Australia’s GrainCorp will be spinning off its malting business and integrating its grains and edible oils operations into a new business called New GrainCorp.

“The proposed demerger would enable both MaltCo and New GrainCorp to pursue independent operating strategies, with discrete capital structures, and attract investors with different priorities,” the company said in a press release on 4 April.
New Grain Corp would become a domestic and international grain handling, storage, trading and processing company focused on grains, oilseeds, pulses, edible oils and feeds, with operations in Australia, New Zealand, Ukraine, Asia and North America.

“New GrainCorp will operate the largest grain storage, transport and marketing network in eastern Australia as well as Australasia’s largest integrated edible oils business,” GrainCorp said.

“It has a strategic focus on building and developing its global grain and oilseeds origination network, through ongoing investment in the GrainsConnect Canada supply chain and growth into new markets in the Black Sea and Indian subcontinent. It is also targeting the domestic, on-farm and niche grains markets, including organics, as growth opportunities.”

New GrainCorp’s storage and logistics infrastructure assets comprised 145 country receival sites, with 20M tonnes of storage capacity and seven export terminals.

In addition, it was considering a long-term derivative scheme to reduce cash flow volatility linked to harvest volumes.

After the demerger, New GrainCorp would continue to engage with potential buyers for either all or parts of the company, including Long-Term Asset Partners, which made a takeover offer of US$1.69bn in December last year.

New GrainCorp had an average EBITDA of around A$125M (US$85M)/year between 2014-2018.

The company said the new business was expected to benefit from a range of initiatives which would increase EBITDA by A$55-80M (US$40-57M)/year, including expanded footprints in Canada, Ukraine, and India; expansion in organics; operational improvements in stock management; grain cost reductions; new rail contracts; and supply chain integration and improved asset utilisation.

“In addition, the oils business unit expects to increase EBITDA by A$15-25M (US$11-18M) with ongoing benefits from foods, improvements to management of crush margins and the Numurkah [oilseed crushing and extraction plant] expansion.”
GrainCorp’s demerger news comes just weeks after it announced on 4 March that it had agreed to sell its Australian Bulk Liquid Terminals business to ANZ Terminals Pty Ltd for some US$246M.
Included in the deal were eight terminals storing and handling liquid fats and oil, fuels and chemicals across Australia with a combined storage capacity of 211,000m3.