Murray Goulburn eyes ASX

22 Nov, 2013 04:12 PM
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Murray Goulburn managing director Gary Helou.
We are not proposing any change to the co-operative structure
Murray Goulburn managing director Gary Helou.

AUSTRALIA’S largest dairy food company Murray Goulburn has confirmed it will pursue the establishment of an ASX-listed unit trust to allow external investment while maintaining 100 per cent farmer control of the company.

Shareholders at today’s annual general meeting (AGM) in Melbourne were briefed on the outcomes of the capital structure review which has been conducted over the past nine months.

In a statement released after the AGM, the MG board said it intends to develop and is likely to recommend to members of the co-operative the adoption of such an enhanced capital structure.

MG says it believes the establishment of an ASX-listed unit trust, similar to the one successfully implemented by New Zealand dairy co-operative Fonterra was considered logical and appropriate "given the balance it provided in meeting the capital needs for growth while maintaining supplier focus and control".

MG says it will visit all supplier regions in late November, December and January to consult directly with supplier/shareholders on the proposed capital restructure.

MG managing director Gary Helou told the meeting the core objective in pursuing growth was to significantly increase underlying farmgate returns.

“We believe increasing the underlying farmgate returns by $1 per kilogram of milk solids by FY17 will deliver the level of return MG supplier/shareholders require to have confidence to invest in their farm businesses and grow milk production,” he said.

“In addition to enhancing our capital structure through access to mainstream capital markets, a Trading Among Farmers type platform, similar to that recently implemented by Fonterra, will also provide a clear and observable market value for MG dairy farmer-held shares.

“This will mean that equity in MG can be practically applied to strengthen individual farm balance sheets and in doing so increase investment in individual farm businesses.

“This also means there will be potential for value creation in line with public market values, and from realisations of existing individual shareholdings.”

MG chairman Phil Tracy said the model being considered followed a thorough review of the capital options available to MG to pursue international growth opportunities and was considered the most balanced way forward.

“The co-operative structure is at the heart of our success and we want to reassure all supplier shareholders that we are not proposing any change to it,” Mr Tracy said.

“What we are likely to recommend is a funding model that maintains 100 per cent farmer control, but allows external investors to invest into MG.

“Such a model would put MG in a strong position to pursue the growth opportunities we have available to meet our objective of lifting farmgate returns.”

MG will have to undertake a number of steps before it can proceed to implementation including engaging with the various regulators that will be required to approve the restructure.

Following the first round of consultation meetings with supplier/shareholders in December/January, MG says it will hold a further round of supplier meetings in March 2014 to discuss, in full, the final proposed structure, followed by an extraordinary general meeting in May for shareholders to vote on the model.

Besides discussions on its capital structure plans, the AGM today saw shareholders vote in favour of a new director for the western region, Cobden dairy farmer and accountant, Duncan Morris.

Mr Morris was elected to the board following the retirement of Don Howard from the board after 16 years of service.

Existing western region directors, John Pye and Martin Van de Wouw were both successfully re-elected to the board for further three year terms.

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READER COMMENTS

BobY
22/11/2013 6:11:24 PM

Helou is steering MG into uncharted waters without a lighthouse in sight!
Ian Macallan
23/11/2013 2:40:06 PM

George might just have the right lighthouse in sight and more than that he is prepared to sail to it with focus and intent. Pity MG cannot move quickly on WBC and possibly BC. This would start to see the industry drive its own reform and consolidation for the export market rather than wait for others to provide the lead or acquire for a different purpose. One might say George is providing leadership in an industry that has been lacking such for quite some time. MG and Bega appear to be getting it right but the question remains "are they just too late"? Time will tell...

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