WEST PERTH, AUSTRALIA — GrainCorp is in the midst of reviewing a potential takeover bid from the Long-Term Asset Partners Pty Ltd (LTAP). The LTAP proposal includes an acquisition via a scheme of arrangement, of 100% of the shares in GrainCorp for cash consideration of A$10.42 per share.
LTAP directors, Tony Shepherd AO, Lance Hockridge, Andrea Staines and Chris Craddock, stated that it is an asset manager for a trust whose beneficiaries are Australian investors. Further, that the structure has been established to make long-term investments and that it does not intend to sell any of the assets of GrainCorp.
The GrainCorp board plans to assess the LTAP proposal in context with the co-op’s current ongoing portfolio review. GrainCorp is working to develop strategies to improve value for shareholders by evaluating:
- Value maximizing options for bulk liquid storage infrastructure assets;
- Options for maximizing the value of the global GrainCorp Malt portfolio, including through participation in ongoing industry consolidation or an ownership separation of these assets; and
- Initiative’s to enhance the global grain infrastructure capabilities, both internationally and domestically, by progressing the initiatives to simplify the eastern Australia grains operating structure to better serve customers and reduce costs.
The evaluation is ongoing and the proposal is not yet sufficiently certain or in a form that would allow GrainCorp's directors to make a recommendation to shareholders.
The board also noted that the proposal is subject to a number of conditions and involves a complex financing structure with significant leverage comprising A$3.2 billion in acquisition facilities from Goldman Sachs and A$400 million from Westbourne Capital. LTAP is a new entity and this would be its initial investment.
“There is no certainty that the proposal will result in a binding proposal for GrainCorp, what the terms of any such proposal would be, or whether it will be recommended by the GrainCorp Board,” the cooperative said. “In particular, the LTAP proposal and the acquisition financing facilities are conditional on due diligence, which will be provided once appropriate confidentiality and standstill arrangements have been put in place including customary protections for GrainCorp.”
The GrainCorp board is requiring additional information to consider whether the price offered is at a level that it is prepared to recommend to shareholders in the context of change control as well as the identity of the equity investors underpinning the LTAP proposal.
Currently, the GrainCorp board is recommending that shareholders take no action in respect to the LTAP proposal and await further information from the board which will be provided as part of the ongoing portfolio review.
GrainCorp has appointed Macquarie Capital (Australia) Limited as financial adviser and Gilbert + Tobin as legal adviser.
