Australian investors with a taste for rural investments will have a chance to get their hands on a new play in rice in coming months with the decision by the rice export monopoly SunRice to list on the ASX in a limited fashion.
SunRice will use a share structure and ownership model similar to that of New Zealand dairy giant Fonterra and the one being considered by Victorian dairy group Murray Goulburn.
The decision follows a length capital structure review (after a rejected offer from Spanish group Ebro back in 2011) to try and accommodate those rice growers who want to stay in the industry, those who want to sell, and those investors who want exposure to rural commodities, but don’t want to farm or to trade commodities such as rice.
SunRice chairman Laurie Arthur said the review, which kicked started in June 2012, is an opportunity to create a strong Australian food business while keeping control in the hands of rice growers.
"We are pleased to present our growers and shareholders with a model that can underpin the company’s growth, while preserving the voting and control rights of A Class Shareholders and enhancing the value of B Class Shares.
“Significantly this includes a modified ASX listing that enables grower shareholder control to exist as it does today in an enduring way, with no sunset class," he said.
He said in the months ahead SunRice will be meeting with growers and shareholders to discuss “a potential capital structure which is unique to SunRice and meets our non-negotiable around preserving grower shareholder control on an ongoing basis”.
The dual share structure will allow growers, who hold A Class shares, to retain control given A Class stock has voting rights and B Class stock does not.
External investors will receive economic rights through B Class shares.
SunRice will delist from the small National Stock Exchange and list on the ASX which will offer greater liquidity and potentially wider interest from investors..
The listing change will improve the liquidity and value of SunRice’s B Class stock.
Existing B Class shareholders will exchange their shares on a one-for-one basis and will be entitled to the same economic rights, have the right to receive dividends, and can be bought and sold on the ASX.
SunRice’s B Class shares have languished at $3.50 on the NSX.
That price is well below the $5.62 a share offer from Spain’s Ebro in its unsuccessful $600 million takeover bid back in 2011.
Sunrise said yesterday there would be No change to A Class Shareholder control:
- A delisting from the NSX and the creation of the SunRice Fund, to be listed on the ASX. Attached to the Fund and the structure are a range of protections and mechanisms, including Responsible Entity and Custodian arrangements;
- The issue of securities in the SunRice Fund (SunRice B Securities) to existing B Class Shareholders in exchange for their B Class Shares, on a one-for-one basis;
- The B Securities would have the same economic rights as the old B Class Shares, most importantly, the right to receive dividends, and can be bought and sold on the ASX by investors generally; and
- The continuation of the existing SunRice business, including no change to the way paddy returns and dividends are determined, protecting both sets of shareholders’ interests.
