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Ebro's SunRice bid rejected

5/31/2011 4:56:26 AM

Shareholders meet to discuss and vote on a proposal to sell SunRice.

UPDATE: SPANISH food company Ebro Foods has lost its bid to take over NSW rice processor SunRice.

SunRice was only able to muster 67 per cent of the A-class vote in favour of the scheme of arrangement needed to enable the takeover.

The company needed 75 per cent of shareholders at both A-class and B-class meetings in Jerilderie today to approve the scheme.

SunRice narrowly managed to secure enough votes from B-class shareholders in support of the takeover bid.

Ebro Foods had proposed buying SunRice for $610 million.

About 500-600 shareholders attended the meeting.

SunRice chairman Gerry Lawson said B-class shareholders would be disappointed with the result.

"The board will now focus on how to best underpin SunRice's future,'' Mr Lawson said on announcing results of the ballot.

He said the SunRice board would now concentrate on measures to reduce the company's debt while allowing it to expand.

The rice processor's level of debt and loss of control of the industry were major issues debated by shareholders.

Many shareholders said they were not aware of the precarious level of the company's debt until the scheme of arrangement.

Mr Lawson earlier told the meeting the company's board had given careful consideration to Ebro Food's offer and supported the proposal.

"We all love SunRice.

But you can't exist on love alone,'' Mr Lawson said.

"We have a high debt level and need further equity capital.

"If the Ebro offer is rejected, SunRice will have to change.

"That will have to come from you.

"You can expect a reduction in (rice) prices.''

Tocumwal grower Lach Thorburn voted against the proposal.

"The indication (of the scheme of arrangement) is that our board has given up running SunRice,'' Mr Thorburn said.

He told The Weekly Times before the meeting started the SunRice board had "screwed up and I think there should be change''.

The vote had split families.

Berrigan grower Doug Cameron said before the meeting he was leaning towards voting against the Ebro Foods bid but his brother was likely to vote in favour of the takeover.

Mr Cameron said he was worried about the implications of foreign ownership.

"Ebro will look after its shareholders and the growers will come second,'' he said.

Former SunRice director and former National Farmers Federation president Graham Blight told the meeting he was voting in favour of the takeover.

"It's an emotional day,'' Mr Blight said.

"At the end of the day, it is reality day.

Mr Blight, a Leeton rice grower, said he estimated rice growers needed to forego about $70 a tonne in farmgate prices to resolve the debt problem.

"With ownership, comes responsibility,'' he said.

"(If the takeover bid fails) we are going to have to put up money.

"And we are going to have to make a long commitment to grow rice.

"I am voting 'yes' but very reluctantly.

"It's a damn sorry day.

But at the end of it, we have no option.''

Long-time grower Greg Brown told the meeting he was voting in favour of scheme of arrangement.

"Ebro is in the rice business,'' Mr Brown told the meeting.

"They are buying us out but not going to kill SunRice.

"For those voting 'no', I only ask they consider the industry beyond their farm gate.''

Peter Draper said a 'yes' vote was the best opportunity to move forward.

"A 'no' vote, in my opinion, is a vote of no confidence in the board,'' Mr Draper said.

The proposal will now go before the Federal Court to approve the scheme of arrangement effecting the takeover.

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SRC: http://www.weeklytimesnow.com.au/article/2011/05/31/339131_latest-news.html


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