Foreign Investment Decision

Today I approve the application by Wilmar International Limited (Wilmar) to acquire, through its Australian subsidiary, Wilmar Australia Pty Ltd, full ownership of Sucrogen Limited (Sucrogen) from CSR Limited (CSR).  This approval is subject to legally enforceable undertakings.

The undertakings provided by Wilmar will, in summary:

• Restrict Sucrogen's ability to influence key decisions taken by the industry‑owned export marketing body Queensland Sugar Limited (QSL) if Sucrogen was to announce a termination of marketing activities with QSL; and
• Ensure that if Sucrogen acquires an interest in strategic sugar storage infrastructure owned by Sugar Terminals Limited (STL), it must operate the infrastructure with proper regard to the broader interests of the industry and other participants. 

These undertakings ensure consistency with Australia's national interest principles and are a condition of my approval under the Foreign Acquisitions and Takeovers Act 1975 (as set out in Attachment A).

In addition to these undertakings, I have taken account of Wilmar's ambitious growth plans for Sucrogen.  These include the expansion of the company's Australian operations by providing better access for its sugar products to growth markets in Asia, and jointly developing refining facilities and distribution networks in the region. Wilmar has informed FIRB that it does not anticipate any significant changes to Sucrogen's operations and its management, with current employment conditions remaining unchanged. Wilmar has also advised that if its growth plans are achieved, there will be increased jobs in the Australian sugar industry.

I also note that CSR has exposures to asbestos liabilities arising from its past manufacture and sale of building products containing asbestos.  

As part of my decision, I have taken account of CSR's undertakings to further protect the interests of both current and future asbestos injury claimants. These arrangements increase the legal safeguards to protect creditors that exist under the Corporations Act 2001, and will ensure that for future capital returns to shareholders, including from proceeds of its sale of Sucrogen, CSR will receive independent expert advice regarding its potential to materially prejudice creditors, including asbestos claimants. Importantly, the arrangements will take into account the potential liabilities arising from future asbestos claimants in addition to the liabilities associated with existing creditors.

The key elements of the arrangements (as set out in Attachment B) involve CSR's Board:

• receiving an independent actuarial review of its estimated liabilities to current and future asbestos claimants;
• considering the results of the actuarial report, impact on its prospective credit rating and financial ratio tests in determining whether to undertake a proposed capital reduction;
• treating the unascertainable future creditors (i.e. asbestos victims that are not yet diagnosed and who have not yet made asbestos claims) as though they are crystallised creditors;
• receiving an independent ‘big 4' accounting firm review of its proposed decision, having regard to the position of the company and the report of the actuary, to determine whether it is reasonable (CSR will not undertake the capital event unless the accounting firm confirms that the proposed capital payment has a reasonable basis); and
• having an independent entity overseeing the governance arrangements, supported by a legally binding deed between it and CSR. 

These arrangements provide a valuable additional safeguard for current and future asbestos claimants, and are a welcome demonstration of CSR's publicly stated commitment to meet its asbestos liabilities. 

Given the undertakings provided by both Wilmar and CSR, I am satisfied that the national interest concerns with respect to this acquisition are sufficiently mitigated and appropriately managed.

It is on these bases that I have approved the acquisition of Sucrogen by Wilmar under the Foreign Acquisitions and Takeovers Act 1975.

Attachment A

Undertakings by Wilmar International Imposed as Approval Conditions Under the Foreign Acqusitions and Takeovers Act 1975

1. WHEREAS,
   1. Sucrogen Limited is a mill owner member of Queensland Sugar Limited, ACN 090 152 211, (QSL) and currently holds a majority of the voting power of the mill owner members;
   2. QSL currently undertakes certain marketing activities on behalf of its members in relation to raw sugar in the Asia-Pacific region; and
   3. Sucrogen Limited and QSL have entered into a Deed, whereby Sucrogen agrees that it will vote in favour of any resolution put to a general meeting of QSL's members which proposes to amend the Constitution in accordance with Schedule 1 of that Deed, and that if any such resolution is not passed due to being opposed by other members of QSL, Sucrogen will meet with QSL to discuss in good faith amending the resolution to resolve that opposition while achieving a materially fair outcome,

   Wilmar agrees that Sucrogen is bound by the terms of the Deed with QSL, and Wilmar will support Sucrogen acting in accordance with its obligations under the Deed; AND

2. WHEREAS,
   1. Sugar Terminals Limited, ACN 084 059 601, (STL) has beneficial ownership of certain sugar terminal infrastructure in Queensland, being the six bulk sugar terminals located at the ports of Cairns, Mourilyan, Lucinda, Townsville, Mackay, and Bundaberg;
   2. as at 30 June 2010, Sucrogen holds, through Sucrogen Investments Pty Ltd, 1, 111, 343 of the Grower (G) class shares in STL; representing around 0.48 per cent of the G class shares; and 59, 824, 003 of the Miller (M) class shares in STL, representing around 45.8 per cent of the M class shares in STL;
   3. STL's sugar terminal infrastructure is currently operated by QSL pursuant to a Sublease, commencing with effect as of 1 January 2009 and for an initial period of 5 years with an additional period of 5 years provided both STL and QSL notify renewal of the Sublease by 30 June 2013;
   4. QSL currently operates the sugar terminals infrastructure on an ‘open-access' basis; and
   5. Wilmar does not currently have any intention, whether itself or through Sucrogen, to seek to acquire from STL a lease of any of STL's sugar terminal infrastructure;

if, contrary to its existing intention, Wilmar does, through Sucrogen or otherwise, seek to operate STL's sugar terminal infrastructure, either through a lease, direct ownership or other means, then Wilmar will provide the same open access arrangements to STL's sugar terminal infrastructure that are currently provided by QSL.

These conditions, imposed under section 25 (1A) of the Foreign Acquisitions and Takeovers Act 1975, are subject to any revocation or amendment by the Treasurer.

Attachment B