NAMOI Cotton Co-operative and Louis Dreyfus Commodities Group today jointly announced a proposal for the establishment of a cotton marketing and commodities packing services joint venture to be called Namoi Cotton Alliance.
Under the proposed Joint Venture, Namoi Cotton will hold a 51 per cent controlling interest and Louis
Dreyfus Commodities will hold a 49% minority interest.
The joint venture will hold Namoi Cotton's cotton marketing and commodities packing assets, for which Namoi Cotton will receive $30.38 million.
Namoi Cotton will also raise approximately $3.65 million from the issue of 14,327,384 Namoi Capital
Listed Stock to Louis Dreyfus Commodities.
Namoi Cotton chairman Stuart Boydell said the fundamentals of Namoi Cotton's business will remain unchanged and it will continue to own and operate 100% of its ginning and cotton seed businesses, maintaining these critical supply chain activities for growers.
"Today's joint announcement represents the culmination of Namoi Cotton's cornerstone investment strategic initiative which commenced in early 2012. This strategic initiative was embarked upon to deliver liquidity for business development opportunities, enable flexibility around our working capital requirements and strengthen our balance sheet," Mr Boydell said.
"The Namoi Cotton Board believes the Louis Dreyfus Commodities' offer represents compelling value
and is in the best interests of Namoi Cotton Grower Members and Namoi Cotton.
"The Board is unanimously recommending that Namoi Cotton Grower Members vote in favour of the Proposed
Resolution in the special postal ballot."
Louis Dreyfus Commodities Australian chief executive officer Robert Green said Namoi Cotton Alliance will
undoubtedly support Australian cotton growers in international markets long-term, while allowing the
global Louis Dreyfus Commodities business greater exposure to additional Australian cotton volumes
to meet the needs of its international customers.
"This investment by Louis Dreyfus Commodities in established infrastructure and logistics operations
in Australia illustrates the group's desire to build stronger engagement with Australian growers, as the
basis for our immediate and longer term growth goals," he said.
Namoi Cotton will seek the approval of its Grower Members by special postal ballot (75% majority) for
the establishment of the joint and is set to be completed by the end of next month.
Further details will be provided to Grower Members and the market in coming weeks through the
release of a Grower Booklet, which will contain information explaining the impact on Namoi Cotton of
the Joint Venture.