GrainCorp, CBH’s publicly-owned cousin operating the largest eastern Australian grain storage network, announced on Feb. 17 it had joined a consortium, the Australian Grains Champion (AGC), which proposed privatization of CBH Group and listing the 83-year-old cooperative on the Australian Stock Exchange.
On March 14 CBH’s board unanimously rejected a proposal from the AGC backed by GrainCorp to privatize the cooperative. The board said the proposal would destroy value for CBH grain grower members and their strategic network, and gives too much power to GrainCorp.
The proposal to commercialize did raise the question about whether CBH should remain a cooperative. CBH then released a booklet on Aug. 15 outlining the options, benefits and trade-offs in relation to potential changes to structure and governance. The AGC officially withdrew its commercialization offer on Sept. 19.
CBH said over 2,600 growers, or 63% of all members, completed the survey, with a vast majority of them supporting the co-operative model.
“Almost eight out of 10 growers want some form of a co-operative with most of them supporting a non-distributing co-operative,” said Wally Newman, CBH Group chairman. “The board has listened and unanimously resolved CBH will remain a non-distributing co-operative and will explore further enhancements to how value is returned. Also, with 70% of growers wanting CBH to introduce a mechanism to protect the collective equity for future generations, we have a real mandate to explore this in more detail.”
The survey, conducted by a Western Australian market research provider Thinkfield, indicated that only 14% of growers supported external parties investing in storage and handling and only 12% supported a publicly listed structure for CBH.
“On governance, there was no single issue that stood out for reform but growers indicated they were open to exploring change in some areas,” Newman said. “The board will explore potential changes to the top four governance elements, including encouraging greater diversity on the board and member directors’ skills and experience. The board will explore a number of initiatives on the structural enhancement and governance fronts during the first part of next year with the objective of implementing changes before the 2017 harvest. Some changes may involve a member vote while others may simply involve a change to existing policies or practices. We will continue to keep growers engaged the whole way throughout this process.”