I have approved the joint proposal by Shandong RuYi Scientific & Technological Group Co. Ltd and Lempriere Pty Ltd (collectively, the Consortium) to acquire the assets of Cubbie Group Limited, subject to a number of important undertakings I have sought and obtained from the Consortium in relation to employment, ownership, board composition, management and water use.
Critically, RuYi has undertaken to sell down its interest to no more than 51 per cent within three years.
Following significant financial difficulties, Cubbie Group was placed into voluntary administration three years ago. Since then, a number of attempts have been made to find a buyer for the company. If the Consortium is the successful bidder in the sale process being conducted by Cubbie Group's administrator, the proposal would bring an end to this long period of uncertainty, helping ensure the ongoing operation of Cubbie Group, protecting jobs and supporting economic activity in the Dirranbandi and St George regions.
RuYi is a textile manufacturer owned by a consortium of investors based in both China and Japan.
Lempriere is part of an Australian family-owned group of companies, with a long history and extensive experience in wool trading and in managing agricultural properties across Australia. Consistent with the undertakings, Lempriere will be responsible for operating and managing Cubbie Group, including the marketing and sale of its cotton production in conjunction with the existing management team. All cotton will be sold on arms-length terms in line with international benchmarks and standard market practices.
Initially the Consortium will be owned 80 per cent by RuYi and 20 per cent by Lempriere. However it is not RuYi's long term intention to retain an 80 per cent interest in Cubbie Group.
As part of the proposal, RuYi has therefore undertaken to:
The Consortium has also undertaken to:
The proposed acquisition of Cubbie Group will not impact on water management arrangements as Cubbie Group will remain subject to State and Commonwealth rules and regulations. If the proposal proceeds, the Consortium will be able to actively participate in water markets to sell water access rights that are surplus to business requirements.
Water access rights within the Condamine‑Balonne catchment area are managed by the Queensland Government under its Water Resource Plans and Resource Operation Plans. Cubbie Group will be required by Queensland authorities to comply with allocation levels and other conditions stipulated by these plans.
The outcome of the Consortium's proposal is dependent on the administrator's decision following commercial negotiations. In the event the Consortium is successful in acquiring Cubbie Group it will report to the Foreign Investment Review Board every 12 months on its progress on meeting its undertakings.
The Government welcomes foreign investment in Australia and continues to ensure that investments are consistent with Australia's national interest.