Australia: ABB faces a tough battle to get its grower-held A-class shares abolished

ABB Grain Ltd faces a tough battle to get its grower-held A-class shares abolished, Nationwide News Pty Limited reported June 13.

The barley marketer has called a meeting of shareholders on July 31 to redeem the shares at nil value.

But the Victorian Farmers Federation believes the shares have a value and is threatening to urge its members to vote against the proposal unless ABB Grain produces a better deal.

Last week, the VFF told ABB Grain director Ross Johns and senior executive Marc Cooney that if the company wanted the vote on redeeming the A-class shares to succeed, growers must be paid some value for them.

VFF grains group president Geoff Nalder said market analysts had told the group there was potential for the listed B-class shares to rise in price if the dual-class share structure was abolished. He said that meant the A-class shares had some value to the B-class shareholders, and growers should be compensated accordingly.

''For removal of the A-class shares, we consider that they do have a value,'' he said.

''If ABB wants to get rid of those shares, it needs to look at a value for them. It needs to put some sweeteners in there to make this happen.

''Otherwise, it will end up with a dual class share structure.''

Mr Nalder said a precedent was set with GrainCorp a few years ago when it abolished its B-class shares, which had no previous value attached nor gained dividends.

He said GrainCorp placed a value of $37.5 million on the shares and paid it to Grain Growers Association, which held the shares.

The issue facing ABB Grain has ramifications on the demerger of AWB (International) Ltd from its parent, AWB Ltd.

AWB also has a dual class share structure, with B-class shares listed on the Australian Stock Exchange and A-class shares held by growers and redeemed at no value if shareholders leave the grain industry.

The VFF also believes the AWB A-class shares have a value and may be an argument for transfer of capital from AWB to AWB(I) to help the latter cope in hedging the crop.

Mr Nalder said the VFF also raised the issue with AWB executives when it met them last week to discuss new wheat marketing arrangements.

''We brought to their attention that removal of the dual-class share structure would be of benefit to B-class shareholders,'' he said.

''That value needs to transfer to the new entity if the dual class share structure is abolished.''

15 June, 2007