News

Aussie offer for Cubbie 'ignored' in favour of Chinese bid

A $250 million Australian offer for Cubbie Station which was not subject to finance was rejected by administrators almost a month before they sold the giant irrigation enterprise to a Chinese-led consortium.

The offer - fully funded and not requiring Foreign Investment Review Board approval - did not appear to be given due consideration by administrators McGrathNicol or investment bank Goldman Sachs, which is acting as a financial advisor to the firm.

James Loel, a solicitor representing the Australian bidders, said the offer had been made in writing on September 18.

A day later, he received a note from McGrathNicol - appointed as the administrator of Cubbie Station in 2009 after the vast property had run up debts of about $300 million - advising him to contact Goldman Sachs, and providing an address and telephone number.

On October 15, Goldman Sachs Australia managing director Lachlan Edwards wrote to Mr Loel, telling him a contract had been signed "with other parties" and that he was "not in a position to further discuss the matter".

At about the same time, news broke of the 93,000-hectare property's sale to a consortium led by Shandong RuYi.

The sale was said to be conditional upon finance and regulatory approvals.

The purchase price has not been revealed but is believed to be between $225 million and $270 million.

Documents, including the current creditors' report, as well as correspondence between Mr Loel and the Cubbie Station administrators, have been secured by APN's Balonne Beacon.

They raise questions as to why the Australian bid was never considered and come after suggestions were raised in a Senate committee hearing on Wednesday that Goldman Sachs might have given preferential treatment to the Chinese consortium for its own business interests.

Under Section 420A of the Corporation Act, administrators must ensure they get the greatest return for shareholders and investors.

Mr Loel said when his clients made their offer, Cubbie Station administrators had not signed a contract with anybody else.

He said he believed this indicated that interested Australian parties never had a legitimate chance of buying the property.

"It appears they were committed to Shandong RuYi at the exclusion of all others," Mr Loel said.

Mr Loel said he believed the contract was "conditional as to both finance and regulatory approvals", and that it wasn't a done deal.

"... I don't understand why we can't be negotiating now (with administrators) subject to the Shandong RuYi contract falling over," he said.

The station's sale to the consortium, led by Shandon RuYi and including an Australian company called Lempriere, was approved by the Federal Government on the advice of the Foreign Investment Review Board.

Nationals Senator Barnaby Joyce, who has been the sale's most vocal opponent, said a Senate inquiry "absolutely" needed to be called.

"If people aren't telling the truth, the only way we can get them to tell the truth is with a Senate inquiry," he said.

Independent Senator Nick Xenophon said he believed administrators should appear before the current Senate inquiry into the Foreign Investment Review Board inquiry.

"I think there's an issue of a level playing field," he said.

"We need to make sure Australian bidders were given the same opportunities."

The Balonne Beacon asked McGrath Nicol to explain why the $250 million offer, not subject to finance, was rejected in favour of continued negotiations with the Chinese-led syndicate and why Australian bidders were denied access to Cubbie Station's financials in order to complete due diligence.

A spokesman said they would not "be offering any comment" on the matter.

Cubbie Station, at Dirranbandi in south-west Queensland, is the largest irrigation operation in Australia and will produce about 5% of the country's total cotton crop this year.

The Shandong RuYi Scientific and Technological Group Co is described as a privately-held textiles company that employs 30,000 people and generated revenue of $2 billion in 2010.

 

 

AUSSIE OFFER: This letter from solicitor James Loel to McGrathNicol shows an Australian entity made a $250 million bid for Cubbie Station on September 18.
AUSSIE OFFER: This letter from solicitor James Loel to McGrathNicol shows an Australian entity made a $250 million bid for Cubbie Station on September 18.
OFFER REFERRAL: In this September 19 letter, McGrathNicol's John Cronin refers the solicitor representing the Australian bidders to Goldman Sachs.
OFFER REFERRAL: In this September 19 letter, McGrathNicol's John Cronin refers the solicitor representing the Australian bidders to Goldman Sachs.
NOT INTERESTED: Goldman Sachs Australia managing director Lachlan Edwards tells James Loel a contract for Cubbie Station's purchase has been "recently signed" with another party.
NOT INTERESTED: Goldman Sachs Australia managing director Lachlan Edwards tells James Loel a contract for Cubbie Station's purchase has been "recently signed" with another party.

Topics:  agriculture, barnaby joyce, cotton, cubbie, cubbie station, dirranbandi, firb, foreign investment review board, goldman sachs, lempriere, mcgrathnicol, nick xenophon, politics, treasury



Long-time visitor socialises at sale

SALE VETERAN: Keith Harvey has been coming to the pig and calf sale for almost 30 years.

Good rain sees strong market close for winter in Warwick

Warwick girl competes for rodeo crown

RURAL PASSION: Paralegal Ashleigh Grant is competing for the Warwick Rodeo Queen title this October.

Queen Quest competitor vies for Rodeo crown

Another public holiday! But do we really want that?

Businesses may consider closing for the entire period.

Latest deals and offers

Love is in the air on The Bachelor, but not for Kiki

The Bachelor Australia contestant Kirralee 'Kiki' Morris.

BACHELORETTE bows out gracefully as show enters its final weeks.

A $65,000 bathroom? The Block's incredible budget blow-outs

The Block contestants Julia and Sasha spent a whopping $65,000 on their first renovated room.

TEAMS deliver most expensive en-suites in reno show's history.

Cryptic crosswords: Top clues to solving them

Your guide to solving the cryptic crosswords in your local paper

MOVIE REVIEW: Ben-Hur isn't likely to become a new classic

Toby Kebbell plays Messala Severus and Jack Huston plays Judah Ben-Hur in a scene from Ben-Hur.

ANYTHING less than grand in a remake of Ben-Hur won't do.

Coming up on your TVs this September...

Don't miss A Place to Call Home as season four launches this September.

HERE'S a sneak peek at what's coming up on Foxtel.

Taylor Swift dismissed from jury duty

Taylor Swift was dismissed from jury duty in a sexual assault case

Bunnings starts demolition of historic foundry buildings

SAWTOOTH GONE: Demolition of Foundry sawtooth shed to make way for new Bunnings building.

Lane and footpath closures will take place

Australia's most expensive balcony and it hasn't been built

Viridian Noosa.

How Noosa millionares' squabble could affect body corporates

Receivers move in on Springfield's 'Tower of Power'

The 10-storey tower at Springfield is up for sale with interest high in the iconic structure.

Interest high in iconic 10-storey office building

Palm Lake Resort set to move in to Coast with 276 villas

Palm Lake Group has been given approval by Sunshine Coast Council to build a 276-villa over 50s resort and 120-bed aged care facility at the intersection of Caloundra Rd and Caloundra Mooloolaba Rd in Little Mountain.

New facility planned for Caloundra Rd

Warning for unit investors with price plummet prediction

The warning signs are flashing for one real estate sector in 2017 despite others performing the best they have in years and it's not going to be pretty.

One real estate sector looks set for a rocky 2017

REVEALED: Pat Rafter's $18m Coast house on the market

Check out the photos of the Coast's most expensive property for sale