AWB is facing internal board divisions over the company's push to reform its shareholding structure, with reports that some directors believe the current dual-class shareholding system is the key to retaining grower loyalty.
According to today's Australian Financial Review, the four grower directors are opposed to the second attempt at collapsing the dual-class structure, despite external advice warning the board of a "significant" negative impact if the structure is retained.
The four grower directors detail their argument in the notice of meeting released by AWB today, which also contain the counter-argument from the remainder of the board.
Currently, only wheat growers have A-class AWB shares, while the B-class shares are publicly listed.
The company tried and failed in February to reform the structure, winning 88pc of B-class votes in support of the motion, but only 62pc of the A-class votes. The company constitution requires 75pc of both classes of shareholders for the motion to be carried.
But Value Enhancement Management has warned the board of the dangers to its long-term performance if the dual class structure is retained.
"Our assessment is that lack of progress towards comprehensive constitutional and governance reform would have a significant medium- to long-term negative impact on AWB in terms of share price, competitive position and ability to tap the capital markets," AFR has quoted the VEM report as stating.
AWB chairman Brendan Stewart has today written to shareholders arguing that for the company and wheat growers to benefit from the new wheat marketing laws, "it is essential that AWB is able to compete effectively with the bulk handling companies and the international traders".
"It is for this reason that I am urging all shareholders to vote 'yes' to the proposal to amend the constitution," Mr Stewart writes.
"If shareholders vote to amend the Constitution by removing Article 2, AWB will move to adopt a new constitution similar to the constitutions of most other ASX listed companies."
If Article 2 is removed, Mr Stewart says the A-class shares will be automatically redeemed and AWB will have a single class of ordinary shares.
"This reform will put AWB on an equal footing with other listed companies, assist in lowering our funding costs, help us to access capital at more competitive rates and allow us to explore wider growth opportunities," he said.
"All of this means that we can offer Australian wheat growers a better deal for their wheat.
"Australian wheat growers can rest assured that AWB will maintain the key features of wheat marketing that they are familiar with: pooling, quality increments, regular payments for their wheat and harvest finance."
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