Ricegrowers Ltd. Class B · ASX:SGLLV
Ricegrowers Ltd. Class B — SunRice — Merger or Acquisition (May 2011)
11 slides from Ricegrowers Ltd. Class B's merger presentation, May 2011
Slide 1: SunRice Independent Expert Report
SunRice Independent Expert Report Proposed acquisition by Ebro May 2011 Liability limited by a scheme approved under Professional Standards legislation
Slide 2: Scope – fair and reasonable
Scope – fair and reasonable ASIC RG 111 – Content of Independent Expert Reports Fair “An offer is fair if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer” offer Reasonable “An offer is reasonable if it is fair. It will al
Slide 3: Other definitions
Other definitions • EBITDA Earnings before interest, tax, depreciation and amortisation • Net assets Total assets less liabilities ((as shown in accounts) • Gearing Net debt to shareholders funds 33
Slide 4: Valuation methodology
Valuation methodology • Going concern businesses are generally valued by reference to their on‐going sustainable earnings • Two methods have been applied – Capitalisation of EBITDA – Capitalisation of profit after tax • Valuation range reflects significant premium to net asset value 44
Slide 5: Maintainable EBITDA
Maintainable EBITDA • Must reflect sustainable on on‐going going earnings • Assessed at A$70 million (per annum) • Our assessment recognises that in some years EBITDA will be materially lower and materially higher than A$70million • FY09 benefited from significant g (unhedged) ( g ) increases in the
Slide 6: EBITDA multiple
EBITDA multiple • We adopted p a multiple p of 8.25x to 8.75x • There has been comment that SunRice is worth 11.3x EBITDA based on the KPMG report of 2009 • KPMG did NOT use 11.3x 11 3 iin coming i tto its it value l off $2 $2.07 07 ‐ $2.67 $2 67 per B Class share: “[KPMG] are of the opinion that an
Slide 7: Valuation summary
Valuation summary LEA Low High A$m A$m EBITDA 70.0 70.0 Multiple 8.25 8.75 577.5 612.5 Less net debt and surplus assets (292 7) (292.7) (292 7) (292.7) Equity value 284.8 319.8 Adopted 290.0 320.0 Less A Class share value (41.5) (30.0) Value of B Class shares 248.5 290.0 B Class shares on issue 54.7
Slide 8: Key findings
Key findings • We concluded that “the Scheme is fair and reasonable and in the best interests of the A and B Class shareholders of SunRice in the absence of a superior proposal” • The A Share Scheme Consideration is at the top p end of the assessed valuation range of $37,500 to $51,875 • The cash pa
Slide 9: Key findings
Key findings • We consider the Proposal p to be a “superior p outcome ffor Shareholders and Growers” compared to the alternatives considered by the Board • Concluded that “if the Scheme is implemented SunRice shareholders (as shareholders) will no longer be exposed to the risks associated with the S
Slide 10: ASX Listing – implications
ASX Listing – implications • Will not realise same value as Ebro Proposal • SunRice can not list in current form. Need to: – remove A Class shares for corporate governance and investor reasons – appoint majority independent directors (not growers) including independent Chairman – significantly reduc
Slide 11: Illustrative ASX listing metrics
Illustrative ASX listing metrics Graincorp Goodman Fielder Maintainable EBITDA ($m) 70.0 70.0 Forward EV/EBITDA multiple (x) 6.4x 6.6x Enterprise value ($m) 448.0 462.0 Net debt ($m) (298.2) (298.2) Surplus assets ($m) 5.5 5.5 Equity value ($m) 155.3 169.3 A Class value – assumed mid‐point of valuat