Australian Grains Champions Strategy

Would you not just submit the proposal, respect the board's complex job of assessing the deal in all its intricacy and how it will affect the growers in 1, 2, 5 and 10 years time, how it affects the business, the investment here and everywhere?

 

Would you not let the board work out what will change, how it affects dollars and cents of current enterprises and in the wings investment plans?

 

Would you go to the board and say this is what we want, this is what we think you want, tell us what you want so we can together construct a deal that benefits everyone well as best is possible

 

Or would you embark on a hostile take over, where you submit the deal and rather than wait for the deadline date to appear, fire as many shots off at the board to marginalise the board from the members, demonise the board to an extent to give the impression the board, going about its proper process of due diligence, is some how denying the members a right to decide?

 

You decide...look at the screen shots of internet posts on FB & Twitter...all BEFORE the deadline hit

This one above (6 days til deadline) highlights 2 points. Lets split and assess.

1. That growers do want to maintain control of CBH.
2. If the board refuses the offer is that grower control?

The first one...if the company is public floated, it becomes a publicly listed company with shares bought and sold on the ASX.

• Some farmers will sell their shares, its a pointless exercise if no one ever sold their shares.
• These shares could and probably would be bought by non farmer/grower investors otherwise its a failed company and again a pointless exercise floating.
• A future board can also release new shares of any number at a nominal price to raise capital for new ventures, investment, mergers & acquisitions etc which would then further dilute the grow control unless all the shares sold went to growers, that is if all the millions required came from farmers ONLY. Fanciful.
• And of course there's the other likelihood that being a saleable company, foreign companies like ADM would come in and get up to 20% of the listing, so too could GrainCorp and so to could any speculators, super funds or institutions. Like Wesfarmers grower control can and will be lost.

 

Now in a conversation with one AGC director the comment was "we would encourage members not to sell so as to retain control"

Curious. Absurd, I have to say it was a silly statement and sad I was thought to be so silly as to swallow that.

When I asked how it got a little more fluid and then obvious it can't be assured and loss of control is assured if the company is any good. Wesfarmers again a classic example.

Second point, how on God's green earth is it that the board doing their job, fulfilling their role, rights and responsibilities a loss of grower control?

Can it be so? No. Its disingenuous, or it could be deliberately deceptive or its a silly rant from someone clueless. You choose, I'm still stunned.

 

AGC presented the proposal to the board, not the members. They could and still can, lob the entire proposal in the media, release it to everyone and let the members decide. They won't. I'd assume there will be some commercially sensitive facets they wouldn't want anyone improving on and lodging a superior or equal bid. Hence the "break fee" arrangement in the beginning.

 

Now the strategy appears to be one of marginalising the board from the members, demonising the board by wrongly suggesting the board is denying the members a right. Humbug.
Lodge the deal, then snipe at the board's reputation and integrity to gather and garner all the possible support from the growers that is possible...forget about the deadline, keep firing whilst the deadline is in place.

 

It is worse than a hostile take over, its putting aside the facts about directors fiduciary duty and their legal requirements under law and suggest the members are being denied something.

Here's the thing, the board is elected to represent the members and has a lot of commercial sensitive information of its own it has to take into account when assessing the deal. You can't by pass the board and go straight to the members unless you want to talk about 30 pieces of silver up front and continue with "the devil's in the lack of detail approach".

The members elect the board to make these commercial decisions. AGC don't want you to have a group of people who are better placed to look at the deal than members. They want members with less information and less ability to assess the deal's impact on the entity, its operations, its strategic plan, its forward planning and its deals in process. They want members with less understanding or access to make a decision with less information than the board, the board is legally liable.

If the directors are failing in their fiduciary duty, its a breach of the Corporations Act and should be reported to ASIC immediately for a serious inquiry and possible prosecution under law. And yet AGC don't, the only thing they continue with is vacuous inferences that might cause some grower member's blood to boil. If you undermine the board, you undermine the members. That appears to be their aim...intentional or not. You decide

 

In the meantime, this is what you're going to get...

 

 

 

 

AGC has now lifted the "Break Fee" and wants the board to accept the proposal, or give the decision to the members only.

 

"Don't let CBH board stop you hearing the full story" WHAT??? Where, when? If they have breached the Corporations Act why wouldn't AGC lodge a complaint with ASIC?

AGC, could send the entire deal to the members, but the members haven't the full access right across the whole CBH business. Why would you do that?

I have never seen a deal lodged like this, where the deadline hasn't been met and the director's integrity is being questioned by those submitting the deal. The board is being criticised for a denial of rights that does not exist.

Stunning adversarial attack. Let the board & management go about their business, putting out brush fires from grassy knoll snipers who lodge the proposal in the first place...sorry but that's a pretty low & disrespectful line of business behaviour. One theory circulating is that AGC are making it too hard to accept in the hope the board will reject and then present enough signatures for an extraordinary AGM to try & roll the board. It was something I put very little stock in, but I'm seriously left wondering now. When the 18th rolls around we'll see if the deal is accepted or not and what happens then. But hindsight will answer a few questions.

Due process and due diligence will be denied if the board is bypassed and that may be the intent.

Is Rick Mazza of the Shooters & Fishers Party any good for WA?

Well truthfully I never had any reason to think he was bad for WA but under urging I did go look a long time back. I have had one phone conversation with Rick and later met Rick in a small meeting setting but that's a while ago now.

Upshot, short version yes I think he is good for WA on a number of levels & may well go down on the list of highly under rated elected public servants. I say that because he seems from my perspective at least very conversant with the fact that whilst he has a platform to stand on during electioneering he is a an elected, paid public servant who serves his electorate and the state.

 

Now, some might laugh and some might think that's as it should be, but its not altogether as common as it actually is.

Here's how, what and where...

 

If you want to stand for parliament via the Labor, Liberal or Nationals there's some commonalities and some differences but some people believe the commonalities and differences don't matter because they're all perverse or subtle twistings of how things should be.

 

One notable rising MP in one of the 3 major WA parties (yes who shall remain nameless) went and took out a large loan to renovate his house & it was a pretty good reno by all accounts. This then raised his house's market appraisal and despite the dip in equity from the reno loan the appraisal bumped it up a lot, allowing him to get a bigger mortgage to help fund his pre-selection for a better seat within the party.

 

Now how does it sit with you, he's far from alone in this pathway so he's maybe a good smart operator who saw how the system within the party works and developed a plan to best place him in the best seat available.

 

Does that make him determined, crafty or just innocently switched on?

Not sure but it put him at a distinct advantage at other players thinking about pre-selection.

  

Well before you even ask yourself that just ask yourself this, what of the others vying for pre-selection?

1. Who of them was most likely to be the best legislator?
2. Who of them was most skilled at getting across an issue or portfolio?
3. Who of them was a good parliamentary performer but also a good public servant serving the greater good for the state?

 

Well dear reader...we'll never know. We won't because that's one flaw in the problem that whilst the pre-selection process will vet the applicants and you'd hope weed out the less well equipped it can mean an excellent prospect won't make it onto the ticket.

Now the parties vary a little but in essence, what faction you belong to can make a huge difference. Who you side with in a particular branch can push you forward or see you pushed back. And then we get the introduction of the "ruling class" for want of a better term. Its the politicians or aspirants who are a 2nd generation politicians or had a long time serving as political staffers. These people know how the machine that spring boards you onto the ticket really works, they're all over it and a good legislator waiting in the wings may not. He or she is going to have to play the pre-selection game to get any ground under their feet.

It is odd, but its good that if 6 people throw their hat in the ring for pre-selection only one is picked...but how do you prevent a poor candidate with good mates, connections and money beating a damn good bloke or sheila?

You don't, you can't. you just have to hope its not common & if you're party of the party machine you just hope no one notices.

You see on the ticket, you see personage but you're not voting for a person, you're voting for a party's choice to be the face that collects votes and hopefully a seat for them.

 

You're really not voting for Dick or Dora. You're voting for the party and the pre-selection is a great training tool to craft the aspiring candidates into becoming party servants, not elected public servants nor electorate representatives.

So how does Rick Mazza depart from this cock up of s system?

He's the sole elected SF&P member of parliament. Both He and the Shooters & Fishers Party are THE brand on polling day and every sitting day and every time a microphone and/or camera jumps in front of him.

He has no party to hide behind.
Unlike Labor he's from a party where every vote is a conscience vote.
Unlike Liberal he can't rely on rusted on supporters who'll pour big bucks and influence behind him if things get troublesome
Unlike the Nationals he can't say in coalition "Well its a Liberal decision, we didn't have the numbers in cabinet but we fought really hard" when perhaps they didn't because they don't want to lose the extra $130,000 that being in cabinet brings.

Rick is pro 4WD-ing. Pro camping. Pro-fishing. Pro-shooting.
He's also pro Live Export and is the only WA MP who went down to the big anti Live Export rally to see and learn and ask questions, still walking away Pro Live Export.

 

Like his eastern states counterparts he's also pro-farming with the eastern states S&FP changing their name to the Shooters, Fishers & Farmers Party because Labor never helped them, Liberal a disinclined to leave the leafy suburbs and the Nationals over there have abandoned rural and regional Australian so bad there are now rival parties starting up in 3 states.

You don't have to be a shooter or anything else to consider the S&FP in WA but you should look at their efforts here. Look at the Upper House committee meetings. Go onto YouTube and type in "Rick Mazza" and see he does actually ask the hard questions as a legislator should, not as a party servant who serves the party's interest and pretends to be a representative of the electorate.

Having been a rusted on Nationals voter all my life and voting no other way ever, its an uncomfortable time for me as I have to consider carefully who to vote for because the Nationals have lost so much of its traditional country party values and culture.

So what's the plan come next election? I'm going to encourage others to do as I am and its in the best interests of the state. I'm going to do what to some might be counter intuitive but of late seems to be very effective. I'm going to rely on the House of Review to actually look after this state. And I'm also going to back a small group that has to get it right or they'll be in the wasteland. The small group that won't always do exactly as I want but they will explain properly in detail their reasons for their positions. They have no cabinet seats to sell the rear for, they have no ugly faction wars to worry about, they have no deep pocketed political benefactors in the shadows watching their every move with a hand on a trap door lever. The S&FP are actually encircled with a ring of fire called integrity and if they blow it, the lose everything. They have to be accountable for every decision, every stance or they're toast. Whether you shoot or fish or not, these unlikely elected public servants are your best hope yet. Even if you hate shooting, fishing and 4WD-ing, this one member party lives and dies by its every move, they're fully accountable. Something NO OTHER PARTY IS NOR WANTS.

THE UPPERHOUSE WILL BE THE SAVING GRACE OF THIS STATE & AS SUCH I'M NOT VOTING LABOR, LIBERAL, NATIONALS, GREENS IN THE UPPER HOUSE. Last thing we need is a rubber stamp upper house.

IN THE LOWER HOUSE VOTE FOR WHOMEVER YOU LIKE OR WANT

BUT IN THE UPPER HOUSE VOTE FOR SHOOTERS & FISHERS PARTY

 

 

 

CBH - The betting man has left the building.

So more messages came with questions, but not being on the inside I don't know any better than anyone else. Whilst its all my thinking typed out, may be that not a single word is original, unique or...or right.

1. Who are the AGC directors, who makes up the board of AGC?
   
   Firstly, the Australian Grain Champions have a web page that has a FAQ section. From there you'll see they make the comment...
   
   "The directors of Australian Grains Champion are grower directors Sue Middleton, Clancy Michael, and Brad Jones, strategy director Samantha Tough and finance director John Corbett. The shareholders of Australian Grains Champion are WA graingrowing families who support our vision for the CBH business."
   Most will know Clancy Michael and Samantha Tough are ex-CBH Directors, Mr Michael being a grower director, Ms. Tough being an Independent director. My understanding is Brad Jones & Sue Middleton are grain growers and John Corbett I don't know of unless he's the John Corbett who is Managing Director of Knight Hare the international real estate consultancy until his planned retirement in a few months time. No bios on any of them, so these are just my guesses. There's a comment section below, you can post your guesses if you like.
2. Who are the rest of the share holders of AGC?
   I don't know, it might be listed on their web page. It gives the impression that the shareholders are "WA graingrowing families" so maybe Samantha Tough & John Corbett are Independent directors with zero shares in the company. If they do have shares despite the impression given in the FAQs I think its a bit sloppy, not nefarious. Again you can post a guess in the comment section if you want, but pays not to guess. In short before someone asks, no I don't know how much of AGC is owned by how many and who. They might tell you, just ask. One way or another you'll get an answer...albeit a no comment is possible as anything. I don't know who all the shareholders are, who owns what percentage nor do I know if any on the board are directors with a shareholding or independent directors. Be interesting to know but I haven't asked. I do not know if GrainCorp has shares in AGC, my understanding is they do not but that's only going by the AGC FAQ that says " The shareholders of Australian Grains Champion are WA graingrowing families who support our vision for the CBH business."
3. Do I think the offer will be successful?
   Depends on your view and perception of success and at what point that is assessed.
   
   What I mean is, whilst there's been some strongly critical comments about the White Ant clause (my term, not theirs) of $16million being growers money, it was defended as being a way to protect any loss (to AGC) due to commercial damage via their deal being used to secure a better deal for CBH from a rival company. So with less than a week left on the deadline, the very important and at times highly defended clause has been abandoned. Most peculiar, now noise about the clause being dropped and continuing noise about why won't the board let the members decide. There's a deadline on the CBH board's decision and it does look like their being rushed a little via media and social media. Very odd. Wouldn't you make an offer and if there's an expiry date, leave them to their own devices to decide, perform due diligence or does the expiry date mean nothing?
   
   Ahh this stumped me and its likely it could go one of 3 ways.
   a) It makes no difference as the initial offer was never expected to be taken
   b) It was hoped it would be taken but if not an equally well planned "Plan B" was ready
   In both the above cases the required number of member's signatures would probably already accounted for a special AGM to push the matter further. To the members. Which is possible seeing they mention the members deciding so often. Constantly...over and over as if the board is denying the members of a right.
   
   Why? Think back to the media complaining about being locked out of the AGM. The members meeting. It is the one board meeting where the members get to hear about the year that was, the year that is expected to be, the financials, the ability to ask the board questions and the yes, the election of office bearers as well as all the direction members want to make part of strategy.
   The AGM is the Member's Meeting.
   
   If you think Plan A was fast, I'd expect (if this is what plays out) this Plan B will be fast also.
   - - - If CBH support the offer, I'd expect AGC will have the required number of signatures already on paper to call the AGM straight away.
   
   - - - If CBH reject the offer, I'd expect AGC will have the required number of signatures already on paper to call the AGM straight away.
   
   At an AGM your entire board could be rolled and replaced. Possible, yes. Likely...I'd be surprised. If velocity is a part of the AGC plan I'd expect it to be counter productive but where meetings get misused is where decisions are made, without all the facts.
   Generations of co-operative growth, I'd be surprised anyone wants to be rushed.
   
   If it played out that way, would you expect AGC to lay out the full proposal in all its entirety and give the members the exact same amount of time to assess the deal as the CBH board had?
   
   Or would you expect them to insist on an answer there and then in the meeting?
   I'd be hopeful but if a wager is involved I'd back the latter but prefer the former...if you're game, post your guess in the comment section.
   
   No I won't be taking any bets.
   
   Thing is, its a bit disingenuous to harp on about the board not letting the members decide.
   The members will because for it to happen 76% of members will have to vote for change of the structure before any float can happen.
   
   Another thing is, if 76% wanted it floated now, they could easily call the required special meeting (AGM) anytime they wanted and make the change, throw out the board (or not) and start the proceedings to float it on the share market. That option has always been there and can be done with or without the current board's support, with or without the current board at all and at any time, with or without AGC.
   
   The members get to decide, always have, always will whilst its a co-operative with that constitution.
   
   Other concerns remain. GrainCorp is still a publicly listed company with a dividend policy of 20-60% after tax profits going into dividends, their dividend yield was 1.17% and their P/E Ratio is a woeful 60. They also have a foreign owned major (not majority) shareholder in ADM who could easily buy 20% of CBH and perhaps...you know by now, post your guess in the comment section. Like me you can post guesses you do or don't believe in
   
   Oh yes I did say it could play out one of 3 ways but only mentioned 2.
   Deliberate. Time for you to stop and "SERIOUSLY THING FOR A MINUTE"
   There's a myriad of theories here...but a couple look more likely than others.
   
   Are you seeing selfless, altruistic benefactors of the WA Grain Industry or opportunists hoping to seize a business opportunity...which sadly is what business is more like these days, but that's life and not illegal or nefarious.
   
   Used to see deal makers reign once, where 2 parties thrashed out a solution that was beneficial for both parties to the point where either would happily recommend the other and happily deal with each other again. Nowadays its a little more dog eat dog or rather more hard nosed.
   I'd have preferred to have seen more of a deal making process with less comments about the board not letting members decide. They can and will one way or the other
   
   One of the more startling theories I've heard used amongst other things, the phrase false flag.
   If you're going to guess best to stick to what we actually know because that theorist had me thinking Elvis, JFK and aliens on the dark side of the moon would soon be implicated. That theory was admittedly 2nd or 3rd hand so it might have gone wonky via Chinese whispers. Listen to everything, test everything. That'll help sift things and save embarrassment. As we all know Elvis lives in North Perth runs a limo service and impersonates Elvis impersonators. Life's funny and a little bit ironic like that. Honest, true story.
   
   Well we do know the CBH Board is elected to assess such proposals, make decisions/recommendations as they have access to much commercial information the members don't have...among other things.
   
   We know they're AICD trained and under Corporations Act have a fiduciary duty to the members. We know some are saying the board needs to work in the best interests of the growers. Who says they aren't, won't or can't.
   
   I'm finally in agreement with John Lennon "Strange days indeed, strange days indeed"