AFTER operating for 90 years under a cooperative business model, the Northern Cooperative Meat Co processing business near Casino in northern NSW is asking its members to consider a move to an unlisted public company structure.

The NCMC board this week issued an advice to its circa 500 producer stakeholder members encouraging them to ensure their membership is up to date (for voting purposes), as the board considers the merits of conversion to an unlisted public company.

Easier access to capital for future development projects is a key reason for the proposed change, Beef Central was told, as well as simply being in the best interests of stakeholders.

It is much harder for cooperatively structured entities to source borrowings to fund major expansions or plant improvements.

A move away from a co-operative structure is not a new concept for the business or its board, as the topic is routinely raised for discussion by stakeholders during NCMC’s annual general meetings each year.

Historically, a co-op structure made perfect sense when NCMC was first founded in 1933. Local cattle producers were being severely disadvantaged in having to direct cattle via train through distant Sydney stock markets, where abattoirs were located. Those cattle were processed, if and when the Sydney abattoirs and wholesalers wanted, with no pre-arranged price attached.

A local abattoir, backed with cattle and finance by local cattle producers, was the answer.

Fast-forward 90 years, and industry dynamics have changed. Northern NSW and southern Qld producers have multiple options to market their stock, either via saleyards, feedlots or direct to processors (including NCMC) via various transport channels.

To remain a member of the NCMC Co-op, a producer only has to consign 500kg (carcase weight) of beef each year – but in reality, many members consign much more than that.

Due diligence

The NCMC board has been undertaking necessary due diligence over the proposed company structure change, and was advised to ensure members were provided the opportunity to remain active members of NCMC, members were told.

Under a proposed move, all existing members would remain pro-rata shareholders in the new business entity. A name change would obviously also be on the cards, to something like “Casino Meat Co” or “Northern Meat Co.”

Simon Stahl

“Converting to an unlisted public company is a multi-faceted process that demands meticulous planning,” chief executive officer Simon Stahl said.

“We are currently in the midst of comprehensive due diligence, which encompasses regulatory and commercial considerations.”

The conversion process remains contingent upon several factors including tax advice, regulatory approval, and ultimately member approval, the board said. To navigate this  process effectively, NCMC has engaged legal advice and expert consultants to provide guidance and support to the board.

“We understand the significance of this consideration and acknowledge communication is paramount throughout the process, and therefore are committed to keeping our members informed as appropriate” NCMC chair John Seccombe said.

It’s anticipated that due diligence will be completed by late August. Later in the year, detailed information regarding the proposed conversion will be provided to NCMC members for a vote. The group’s annual general meeting is held each October.

Should NCMC elect to abandon its co-op structure to become an unlisted public company, it will leave only the Western Australian Meat Marketing Cooperative (WAMMCo) as a cooperative entity in the Australian processing space.

The other well known example, the South Burnett Meatworks Cooperative Association near Murgon, Queensland, closed its doors around 2005 (readers may be able to help with an accurate date – use our reader comment facility at the base of this page).