Co-op no more  – Namoi Cotton goes fully corporate

Reborn Namoi Cotton gets back to business after full ASX listing


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Namoi Cotton’s newly-converted shares began trading on the Australian Securities Exchange last week.

Namoi Cotton’s newly-converted shares began trading on the Australian Securities Exchange last week.

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Cotton growers retain about 46 per cent the now fully-listed public company

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Ginning and marketing business, Namoi Cotton, won’t be rushing to raise extra funds from the share market, despite overwhelming  shareholder support for its recent conversion to a fully listed public company.

This week the pioneering former co-operative was officially registered as a corporation after grower members supported the switch with a 96-plus per cent “yes” vote late last last month.

Namoi’s newly-converted grower shares and co-operative capital units began trading last week on the Australian Securities Exchange (ASX) at about 43 cents each.

Grower members received about 158,000 shares each in exchange for their 800 (per member) co-op shares, while capital units owned by growers and outside investors were exchanged for new Namoi shares.

Biggest shareholders

Joint venture marketing partner and global commodity trader, Louis Dreyfus, continues to hold the biggest stake in the 55-year-old cotton industry service business – 14.7pc.

Other significant shareholders include Australian Rural Capital (12.3pc), National Australia Bank (9pc) and Citicorp (5.6pc).

However growers, as a block, still own about 46pc of the now fully-listed company.

Long-serving chairman and Moree district grower, Stuart Boydell, said while the journey to public listing Namoi Cotton had been a drawn out 18-month process, the company was in no rush to use its new ASX status to drum up fresh capital, although extra funds were needed to help fulfill strategic growth plans.

We don’t want to lose sight of what our business is all about - Stuart Boydell, Namoi Cotton

Namoi wants to invest in ginning and information technology upgrades and expand its commodity marketing business, among other priorities, when new funds become available.  

It has flagged a capital raising, in due course, but Mr Boydell said Namoi’s immediate focus after the past week’s rebirth was to prepare for the next cotton season and make the most of trading opportunities as the winter grain harvest rolls in.

Cotton planting has already begun, particularly in Central Queensland and southern NSW, with the industry tipping a 403,750ha hectare national crop – down slightly on last season’s  472,941ha, but with potential for a bigger 4 million bale yield.

“We don’t want to lose sight of what our business is all about,” Mr Boydell said.

“We’re over the first hurdle, and very grateful for the strong support from shareholders and everybody involved in the restructure, but it will take a little while before we confirm our capital raising agenda.

Australian Rural Capital executive chairman, James Jackson, strongly supports Namoi’s new capital structure as the correct course for generating new capital in the business, but said investors would first want to clearly understand where additional money was to be spent.

When the time comes I think a capital raising will attract good interest from institutional investors interested in the ag sector. - James Jackson, Australian Rural Capital

“While we as shareholders have a keen interest in Namoi’s growth and are excited by the opportunities opening up to the company, we certainly don’t want to rush it into something.”

“When the time comes I think a capital raising will attract good interest from institutional investors interested in the ag sector.”

Mr Jackson said the trend towards more corporate investment, scale and long-term commitment to cotton and other farm sector activities was a good indicator of potential support for Namoi.

Ag’s new investor class

“We’re very encouraged by the institutional capital going into the production end of agriculture these days, which bodes well for Namoi as a business servicing those farms.”

He said the “deeper pockets” and longer-term planning agendas of larger farm sector investors made it easier for businesses like Namoi to commit to their own expansion projects without being so exposed to costs and disruptive weather and market events, or their flow-on impact on smaller family farmers’ budgets.

Namoi’s Mr Boydell said while directors had been fully prepared to keep the business as a co-op if members had preferred that structure (as happened with grain business CBH), he agreed the “cotton business world has changed considerably”.

“I’m a staunch supporter of co-ops, but we’re not just a small-scale localised operation these days –  we compete in a finicky global market environment and need a capital structure that best meets our challenges.

The emphatic support given to the board by shareholders would strengthen and re-position Namoi for the future and deliver a “value proposition for all stakeholders”.

The story Co-op no more  – Namoi Cotton goes fully corporate first appeared on Farm Online.

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