However...seeing a couple people I didn't previously know emailed me I thought I better reply with their concerns. Firstly, not sure how you got my email address but well done and more well done because the Gmail account linked to this blog I probably only check once a month at best...so smart finding and lucky I read it now. Coulda easily been months before I'd read them.
Couple of pick up points from the emails...
- "You people of the antiquated Co-operative mindset are of a socialist ilk..." - I think there's some folk who, through no fault of their own, have an ilk of their own and its keeping them from seeing things clearly as they are. To me at least there is no ilk to be had. In my shed I have Metric spanners, AF spanners, Whitworth spanners and bloody big hammers. Each is a tool for a specific job. Co-operatives are not anti now, not anti "commercial" and not anti Public Listed Company. They're all just different tools with different uses in different situations. As for Socialist ilk, sorry it is probably time to rethink that because that could be interpreted as simplifying it into 2 camps when there's so many shades between "socialism" and what ever some folk think is the opposite. Trying to lump Co-Ops into the same camp as a political ideology that caused an unknown number (millions) of deaths is pretty poor taste. People working together for a common goal, pooling resources to build quarantined benefits for the members and the community is not such a bad thing and isn't socialism. Should add that the "3rd sector" which is the Not-For-Profit sector, which includes Co-Operatives is huge in this country and worth many billions of dollars, employs thousands of Australians and along with delivering returns and quarantined benefits also delivers social dividends that don't show up on anyone's profit/loss or balance sheets. Another now gone Co-Op, United Farmers (now what's left of it being foreign owned) came into the market and other companies recognised the competition and got hard on the price competitive lever. Same happened with CBH's entry into the fertiliser market. Ironically another fault improperly levelled at CBH is it cannot deal with competition, yet it, like United provides it. As for United Farmers life...well weknow it got taken over by foreign entity right?
- "It doesn't cost anything to assess the offer, that's scare mongering" - Well not intended to scare monger at all, its just a fact of doing business. Management doesn't ring me with numbers or concerns but I do know from chairing Business Committees on different boards, assessing deals, Mergers & Acquisitions, Partnerships...whatever, contain risks and opportunities and tallying them all up into digestible numbers worthy of making a good and proper decision on is not easy, is not quick and is not free. Will CBH tell you how many members of staff were involved in crunching the numbers, how many work/man hours were taken up by staff or how much outside advice was contracted in? I don't know, but I expect it to be very significant. Thing is whatever it costs is money well spent if you're thinking its a good idea to ensure the directors/the board are fully furnished with the best information possible to make the most informed decision possible. Its their job to do so, its required under Federal Law. Its quite serious and anyone trying to hide information can get in a lot of trouble too. Its not scare mongering, its highlighting an aspect some members may not be aware of. Its part of the process, it is what it is. It does not make it a dud deal or great deal, it equips the directors to fulfil their fiduciary duty and come to a decision.
- "We'll just have to see which way the directors vote and hopefully some will get voted out on their decision" - Ah this is important. In a board, all the board is responsible for the resolution they come up with. Most boards rarely have a vote and dysfunctional ones will have someone pipe up with the old "Let the minutes record I opposed this decision completely". Dysfunctional because if its resolved by the board in a way you don't like you ONLY HAVE TWO ALTERNATIVES. Stay on the board and know you are 100% liable equally as every other director OR YOU RESIGN. There is no safe harbour saying "I opposed it but didn't have the numbers". I think a person should be encouraged to vote, encouraged to vote anyway they like but be aware its not a popularity contest. Its a skill set and its a position of legal liability as they carry out their duties every day. Now remember the AGM is the members meeting, its where the members get to ask whatever questions they want of the board. That's why many refer to it as the Member's Meeting. Its where issues are raised and people get to vote. I heard one person comment on the poor 51% turn out at the recent director elections. Disappointing maybe, but one should look at the average turn out because more often than not 30% is a good turnout at most board elections.
- "You'll be disappointed when this goes through but you'll see it was the best outcome on offer" - My position on whether it stays Co-Op or goes publicly listed can best be summed up in just two short words "STAGGERING INDIFFERENCE", but I have a position I think is best for WA grain growers. Of course I'm not privy to the whole deal and how it affects CBH now & in the future and grain growers now & in the future. At its best this deal will have much complexity most of us will not be aware of. I have no reason to think the AICD trained directors on the CBH Board won't be able to fulfil their fiduciary duty, satisfy a reasonable person's test and exercise all their rights, roles and responsibilities. That being the case, if you elect directors you do have to listen to their decision/recommendation. Will this be put to the members for a final decision? Maybe, unsure what their procedure is on this. Time will tell but I wonder what happens if the offer is rejected. I'm kind of thinking there'll be another (un)Social Media backlash.
- "Why are you so anti shareholder base, it brings better direction and a better strategy going forward" - I'm not anti shareholder, I hold shares in companies, that's not an issue and again, whatever works best for the majority of members is all good. The downside with the "shareholder base" is the entity is no longer controlled by the customers who are the owners. A distinctive division would begin with public listing, one between customers and owners, they're two separate groups, no longer one. With ownership goes the control and the profits. You need to work out which suits you best and a person who wants a lump of cash now, plus some shares they can sell once the company is floated because, well because they need the money now is not making a bad decision necessarily, they're making a decision that, based on their circumstances is the right decision. The director's position is simple, if they personally need the cash in a real hurry, they'd have to step aside from the decision, because their own personal advantage does not come before the greater benefit of the majority of members. I think the board has direction now, as I understand it, no one's been elected to the board on a platform of "I support and will endeavour to try and break up the Co-Op and see shares and cash are issued ASAP". So not seeing the wrong direction. As for strategy, that's board domain and whilst they may talk in broad terms about strategy at times, its the board province so if you think there's no strategy its either a guess on your part, a lie on your part, a lie someone else has told you and you've swallowed or its true and you have at your disposal a director happy to leak information out of the board. I have no reason to think the board has a leak...so I'd cautiously lean towards one the others, none are helpful. Sorry. Gotta cough up or pipe down sometimes. Which is it? :-)
- "Yes shares would be up for sale if need be and borrowed against but we'd be telling people its better to keep their shares to retain control and that's what most people would do" - So conceding control of the entity IS a valid and important concern. Phew! That's one thing conceded, albeit by just 2 people :-)
If shares can be bought and sold, people can and are entitled to buy and sell shares. Now if an overseas company like ADM were smart, they'd be thinking make a good share offer, below takeover tripping point and become a major shareholder, possibly elected a Nominee Director, which they'd be able to do and be quick to influence the direction of the company every legal way they possibly can. Maximise profits, shave off the less productive parts of the business, build on the other areas.
ADM own just under 20% of GrainCorp. ADM is a foreign company.
Just other things to think about because you cannot guarantee control or pricing or a lot of other things when you're just the customer with some shares...and you cannot be assured all farmers will retain control because as saw in the case of Wesfarmers they lost control of the company and eventually Wesfarmers sold off all of its agricultural arm except CSBP...which supplies a lot of mines as well as farms. - SO CBH's AGM was yesterday and already I've heard 3 journalists comment about being locked out of the AGM and they sounded, well not angry but a tad miffed with an slight air of "I can't believe..." about them. They won't read this but if they did I'd shake an index finger at them and with stern voice bellow "LISTEN CAREFULLY..." but instead I'll just type it calmly.
THE AGM IS THE MEMBER'S MEETING.
Its the one "board meeting" where the directors outline the year that was, outline the year ahead, listen to concerns, report on financials and a number of other things the OWNERS (the members) need to know, or want to know. If they ask for the media to be absent it is not only valid, legitimate, its also perfectly understandable. This is a pivotal point in CBHs history. This is a very sensitive time with many question still unasked and unanswered. I understand that the members are noting there is no guarantee that a public listed company will stay grower owned, indeed it won't, it can't and it would be completely against the concept of being floated and listed if it could be solely or majority farmer owned. List it, the control is lost. Now I was told "Oh but we'd be encouraging shareholders to retain their ownership" which is a hollow false front. Its listed, it will go. As shareholders retire, they'll cash in for that extra cash shot in the arm...control gone.
And who, what where about GrainCorp, the eastern states, part foreign owned company with a P/E ratio of 60 and a dividend return of 1.17%. It opens the door for ADM to own nearly 20% of CBH and GrainCorp could own that or more...and ADM own nearly 20%. If ADM ever get to succeed in their take over of GrainCorp (only just failed a few months ago)...well foreign ownership or domestic, its gunna be less farm owned and what happens after the dangle-carrot date of 5 years cap in the deal? Oh think usual business practice will pop up.
And what of the AGC directors? Who are they and what do you know about them? How many of them have a history in grain, some do and some don't...and some have already said they're looking at a "Wesfarmers moment"...where grower control was completely lost.
I read someone say "Yeah but Wesfarmers owns CSBP, don't forget that" - So, they have a less than 10% segment of their business that has market dominance in that area...owned by non growers. Point invalid and irrelevant.
BE VERY CAREFUL WHICH WAY YOU VOTE, FOR WHAT YOU CHOOSE BECAUSE ITS LOOKING DECIDELY LIKE YOU WILL GET A GOOD SHORT TERM WINDFALL BEFORE YOU LOSE CONTROL AND POTENTIALLY LOSE OUT FURTHER IF IT TRULY IS A WESFARMERS MOMENT...
And please remember it is not only legitimate for the members to ask for the media to step out of AGM discussions, its far from uncommon, its not nefarious, naughty, covert or anything bad...its the members exercising their right to have the Members Only at parts of the Members Meeting, the AGM. - Yes there's more...I'll edit/update other email lines needing a response. Might add, I welcomed their views, they weren't abusive and to their credit they do give a hoot. Some will ignore the entire process, just as many waste their director election votes
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