Sunrice cuts debt but potential for additional capital-raising
Sunrice, Australia’s biggest rice processor, based in Leeton in the New South Wales Riverina, last week announced a review of its current capital and debt structure and a review of its corporate governance structure. It also suspended, immediately and indefinitely, issuing redeemable A-class and tradeable B-class shares.
“The Board’s major focus in the past year has been to address the company’s debt levels and reestablish our business post-drought,” said Sunrice Chairman, Gerry Lawson in a public media release.
Mr Lawson said this announcement did not signal any external bid. “We have neither received nor are we soliciting bids as part of this process.”
Last year the board of Sunrice recommended a takeover by the Spanish group Ebro Foods, but, as Australian Food News reported at the time, the bid was scuttled by major shareholders of Sunrice.
Mr. Lawson, together with Sunrice CEO Rob Gordon and other Directors have been meeting with members of the Rice Growers’ Association’s Branch Meetings this week, to introduce the capital structure review and to discuss Sunrice’s 2011/12 business performance – which is expected to show a solid improvement in Sunrice’s gearing ratio, which is anticipated to make it comfortably below the Board’s 2009 target of 70%, although this is still subject to a financial year-end audit.
Mr. Gordon said while meeting Sunrice’s 70% gearing target will reduce the company’s dependence on short-term debt, the ratio was still too high in the current economic environment and did not provide sufficient capacity to fund business growth and capital investment.