End of an era for Graziers’ Investment Co
AFTER a decade-long battle to claw back from $96 million in debt, Graziers’ Investment Company (GIC) has entered into a Members Voluntary Liquidation.
AFTER a decade-long battle to claw back from $96 million in debt, Graziers’ Investment Company (GIC) has entered into a Members Voluntary Liquidation, marking the end of the historic era of the industry’s failed reserved price scheme.
The 36,000 Australian woolgrower shareholders voted overwhelmingly in favour of liquidating GIC on Wednesday and distributing more than $20 million of funds to the grower shareholders who paid wool tax in 1999 and 2000.
“We have resolved all past legacy issues and we leave the wool industry no longer encumbered with the problems of the past,” GIC chairman Barry Walker, OAM, said.
“Instead of a myriad of legacy issues and a $96 million debt, we bequeath (GIC shareholders) $20 million debt free.”
GIC was established in 2000, under the name Australian Wool Services (AWS), following the fallout from the woolgrowers’ dismissal of the Australian Wool Research and Promotion Organisation (AWRAP) board at Goulburn in 1998.
AWS comprised two subsidiaries - The Woolmark Company and Australian Wool Innovation.
“Woolgrowers voted to dismiss the board of AWRAP, and dismiss the board they did - that vote was counted,” Mr Walker said.
“What they did not do was think about how they can replace the functions of the administrations of the wool industry.”
GIC inherited $57 million of capital from the former industry body, Australian Wool Research and Promotion Organisation, and about $53m of liabilities from previous administrations.
The debt later blew out to $100m due to complicated ties to United Kingdom, IWS defined benefit pension fund.
AWI split from GIC in 2002 before purchasing Woolmark in 2007.
In the same year, with $96m in debt, GIC underwent a “skeletal” restructure in a bid to avoid involuntary administration.
With a net equity of only $4m, and exposure to a debt in excess of $100m, Mr Walker said GIC was severely inhibited in its ability to re-invest and grow the company.
The financial legacy issues tallied 36, some of which stretch back more than 80 years.
Since the 2007 restructure, GIC has been operating as a small secretariat, while continue to resolve the remaining inherited legacies, of which the final $2.7m of which was completed this year.
This included the complex repatriation of $700,000 from a lengthy legacy with IWS India, which came at a cost of $100k, held by the Reserve Bank of India.
Other legacies resolved this year include a Paris tax refund of $1.6m, which dates back to 1999, as well as the offloading of its 62 per cent share in Andar Tool and Press, which was held by the now dissolved GIC New Zealand.
“We have come a long way, having gone from a global organisation having $4m in equity and many inherited legacies, the key one being a $100m pension fund liability to a skeletal organisation with $20m, with no further exposure to the UK Pension Fund and all financial legacies resolved.
“You will no doubt agree the outcome achieved is a far better result than the alternative, which was for the company to have been placed into administration back in 2007 with a net deficit of $96m,” Mr Walker said.
Shareholders can expect to receive an estimated $9.55 per share, in February next year.
Major shareholders include Twynam Pastoral Co, John Swire and Sons, Lynoch, NM Rural Enterprises, Emanuel Exports, AJ and PA McBride and F S Falinker and Sons, according to GIC’s 2016 annual report.
Liquidator Grant Thornton director Ahmed Bise now needs to locate more than 6,000 unknown shareholders, who have potentially passed away or left the industry, entitled to about $2.7m in shares.
GIC has written to Federal Agricultural Minister Barnaby Joyce pleading to reinvest any unclaimed money back into the wool industry for the benefit of all woolgrowers.
However, Mr Bise said any money unclaimed after GIC was liquidated became the Federal Government's consolidated revenue.
“There is an appropriate old saying, ‘Life is a journey, where we can cherish the past, face the present and move ahead to new milestones’,” Mr Walker said.
“As we reflect on the past and accept the present, we wish you well in achieving new milestones for a bright and long future in the Australian wool industry.”