Aussie offer for Cubbie 'ignored' in favour of Chinese bid
A $250 million Australian offer for Cubbie Station which was not subject to finance was rejected by administrators almost a month before they sold the giant irrigation enterprise to a Chinese-led consortium.
The offer - fully funded and not requiring Foreign Investment Review Board approval - did not appear to be given due consideration by administrators McGrathNicol or investment bank Goldman Sachs, which is acting as a financial advisor to the firm.
James Loel, a solicitor representing the Australian bidders, said the offer had been made in writing on September 18.
A day later, he received a note from McGrathNicol - appointed as the administrator of Cubbie Station in 2009 after the vast property had run up debts of about $300 million - advising him to contact Goldman Sachs, and providing an address and telephone number.
On October 15, Goldman Sachs Australia managing director Lachlan Edwards wrote to Mr Loel, telling him a contract had been signed "with other parties" and that he was "not in a position to further discuss the matter".
At about the same time, news broke of the 93,000-hectare property's sale to a consortium led by Shandong RuYi.
The sale was said to be conditional upon finance and regulatory approvals.
The purchase price has not been revealed but is believed to be between $225 million and $270 million.
Documents, including the current creditors' report, as well as correspondence between Mr Loel and the Cubbie Station administrators, have been secured by APN's Balonne Beacon.
They raise questions as to why the Australian bid was never considered and come after suggestions were raised in a Senate committee hearing on Wednesday that Goldman Sachs might have given preferential treatment to the Chinese consortium for its own business interests.
Under Section 420A of the Corporation Act, administrators must ensure they get the greatest return for shareholders and investors.
Mr Loel said when his clients made their offer, Cubbie Station administrators had not signed a contract with anybody else.
He said he believed this indicated that interested Australian parties never had a legitimate chance of buying the property.
"It appears they were committed to Shandong RuYi at the exclusion of all others," Mr Loel said.
Mr Loel said he believed the contract was "conditional as to both finance and regulatory approvals", and that it wasn't a done deal.
"... I don't understand why we can't be negotiating now (with administrators) subject to the Shandong RuYi contract falling over," he said.
The station's sale to the consortium, led by Shandon RuYi and including an Australian company called Lempriere, was approved by the Federal Government on the advice of the Foreign Investment Review Board.
Nationals Senator Barnaby Joyce, who has been the sale's most vocal opponent, said a Senate inquiry "absolutely" needed to be called.
"If people aren't telling the truth, the only way we can get them to tell the truth is with a Senate inquiry," he said.
Independent Senator Nick Xenophon said he believed administrators should appear before the current Senate inquiry into the Foreign Investment Review Board inquiry.
"I think there's an issue of a level playing field," he said.
"We need to make sure Australian bidders were given the same opportunities."
The Balonne Beacon asked McGrath Nicol to explain why the $250 million offer, not subject to finance, was rejected in favour of continued negotiations with the Chinese-led syndicate and why Australian bidders were denied access to Cubbie Station's financials in order to complete due diligence.
A spokesman said they would not "be offering any comment" on the matter.
Cubbie Station, at Dirranbandi in south-west Queensland, is the largest irrigation operation in Australia and will produce about 5% of the country's total cotton crop this year.
The Shandong RuYi Scientific and Technological Group Co is described as a privately-held textiles company that employs 30,000 people and generated revenue of $2 billion in 2010.