GrainCorp considering all options as Long Term Asset Partners continues to mull formal bid
GrainCorp has suffered lower than usual shareholder support at its AGM as it waits to see if a formal LTAP bid eventuates.
GrainCorp says it has received a number of proposals for its businesses as it waits to see if a formal bid from Long Term Asset Partners, valuing the company at $2.4 billion, eventuates.
The Tony Shepherd-chaired LTAP has been conducting due diligence on the business since late December but GrainCorp (GNC) chairman Graham Bradley told shareholders at the annual meeting in Sydney this morning that the bid remained “indicative and non-binding.”
Mr Bradley said discussions with LTAP were ongoing and confidential.
“GrainCorp’s board wishes to ensure that these discussions are provided the opportunity to deliver full value for shareholders and we continue to look at all options in order to achieve that,” Mr Bradley said.
GrainCorp revealed the bid last year as it announced a portfolio review including possible asset sales to improve the performance of the business amid a drought that has severely reduced the east coast harvest.
The company, which owns the grains collection, storage and ports network along Australia’s east coast, has also received unsolicited advice from John Wylie, a former investment banker and shareholder via fund manager Tanarra Capital, on a possible split of the business.
Under the Tanarra proposal the grains business would be split from the group and its oils and bulk terminals business would be sold, leaving a stand-alone malt business.
Chief executive Mark Palmquist told the AGM in Sydney that the malt business in the US was benefiting from an “explosion” in brewpubs in the US that sell craft beer, and in Scotland from single malt whisky. Craft beers typically use twice the malt of more commercial brews, while single malts don’t allow substitutes such as corn that are used in blended whisky.
Mr Bradley said the company had been approached by a number of parties expressing “serious interest” but that they were incomplete.
Shareholders aren’t happy
GrainCorp shareholders were in a cranky mood if today’s votes are anything to go by.
Votes on director re-election and remuneration have been well below the usual levels — both for a company and across the market.
Veteran director Donald McGauchie was re-elected with 62.6 per cent of votes in favour and 37 per cent against.
While Peter Richards was returned with just 60.5 per cent of shares cast in his favour according to proxies displayed before the vote from the floor. No one spoke against McGauchie but the ASA rose to note that its 100,000 plus proxies would be voted against Richards because he is chair of three other companies and might not be able to devote the needed time to the job if one of them got into trouble.
The ASA said he should hold one year’s director fee in shares and only holds half of that
The remuneration report also suffered an 18 per cent against vote, slightly bigger than the 6 per cent against a grant of performance rights to chief executive Mark Palmquist.
The votes come amid reports of disquiet on the part of shareholders at the length of time it is taking the company to show any progress in the takeover bid from Long Term Asset Partners or the portfolio review that is expected to deliver asset sales.
Chairman Graham Bradley said he was disappointed in the votes against both the directors and the remuneration report and noted there had been the highest ever number of proxies voted before the meeting.
