rome burns: tune the violins

To me, there is a possibility that the Wilmar deal may not proceed.

A summary of the agreement for the sale of Sucrogen to Wilmar was published on the CSR website on 5 July 2010.

The directors say the sale is expected to be completed by (or before) the last quarter of 2010. But the sale is conditional upon approvals from the Australian FIRB and the NZ Overseas Investment Office (OIO). Although FIRB approval was obtained, no indication yet of any consent is forthcoming from the OIO. By Monday, 29 November, it will be 147 days since the agreement was announced. The
OIO website states it normally takes 50 working days after registration of a properly made application
for a decision, however, there is no statutory time-frame for reaching a conclusion. Assuming an application was lodged about the time of the agreement, it seems this determination is long overdue. Even though the OIO is not bound by any time periods, why is the NZ approval taking so long? (FIRB approval was obtained on the 8 November, 2010, even with the process being interrupted by the federal election).

According to the sale agreement between CSR and Wilmar, either party can apparently end the agreement if all approvals are not obtained by the 31 December 2010. CSR says it has left open the option for the demerger of Sucrogen if the sale cannot be completed for any reason by this date.


No capital management initiatives can be resolved by management until a transaction for realising the sugar
business is secured and finalised.

There are also other complicating factors which may delay the implementation of capital initiatives. The added requirements set by the Australian treasurer must be met before any repatriation of capital can occur. There is also a real risk various third parties like the NSW government, James Hardie and asbestos compensation funds could interfere in Stage 3 of any statutory demerger process or through separate litigation which could defer the completion of any Sucrogen disposal indefinitely.

Time is running out to complete the Wilmar deal by the due date, especially as many public bodies and bureaucracies close down in the latter part of December. If OIO approval is not obtained by the deadline, or the sale otherwise falls through, then we are back to square one. In this event, one might wonder how much so far has been spent by the company for administrative, processing and stationery costs, expert consulting fees and other restructuring costs in pursuing all the failed options (ie initially demerger, then trade sale, then possibly back to
demerger).

Let us hope that the directors are endeavouring to obtain a speedy and favourable decision from the OIO before the effluxion of time makes it a waste of time.



Disclaimer
Please note that I am not providing valuations, advice, information, recommendations or predictions. The above
statements are merely my own comments and thoughts as an ordinary shareholder without any special skills or
knowledge. I absolutely disclaim any responsibility or liability whatsoever for any consequences arising from the
use of my comments and thoughts expressed. If you require advice or information, you should seek the services
of an appropriately qualified independent expert professional person as well as do your own proper research.