Stock options

January 31, 2018

International investors may soon be sought in an effort to grow a deeper pool of capital for SunRice.

The leading food company has started investigations to list on international stock exchanges, which could include New Zealand, New York or Singapore.

SunRice chair Laurie Arthur said the investigation was launched following the 2017 Rice Industry Leaders Forum.

Growth of the company’s capital is a key objective of its five year strategic plan implemented last year.

The final stock exchange listing proposal is expected to be put to shareholders later this year.

Mr Arthur said the listings would not proceed without majority support, and specified only B class shares would be offered.

He said the A class shares, which are controlling shares owned by rice growers, would not be listed.

‘‘At the Leaders Forum, the SunRice board agreed to come back with some options (on how to grow capital),’’ Mr Arthur said.

‘‘We will put it to our shareholders, what our options are, and listen to what they believe is the best option.

‘‘Where we are on the National Stock Exchange, the liquidity is tiny and that has implications for our shareholders when it’s very difficult in a liquid market to trade shares.

‘‘Because of the nature of the rice industry you see the fluctuating nature of this industry. We have markets of 1.3 million tonnes of rice, and part of the five year strategic plan is to secure our global supply chain.

‘‘We also have associated businesses across the world, so the strategic plan is quite comprehensive how we position ourselves in the ever changing world of agribusiness over the next five years.’’

Mr Arthur said a previous proposal to list B class shares on the Australian Securities Exchange was recently shelved, in part because of the volatility being experienced in the dairy industry at the time.

He said SunRice was also forced to react to plans from the Papua New Guinea government to remove free trade agreements and replace it with a quota system.

It threatened to reduce an 80 per cent free trade market for SunRice’s PNG equity partner Trukai Industries to a set 20 per cent share.

Mr Arthur said negotiations with the PNG government are continuing, and he hoped there would soon be a positive resolution.

He said another deciding factor for shelving the ASX attempts was its listing rules which prevent companies from having dual class shares.

‘‘That is an issue for us, because grower control is not negotiable,’’ Mr Arthur said.

Finley ricegrower and Berriquin Ricegrowers’ Association member Warren Lang said he would support any effort by SunRice to grow capital without impacting on grower control.

He said it might actually be necessary in securing the future of the company.

‘‘In these changing times and considering where the value of water is heading, SunRice needs to explore all options,’’ Mr Lang said.

‘‘As a business SunRice needs to adapt.

‘‘I’m happy they’re exploring all options and finding a different way capital may be raised.’’

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