GrainCorp sells Australian bulk liquid terminals for A$350m

Long-Term Asset Partner’s mysterious bid for 100% of GrainCorp faces a May 10 deadline after sale of liquid terminals to ANZ Terminals, owned by several infra fund managers.

GrainCorp has announced the sale of its Australian Bulk Liquid Terminals business for a total enterprise value of approximately A$350 million ($248 million; €218 million), setting a deadline of 10 May for the separate takeover bid by Long-Term Asset Partners in the process.

The buyer of the assets is ANZ Terminals, an independent owner and operator of bulk liquid storage facilities in Australia and New Zealand. Its offer represents a multiple of approximately 13 times the subsidiary’s expected fiscal year 2019 EBITDA.

ANZ Terminals counts several infrastructure fund managers and institutional investors among its shareholders. Palisade Investment Partners manages a 32 percent equity stake in ANZ Terminals on behalf of its open-ended Diversified Infrastructure Trust and two unidentified direct mandates, according to a statement made upon acquiring the stake in November 2014.

Colonial First State Global Asset Management also holds a stake in ANZ Terminals of around 23 percent via its Global Diversified Infrastructure Trust, while Canadian managers Northleaf Capital Partners and Fengate Capital are also known to be shareholders. All acquired their stakes from Macquarie Group in late 2014, with Macquarie Capital then retaining a stake of around 10 percent.

The sale of the bulk liquid terminals business is part of GrainCorp’s ongoing portfolio review, announced around the time that the firm revealed Long-Term Asset Partners’ takeover bid in December 2018.

GrainCorp said that the deal announced today [4 March] was subject to several conditions, including the firm not entering into a change of control transaction or material alternative transaction before 10 May 2019 – effectively giving Long-Term Asset Partners until that date to finalise its takeover bid.

The little-known asset manager’s A$2.4 billion offer for GrainCorp would see it acquire 100 percent of the company’s shares via a scheme of arrangement, for a cash consideration of A$10.42) per share. Goldman Sachs is providing A$3.2 billion in acquisition facilities for the deal, while infrastructure debt specialist Westbourne Capital has committed A$400 million of debt financing.

LTAP has been conducting due diligence on its bid since mid-December 2018. At GrainCorp’s AGM on 20 February, chairman Graham Bradley said LTAP’s proposal remained “indicative and non-binding”.

“There is no certainty that LTAP will make a binding proposal for the company or what the terms of any such proposal would be,” he added, offering no other updates on the bid.

GrainCorp acquired its Australian Bulk Liquid Terminals business in 2012 as part of its acquisition of edible fats and oils business Gardner Smith. The subsidiary operates eight liquid terminal sites across Australia with a combined storage capacity of approximately 211,000 cubic metres.

The sites store and handle bulk liquid fats, oils, fuels and chemicals for a range of customers, including GrainCorp Oils. As part of the transaction, GrainCorp Oils will enter into a long-term storage agreement with ANZ Terminals.

GrainCorp said that it will retain ownership of its bulk liquid terminals in New Zealand as they are “more fully integrated” into its supply chain, but that it was still independently reviewing options for that part of the business as part of the portfolio review.

GrainCorp managing director and chief executive Mark Palmquist said in a statement: “Divesting the assets to another experienced operator, while also putting in place a long-term storage agreement, allows us ongoing and secure access to the storage needed to support our oils business, whilst releasing capital and unlocking significant value for our shareholders.”

ANZ Terminals owns and operates five terminals in Australia and four in New Zealand with combined capacity of around 375,000 cubic metres.

Nick Moen, ANZ Terminals’ chief executive, said: “This acquisition expands our footprint across the Australian bulk liquid terminals market, including key sites in Queensland and Victoria and opens up new geographies for us in Western Australia and Tasmania. It also diversifies our customer base and the range of commodities we store, with the terminals providing significant storage in edibles and tallow.”

Palisade Investment Partners did not respond to requests for comment. ANZ Terminals, Colonial First State Global Asset Management and Macquarie Group declined to comment.