WEST PERTH, AUSTRALIA — The CBH Group received on Feb. 26 a letter from Australian Grains Champion (AGC) declining to provide further information on its proposal to corporatize CBH. 

GrainCorp, CBH’s publically owned cousin operating the largest eastern Australian grain storage network, announced on Feb. 17 it had joined a consortium that is proposing privatization of CBH Group and listing the 83-year-old cooperative on the Australian Stock Exchange.

The proposal, which is backed by GrainCorp and H.R.L. Morrison, offers growers a cash payment and shares in a corporatized CBH. AGC presented the proposal to the board of CBH with a request that it be put to CBH’s grower members.

CBH had requested further information on Feb. 24 to enable it to fully assess whether the proposal is in the best interests of Western Australian grower members

AGC reiterated its desire for CBH to enter into a process agreement by March 18.  This process agreement is onerous and may have serious implications for grower members, CBH said. It includes provisions that limit CBH’s ability to develop other proposals seeking the best outcome for grower members and includes a break fee of around A$16 million payable to AGC in certain circumstances.

Wally Newman, CBH chairman, said the proposal given to CBH does not provide the board with sufficient information to complete an assessment of whether the AGC proposal is in the best interests of CBH members.

CBH’s value would be determined through an initial public offering (IPO), GrainCorp said, but analysts have valued the Western Australian cooperative at as much as A$3 billion ($2.1 billion). GrainCorp said it would be a cornerstone investor, putting up as much as A$600 million. That would be transferred to an equity stake in CBH once it is listed and give GrainCorp a 20% stake in CBH if it was valued at A$3 billion.

The CBH board will continue to assess the proposal with the information AGC has previously provided.