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GrainCorp Stock Climbs On A$10.42/ Share Takeover Proposal From LTAP

Shares of GrainCorp Limited (GRCLF.PK) were surging around 27 percent in Australian trading after the agribusiness and food-ingredients company announced Monday that it has received a non-binding, indicative proposal from Long-Term Asset Partners Pty Ltd or LTAP for cash consideration of A$10.42 per share.

In a statement, the company noted that its Board recommends that shareholders take no action in respect of the LTAP Proposal and await further information from the Board which will be provided as part of the ongoing Portfolio Review.

The company noted that its Portfolio Review is ongoing, contemplates a wide range of potential value creation strategies including operating strategies, and will take some time to complete. GrainCorp intends to provide shareholders with an update on the progress of the Portfolio Review at or before the company's Annual General Meeting in February 2019.

Regarding the takeover offer, GrainCorp said that its Board has determined it will engage with LTAP in the context of the ongoing Portfolio Review to further assess the merits of the LTAP Proposal, including the value offered compared to other value creation alternatives and strategies available to GrainCorp. This evaluation is ongoing and the proposal is not yet sufficiently certain or in a form which would allow GrainCorp's Directors to make a recommendation to shareholders.

The GrainCorp Board notes that the proposal is subject to a number of conditions and involves a complex financing structure with significant leverage comprising A$3.2 billion in acquisition facilities from Goldman Sachs and A$400 million from Westbourne Capital.

LTAP is a new entity and this would be its initial investment. There is no certainty that the proposal will result in a binding proposal for GrainCorp, what the terms of any such proposal would be, or whether it will be recommended by the GrainCorp Board.

The Board requires additional information on the identity of the equity investors underpinning the LTAP Proposal as well as
the longer term financing plan and intentions for the business.

The Board considers that because the Portfolio Review is well progressed and the LTAP Proposal is not sufficiently certain, it would not be in shareholders' interests for GrainCorp to suspend or terminate the other initiatives under assessment.

GrainCorp has appointed Macquarie Capital (Australia) Limited as financial adviser and Gilbert + Tobin as legal adviser.

In Australia, GrainCorp shares were trading at A$9.28, up 27.05 percent.

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