SHAREHOLDERS of AWB Limited have been urged to vote “no” to extending a restriction on the company’s use of capital because it will restrict AWB’s ability to grow and deliver full share value to growers.
AWB Chief Executive Andrew Lindberg said growers were being asked to decide whether AWB Limited should continue to have its investment ability restricted by a cap on non-pool related investments.
“The constitution of AWB Limited has placed an initial restriction on the Board’s use of capital, limiting our investment capability to $150 million,” Mr Lindberg said.
“With total capital available of $643 million, the Board is not able to efficiently manage the balance sheet of the company to deliver commercial returns to shareholders, and indeed to protect the value of their investments in AWB.”
Under the constitution growers must be given the opportunity to vote on whether to remove or keep the cap.
“This means that when we list the company in August this year, our earnings and consequently our expected share trading price could be adversely affected,” Mr Lindberg said.
“The company’s constitution implies that AWB must set aside sufficient capital to provide harvest advance payments to growers – that will not change whether there is a capital limitation in place or not.”
Mr Lindberg said AWB had to diversify its revenue base and grow its value if it was to continue funding Harvest Payments to growers and maximising share holder value.
“At present the majority of our earnings come from one source – underwriting and financing National Pool Returns. This means AWB also carries significant risk to its capital from that same area of the business - especially if we see an escalation in subsidies in the world market.
“AWB Limited is committed to maximising growers returns and their wealth as shareholders in the company. No other Australian company has an articificial restriction such as AWB has with the capital limitation.
“I would urge all growers to make sure they understand the cap and what it means to their company’s future, and vote accordingly.
AWB’s Annual General Meeting will be held on March 15. Shareholders need to send their voting forms to the AWB Limited share registry by 12 noon, 13 March 2001 (Melbourne time) either by the reply paid envelope or by free fax 1800 800 053.
For more information please contact Paul Ryan – AWB Limited Public Affairs. Telephone 03 9209 2098, 0408 347 2