SunRice, the Australian rice exporter, has postponed plans for a capital restructuring that had lined up the listing of a unit trust on the country’s main stock market.
The company said an unnamed joint venture partner had decided to look again the partnership between the two groups in view of the plans for the listing on the Australian Stock Exchange.
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“During the review process we have conducted protracted discussions with a key joint venture partner regarding the capital restructure. This joint venture partner has recently decided that the proposed capital restructure now justifies its own review of the joint venture’s arrangements,” SunRice said.
“Given the material nature of the joint venture and uncertainty surrounding the outcome and timing of this review, the board is currently unable to provide a definitive timetable for the proposed capital restructure.”
SunRice had already pushed back a vote among its farmer members on the new capital structure. The voted was slated for 16 March but SunRice said in January discussions with “corporate and industry regulators and other stakeholders” on the plans was “taking longer than anticipated”.
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Reports in Australia have linked the postponement of the plans to the problems at another Australian food co-operative Murray Goulburn, which last week issued its second profit warning this year amid pressure on global dairy commodity prices and announced the departure of its MD and CFO. Murray Goulburn has also cut the price it pays its farmer members for milk.
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By GlobalDataIn a statement to the National Stock Exchange of Australia, the smaller exchange where SunRice shares are traded, Laurie Arthur, the company’s chairman, said: “The timing of the capital restructure is now being impacted by circumstances related to one of our joint venture partners; it is not being impacted by operational issues or recent media commentary regarding companies with similar capital structures. Indeed, maintenance of our guidance on anticipated FY16 financial results indicates that the business has continued to perform well since January 2016.”
Arthur added: “Let there be no doubt – the Board remains fully committed to the proposed capital restructure, but it will only be brought before shareholders for consideration when it can deliver on every element and has been through all the necessary processes, including completion of the joint venture partner’s review of SunRice-specific arrangements.”
According to The Sydney Morning Herald, SunRice chief executive Rob Gordon said reports “trying to link what we’re doing with Murray Goulburn” had been “quite unhelpful”.
The SunRice board wants to restructure its capital base to “provide access to a deeper equity pool than is currently available”, according to the company’s website.
Under the plans, the board will still have a majority of grower directors and the company says there will be no change to how paddy prices or dividends are determined.
The new structure will “preserve the fundamental elements of the SunRice business”, the company says.
The company will still have what SunRice calls “A Class shareholder control – or grower control”, including a requirement that 75% of A Class shareholders vote in favour of any changes to the SunRice constitution and approve any offers from a third party to take over the company. A second, B Class of shareholders will maintain economic rights in SunRice.
The potential model set to be presented to SunRice’s farmer shareholders “involves a modified listing on the ASX that preserves grower control, similar to the listed fund models established by Murray Goulburn and Fonterra”, the website says.
If the capital restructure is implemented, SunRice and A Class Shares will not be listed on the Australian Stock Exchange. A separate entity called the SunRice Fund will be listed on the exchange and will trade SunRice B securities rather than B Class shares.
“If the capital restructure is implemented, the SunRice business will remain intact exactly as it is today, with the same board, management and operating structure,” the website reads.
