CBH Group provides shareholder loan to Interflour
The CBH Group has today advised its grower members that a US$30 million (A$42.9 million) shareholder loan has been provided to Interflour to support the flour milling and malting business’ turnaround plan, and balance current debt and equity levels.
Interflour, of which CBH has a 50 per cent interest, is well progressed on a turnaround plan implemented last year amongst increasingly competitive conditions in the Asian flour milling and malting industries.
Since 2005, Interflour has spent more than US$300 million on capital and maintenance expenditure, including approximately US$100 million for a malting facility in Vietnam and Mabuhay Interflour Mill in the Philippines, without any equity from CBH and with the majority of this being funded by debt.
CBH and joint venture partner Origold have approved a US$60 million shareholder loan to strengthen Interflour’s balance sheet to ensure future sustainable operations and provide the Interflour team a platform for future success.
CBH’s share of the loan is US$30 million (A$42.9 million).
CBH Chairman Wally Newman said the Interflour management team was acutely aware of the headwinds facing the business and has developed and are robustly progressing a turnaround plan.
“The plan has successfully gained traction and Interflour is on track to improve underlying performance for the year ending 30 September 2019,” Mr Newman said.
“Interflour has improved its position by significantly lowering costs, targeting high margin sales and improving the efficiency of its milling operations as part of a wide-ranging turnaround plan.
“While solid progress has been made to date, further work will continue to improve the performance of the recently commissioned malt facility in Vietnam and the new flour mill in the Philippines.
“Interflour’s operations in South East Asia continue to have a solid long-term growth story as the region urbanises, incomes rise and diets change.
“The turnaround plan and shareholder loan that has been put in place will maximise the opportunity to generate value in the years to come."
CBH Chief Financial Officer Doug Warden said CBH continued to have a strong balance sheet and cash flow, and the provision of the shareholder loan to Interflour would not impact network investment or any other operations within the Group.
“Our strong capital management and financial position has provided us with the opportunity to support Interflour with a shareholder loan without compromising investment within CBH including for our ongoing significant capital investment in the network,” Mr Warden said.
“We’re on track to spend more than A$240 million on CBH network capital and maintenance this year, including A$150 million funding 800,000 tonnes of new permanent storage as part of the Network Strategy.”