a simplified transfer of the company’s B-class shares from the NSX to ASX, allowing new investors to buy B-class stock currently held by rice farmers, staff and people whose families have had a connection to the rice industry.
The current five per cent limit on an individual’s maximum B-class stakeholding in the company would be lifted to 10pc, where it will stay for at least 10 years.
SunRice, which has annual turnover of about $1.2 billion, is keen to take advantage of current investor appetite for Australian-branded fast moving consumer goods and agribusiness stocks, but it wants to retain the dual class structure which gives A-class growers ultimate shareholder control.
This step is designed to strengthen SunRice’s future and build an enduring global company
Each of the 715 current NSW grower suppliers to the Riverina-based milling business holds one A-class share.
The 70-year-old SunRice also has about 56.5m B-class shares, currently worth about $4 each or a combined worth of $226m.
Based on the share market performance of other similar agribusinesses, the extra liquidity available on the ASX is expected to inflate the company’s share price value if the listing goes ahead.
For the proposal to proceed a 75pc majority vote of both A- and B-class shareholders will be required at the September 20 annual general meeting.
In the meantime, public information meetings will be held next week at Deniliquin on June 4; Coleambally, June 5, and Griffith, June 6, all starting at 7pm, with a two-hour webinar also planned from 12 noon on June 6.
“This step is designed to strengthen SunRice’s future and build an enduring global company benefiting growers, shareholders and employees for generations to come,” said SunRice chairman, Laurie Arthur.
Mr Arthur described the proposal as a “compelling opportunity” for the company.
“An ASX listing will provide the opportunity to attract investment from both new and existing shareholders to support our growth strategy, and benefit A- and B-class shareholders,” he said.
“Critically, our dual class share structure and A-class grower shareholder control will be retained and there will be no change to the fundamental structure or operation of SunRice.”
SunRice requires capital beyond our current capabilities to deliver on our strategy in full
The company, which holds the NSW single desk export monopoly for rice, had worked closely with the ASX to ensure its dual class structure could be retained.
This would give the business access to Australia’s largest pool of equity capital.
“SunRice requires capital beyond our current capabilities to deliver on our strategy in full,” he said.
“We have a strong growth agenda over the medium term.
“The company’s 2022 Growth Strategy details the potential opportunities ahead of us to capitalise on global food trends and our competitive advantages to increase farmgate paddy rice returns and drive shareholder value.
“Because improved paddy prices will benefit all growers, not just those with B-class shares, it’s important for everyone in the industry to understand how SunRice’s five-year strategy, is intended to generate better grower returns.”
By removing ownership restrictions on B-class shares the company will also be addressing ongoing concerns among shareholders around estate planning issues.
There will be no material change to SunRice’s existing company or dual class share structure and no change to its paddy pricing or dividend policies
A-class shareholders will have the right to review the 10pc B-class shareholding cap after a decade, and every three years thereafter.
A 50pc majority vote will be required to retain it and, if desired, a 75pc vote at a special general meeting would be needed to lift the cap.
SunRice owns milling and food processing operations in the NSW Riverina and North Queensland, plus similar businesses in the US, the Middle East and Papua and New Guinea.
Its local brands include the big SunRice label, Riviana Foods, and CopRice stockfeeds.
While an ASX listing would reduce business risk and increase its balance sheet resilience, SunRice said its business would remain basically unchanged.
“There will be no material change to SunRice’s existing company or dual class share structure and no change to its paddy pricing or dividend policies, protecting both sets of shareholders’ interests,” a statement to growers confirmed.
The SunRice board would continue to have a majority of (seven) grower directors, but with an additional external director, taking it to four non-grower members.
The ASX proposal has unanimous support from the company’s directors who have urged A- and B-class shareholders to vote “yes”.
B-class shareholders would remain entitled to dividends and would vote on issues affecting their share rights.
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