Event non-ATF Mobile

GrainCorp Limited (ASX: GNC) is an ASX listed consumer staples company based in Sydney, Australia. The company is primarily in the agricultural business and provide services like freight services on Australia’s east coast, handing and storage of grains with main focus on three agricultural grains - wheat, barley and canola.

On 6th May 2019, the company had announced that Long-Term Asset Partners Pty Ltd (LTAP) is unable to go forward with its non-binding, indicative proposal, under which it agreed to acquire 100% stake in GrainCorp for cash consideration of $10.42 per share.

This proposal was announced on 3rd December 2019 by the company and since then GrainCorp has helped LTAP to undertake due diligence and sought to develop a binding offer capable of consideration and response by its Board of Directors.

Simultaneously it has also continued to advance in its portfolio review to evaluate capital management and portfolio optimisation strategies, which resulted in initiatives like;

  • The agreement to sell the Australian Bulk Liquid Terminals to ANZ Terminals.
  • Investment in the Fraser Grain Terminal in Vancouver, Canada.
  • Initiatives to increase through-the-cycle EBITDA in its Grains business.
  • The proposed demerger of its Malt business.
  • The proposed combination of the Grains and Oils businesses and associated simplification and cost reduction benefits.

Long-Term Asset Partners decision to drop the agreement has been taken after a period of due diligence. Before the initial proposal on 3rd December 2018, LTAP had gathered a team of expert Tier 1 finance, legal, grain industry and debt rating experts to assess GrainCorp from outside.

It had also received a financing commitment for the deal which enabled LTAP to execute the deal with an unusually high degree of certainty before conducting any confidential due diligence. Fully negotiated financing commitment letters were also received from Westbourne Capital and Goldman Sachs.

LTAP had also engaged in formal communication with a rating company that issued an indicative A-category rating for the planned long-term capital structure. An internationally recognised insurer had also given commitment letters and term sheets to provide the company with a swap linked to grain volumes for the sole purpose of creating foreseeable and steady earnings in the local Grains business.

Post the due initial diligence, LTAP has acquired approximately 4.2% stake in the company.

Tony Shepherd, chairman of LTAP, said they were serious about the bidding with substantial Australian and international support for the proposed transaction. Had due diligence been a supportive factor for the operational expectations, LTAP would have gone ahead with the proposal and issued a binding offer.

Technical Outlook: The market capitalisation of the company is A$2.06 billion. The 52-week high and low of the stock is A$9.96 and A$7.17 respectively. After making an intraday low of A$7.71, the stock is trading at A$8.160 (AEST: 1:57 PM), down by 6.849% as of 7th May 2019. In the twelve months the stock has delivered a return of 6.8%, and the YTD return stands at negative 2.99%.


Disclaimer

This website is a service of Kalkine Media Pty. Ltd. A.C.N. 629 651 672. The website has been prepared for informational purposes only and is not intended to be used as a complete source of information on any particular company. The above article is sponsored but NOT a solicitation or recommendation to buy, sell or hold the stock of the company (or companies) under discussion. We are neither licensed nor qualified to provide investment advice through this platform.

 

 

All pictures are copyright to their respective owner(s).Kalkinemedia.com does not claim ownership of any of the pictures displayed on this website unless stated otherwise. Some of the images used on this website are taken from the web and are believed to be in public domain. We have used reasonable efforts to accredit the source (public domain/CC0 status) to where it was found and indicated it below the image.

 

   
We use cookies to ensure that we give you the best experience on our website. If you continue to use this site we will assume that you are happy with it. OK