Australia-Conflict over farm sale.
AUSTRALIA-FARM DISPÙTE.
The besieged Australian Agricultural Company is fighting rebellious shareholder Indian Farmers Fertiliser Co-operative over its bitter opposition to AAco’s planned $105 million acquisition of two Northern Territory cattle properties.
The company has released an expert’s report that rejects IFFCO’s criticism of the expert’s previous report on the proposed transaction.
"Others have sat on the sidelines and commented on the transaction. They are not experts … much is anecdotal, old news, nothing of any substance … hearsay," AAco chief executive, Stephen Thoms, told BusinessDay.
"One or two shareholders say the money should be spent elsewhere. That’s not a reason to say the transaction is not fair and reasonable."
AAco wants to buy the Tipperary and Litchfield NT cattle stations from Melbourne barrister Allan Myers to enable Mr Myers to buy Futuris Corporation’s 20 per cent stake in AAco.
Dubai-based IFFCO also bought its 15pc stake in AAco from Futuris, which wants to sell its total 43pc stake in Australia’s biggest cattle producer.
The first expert report by BDO Kendall, with valuations by Herron Todd White, valued the properties at $7.4 million above the $105 million purchase price. Shareholders must vote on the deal this Monday.
The new report emphasised that AAco was not buying a new business, but assets whose value would be greatly improved by integration into AAco’s network of 25 properties. The economics of the Tipperary and Litchfield operations were thus not relevant.
The BDO report said AAco would use the stations to finish cattle for live export out of Darwin. Now, it must pay agistment fees to third parties for use of flood plain country near Darwin, and also pay yard and water fees.
"It is AAco’s intention to focus the properties on the finishing of cattle bred elsewhere in AAco’s holdings, whereas the properties are currently used for the mixed purpose or breeding, backgrounding and finishing," the report said.
Mr Thoms rejected IFFCO’s preference for investing in abattoirs instead of live exports. "AAco has always had a flexible supply chain. We ensure it’s balanced towards the market that will deliver the best bang for buck. Live export is the best bang for buck you can get," he said.
Mr Thoms said in 2003-04, there was hardly any live export. The following year, AAco bought three stations close to Darwin, and had expanded live exports to 60,000 head of cattle last year. This was a substantial, share of the 150,000-200,000 head of cattle the company traded last year.
IFFCO is backed by minority shareholders, including former chairman Nick Burton Taylor, in its fight against NT acquisitions.
AAco shares closed down 4¢, or 2.5 per cent, at $1.54.
