GrainCorp bidder insists it has genuine Aussie credentials

GrainCorp bidder insists it has Aussie backing and good agribusiness skills


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Speculation about Canada’s PSP Investments being potentially involved in bid for GrainCorp “surprises" LTAP.

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Suggestions of overseas backers loitering in the wings to help GrainCorp’s secretive takeover bidder, Long-Term Asset Partners, have been strongly denied by the suitor.

LTAP has also rebutted GrainCorp chairman, Graham Bradley’s assessment of the bid team as having “no agribusiness experience and very little grain industry staff to speak of”.

LTAP spokesman, Andrew Butcher, said GrainCorp would be “100 per cent owned by Australian investors and controlled by Australians” if LTAP was successful.

While its 100pc debt-funded $2.4 billion takeover offer, plus a further $900 million to absorb existing debt, would come from various overseas and local sources “overall control of the company will be in the board, and that is entirely Australian”.

Speculation about Canada’s big PSP Investments being a behind-the-scenes player in the bid was described by LTAP as “a surprise to us”.

It (the debt structure) will actually be safer than GrainCorp is at present - Andrew Butcher, Long-Term Asset Partners

However, the bidding team, led by Tony Shepherd and several other high profile Australian executives, has deliberately avoided releasing the financial structure details of its plan to privatise the big east coast grain storage, marketing and processing company, or name who is actually backing the move.

LTAP did, however, intend to reveal more of its business structure, privately to GrainCorp, by early January after discussing “how best to share more information about our plans with the company”.

Responding to farmer unease about a potential new owner of the valued grain supply chain assets carrying so much debt and being so exposed to seasonal or market earnings risks, LTAP pointed out its ownership would have an investment grade capital structure.

“It will actually be safer than GrainCorp is at present,” Mr Butcher said.

“LTAP acquiring GrainCorp will reduce financial risk in the capital structure for the benefit of all stakeholders, especially the growers.

Naturally, GrainCorp’s deep expertise in grain handling would continue under new ownership - Andrew Butcher, LTAP

“LTAP’s all-cash proposal represents a 42.7pc premium and it is demonstrably superior to the ADM offer recommended by GrainCorp’s board (in 2013) and endorsed by the independent expert.”

The team also had significant grains industry experience and infrastructure and logistics expertise.

“Naturally, GrainCorp’s deep expertise in grain handling would continue under new ownership,” Mr Butcher said.

However, Mr Bradley said at this stage there was no certainty that LTAP’s approaches would result in a binding proposal for GrainCorp, or what the terms of any such proposal would be.

He told the Australian Securities Exchange directors would consider the merits of any final proposal carefully to determine if it was in shareholders’ best interests.

He also reaffirmed concerns about LTAP’s $10.42 bid valuation, noting the board had “not formed a definitive view on whether the price offered under the LTAP proposal was at a level which it would be prepared to recommend to shareholders”.

There’s a great deal of capital in the world looking for infrastructure like ours - Graham Bradley, GrainCorp

Mr Bradley emphasised LTAP’s plan was just one of several potential strategic initiatives being evaluated as part of GrainCorp’s asset portfolio review.

“This review is considering a wide range of potential value creation strategies, including options for maximising the value of our malting, bulk liquid storage and our grains storage and logistics assets,” he said.

Speaking earlier Mr Bradley noted it should be of no surprise GrainCorp’s diverse portfolio could attract considerable interest from potential local and overseas investors or partners.

“There’s a great deal of capital in the world looking for infrastructure like ours,” he said.

“It’s not surprising when a company of reasonable size like GrainCorp comes on the radar it generates interest.

There was quite a lot of chest-beating and celebration from people associated with PSP when the Temora deal wrapped up - Matt Hogg, Agrinova

“The nature of our high quality assets and growing business – notwithstanding the seasonal conditions in parts of eastern Australia lately – mean they are naturally looking at us.

“There are not many GrainCorps in the world.”

For that same reason, Sydney lawyer, Matt Hogg, believed there could be more to the rumours from the grain belt about the potential interest from Canadian pension fund and eager agribusiness investor PSP.

Mr Hogg, who led the locally-funded Agrinova bid for the Temora-based BFB assets, which eventually sold to the Canadian fund in November, understood PSP was still hunting down “strategic acquisitions”.

“There was quite a lot of chest-beating and celebration from people associated with PSP when the Temora deal wrapped up,” he said.

“They were talking of more significant Australian transactions still to come.”

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