Yesterday marked a significant occasion for Brisbane Markets Limited (BML) and the Industry representative organisation, Brismark, in relation to the opportunities for future growth of each organisation.
Following over two years of negotiations, BML and Brismark have agreed terms which, subject to shareholder approval, creates a pathway for the possibility of BML listing on ASX at some point in the future.
This historic agreement will create options for the next stage of growth of each organisation following the successful Brismark led acquisition of the Brisbane Markets site by BML just over twenty years ago.
When BML acquired the Brisbane Markets from the State Government in 2002, the Constitution of BML provided for four Industry Shares, with the holder of each Industry Share able to appoint a director to the Board of BML. These Industry Shares were established as a separate class of shares to BML’s Ordinary Shares.
BML was established as a fruit and vegetable industry-based company, and the provision for the existence of the Industry Shares was intended to allow for the various sectors of the fresh produce industry (growers, wholesalers and retailers) to invest in BML and have representation on the Board of BML. There were also a number of other provisions included in BML’s Constitution which effectively give the holders of the Industry Shares a right of veto of any resolution considered by BML’s shareholders at a General Meeting.
Brismark, as the wholesaling sector’s representative organisation retains the four Industry Shares and continues to appoint four directors to the BML Board. This has been an ongoing responsibility and right under BML’s Constitution.
The four Brismark appointed directors currently include three independent directors and a nominee director from the Brismark Board.
Having this requirement does however bring with it limitations in respect of some of the potential options for the strategic direction of BML, including, for example, considering the option of listing on the ASX. The existing share structure of BML presents a barrier to BML meeting the requirements for admission to the ASX.
So as to have as one of BML’s options for future growth a potential listing on the ASX, the BML Board has been negotiating with the Brismark Board in relation to an arrangement which enables the removal of the “Industry Shares” and the benefits provided to the holder of the “Industry Shares” from BML’s Constitution.
The terms of this arrangement have now been agreed and BML and Brismark have executed a Transition Deed, documenting the process whereby, subject to relevant approval by each of Brismark’s Members and BML’s shareholders and other conditions precedent, the Industry Shares would be cancelled if BML was to list on ASX. This would create one class of share in BML, which would in turn enable BML to apply to list on the ASX if that was the course determined by the BML Board at the time to be appropriate. It is important to note that the cancellation of the Industry Shares would only occur at the time of listing on ASX by BML. The rights of the Industry Shares remain in place until that time, and there is no guarantee that BML will in fact proceed with an ASX listing.
The agreement includes a range of benefits which BML would provide to Brismark as consideration for the cancellation of the four Industry Shares, including the issue of BML Ordinary Shares based on the valuation of the Industry Shares at the time the BML Board resolve to proceed with a listing, together with a contractual right to appoint two directors to the BML Board.
Over the coming months, BML and Brismark will each engage with their respective Shareholders and Members, providing full details of the terms of the arrangement and seeking the required shareholder and member approval of this arrangement.
What this will mean is that at some point in the future, if the various conditions relating to the arrangement are met and the BML Board resolves to proceed with a listing on the ASX, BML would be in a position to progress the necessary steps to apply to list on the ASX. Under the terms of the Deed, there is a limited time during which this can occur, and unless otherwise agreed, it must be done within three (3) years from getting the required approval from Brismark’s Members and BML’s Shareholders. If the buy back and cancellation of the Industry Shares is not completed within the three (3) year period (or such other period as agreed), the Transition Deed will terminate and the Industry Shares will remain on issue.
Having this option is seen by the BML Board, if supported by BML’s shareholders, as creating a significant opportunity for future growth as a specialised Fresh Produce Market, Warehousing and Distribution Facility. While there is no current intention to pursue an ASX listing in the near future, having the ability to do so does provide flexibility to the BML Board in its future deliberations.
Similarly, the Brismark Board sees the terms of the arrangement as providing recognition of the value of the four Industry Shares, providing for Brismark’s ongoing representation on the BML Board, and delivering a range of other options and benefits in terms of the strategic direction and growth of Brismark and the Brisbane Markets in meeting the ongoing requirements of Brismark’s Members and other Brisbane Market stakeholders.
Further information will be made available over the coming weeks.
Shareholders interested in buying or selling shares in BML, or who need any information in this regard, may register their interest by clicking here or to sell your shares, please click here.
For more information regarding this notice, please contact BML on (07) 3915 4200.