Noumi Limited (NOU) Earnings Call Transcript & Summary

Ladies and gentlemen, good morning. It is now 10 a.m., and I have been informed that a quorum is present, and so I declare this Extraordinary General Meeting of Shareholders in Noumi Limited open. For those I've not yet to meet, my name is Genevieve Gregor, and I'm the Chair of Noumi Limited. Before we begin, I would like to acknowledge the Traditional Custodians of the Country on which I'm sitting today and pay my respects to their Elders, past, present and emerging. I extend that respect to Aboriginal and Torres Strait Islander peoples joining the meeting today. Today's meeting will take place as a virtual meeting, which allows shareholders, proxy holders and guests to attend the meeting online. Despite the virtual setting, all shareholders and proxy holders attending online will have the opportunity to ask questions and cast votes. I'm joined today in the room by Michael Perich, the Group CEO; Peter Myers, the Group CFO; Justin Coss, the Group General Counsel and Company Secretary; and a number of our staff and advisers. And importantly, on the phone, we are joined by my fellow Board members, Deputy Chair, Tony Perich; Nonexecutive Independent Directors, Jane McKellar and Stuart Black; and Nonexecutive Director, Timothy Bryan. Before we get too far into the meeting, I wanted to point out that if you lose connection to the meeting at any time, you can log back into the EGM online platform by returning to the link log-in page and following the prompts. You will then receive an automated e-mail with a recovery link which will be reconnected to the EGM. Alternatively, please call our share registry provider Link Market Services on 1 (800) 990-363 for assistance. The notice of meeting was published on the ASX and sent to shareholders on Tuesday, the 19th of July 2022. I will take the notice of meeting and the accompanying explanatory statement as having been read. So today's meeting will be structured as follows. I will provide a brief overview of the proposed sale of the company's interest in Australian Fresh Milk Holdings Pty Limited, which I'll refer to throughout the meeting as AFMH, and give some broader background to the resolution you're being asked to vote on today. Justin Coss will then go through some procedure matters, including how you can ask questions and submit your votes online. After that, I will open the floor for shareholders and proxy holders to ask any questions about the resolution to be put to the meeting. And finally, we will run through the resolutions and proceed to vote on the resolution. Today, on behalf of the Board, thank you for joining us today for this Extraordinary General Meeting of the company and to consider and vote on a resolution relating to a potential sale of Noumi shareholding in Australian Fresh Milk Holdings. As outlined in the EGM notice of meeting, this extraordinary general meeting is necessary because of the contractual terms of the AFMH shareholders agreement, which I would add are typical for a private shareholder agreement of this nature. The contractual framework in relation to the AFMH stake is not straightforward, but we have endeavored to explain the detail in the notice of meeting, and I will summarize the relevant key obligations now as it relates to the resolution to be put to the meeting. As set out in the notice of meeting, Noumi's shareholding in AFMH represents 9.4% of the AFMH total equity. The AFMH shareholders agreement contains a right of first refusal in favor of remaining shareholders of AFMH. This means that before any sale of Noumi's AFMH shares to third parties, Noumi must first offer those shares to the remaining AFMH shareholders. The practical effect of this first right of refusal is to make the asset more difficult to market to third parties who would be aware of the existence of such rights of first refusal and, therefore, would be likely to be deterred from attempting to purchase, unless this right was or had been waived. One of the AFMH shareholders is Leppington Pastoral Investments, which is related to the Noumi major shareholder, Arrovest, and is, therefore, a related party of Noumi. As a result, the approval of Noumi's shareholders is required under the ASX listing rules so that Noumi can offer its AFMH shares under the relevant provisions of the AFMH shareholders agreement and complete a related party transaction on this nature. That is why we are gathered here today: To seek approval to enable the company to sell its AFMH shares to Leppington and other AFMH shareholders for a price of not less than AUD 1.40 per AFMH share. As we indicated in our ASX announcement yesterday, Noumi has entered into a binding transaction to sell its entire interest in AFMH, subject only to shareholder approval being obtained at this meeting. The sale is to the 2 of the AFMH shareholders: NewAustralia, a subsidiary of New Hope Group; and Leppington Pastoral Investments for $1.45 per share. Pursuant to the terms of this conditional sale, Leppington will buy 11,512,263 shares or 56.3% of Noumi's shareholding, and NewAustralia will buy 8,936,587 shares or 53.7% of Noumi's shareholding, only contingent on the vote of today's EGM. The proceeds to Noumi will be approximately AUD 29.65 million. This represents a material uplift on Noumi's original investment in AFMH of AUD 20.4 million and assists Noumi to satisfy its obligations under the Blue Diamond Settlement Agreement, which I will refer to herein as the settlement agreement. Additionally, the sale price of $1.45 per share is at the upper end of the valuation range of $1.32 to $1.49 per share as set out in the independent expert's report, which was provided to shareholders with the notice of meeting lodged on the 19th of July 2022. As set out in the notice of meeting, approximately $25 million of the proceeds from the sale will be allocated towards Noumi's obligations under the settlement agreement announced to the ASX on the 17th of November 2021, with the balance of $4.65 million to be used for general purposes, including expenses related to the transaction. Under the settlement agreement, a Noumi subsidiary agreed to make future payments totaling USD 18 million to be paid in quarterly installments of USD 1.125 million over a 4-year period commencing 1 September 2022. It was a condition of the settlement agreement that Noumi's obligation to make those future payments to be supported by the provision of a bank guarantee in order to provide Blue Diamond with certainty of payments. In order to procure that bank guarantee, Noumi granted security over AFMH shares and the proceeds of any sale of those AFMH shares to the bank providing that guarantee. If shareholders approve the resolution at today's EGM, Noumi will have the flexibility to sell its AFMH shares to a related party and meet its obligations under the bank guarantee supporting the settlement agreement. However, if the resolution to sell to a related party is not approved by shareholders today, Noumi will not be able to comply with the AFMH shareholder terms, with a sale of the AFMH shares and will need to explore other ways to satisfy its obligations under the bank guarantee facility. This would, including future payment obligations out of operating -- this would include future payment obligations out of operating cash flow. This would not be ideal as it would reduce the amount of company's available liquidity and would constrain our ability to fund the transformation and growth initiatives previously outlined to shareholders. As part of the divestment process, Grant Thornton has been engaged as an independent expert to provide an independent expert's report on the potential sale of Noumi's AFMH shares. Grant Thornton considers the potential sale at $1.40 per AFMH share to be both fair and reasonable to the nonassociated shareholders of Noumi. The transaction that Noumi has entered into, subject only to shareholder approval at $1.45 per share, is above this figure. Each of the independent directors of Noumi intend to vote in respect of any shares they hold or in which they have a relevant interest in favor of the resolution. I also intend to vote all proxies held in favor of the resolution. For the avoidance of doubt, Arrovest is precluded from voting at this meeting and is any associated or related entity of Arrovest. Again, thank you for joining us today and for your ongoing support of the company. We look forward to providing more information about the company's performance with the release of the FY '22 results in the coming weeks. I'll now hand over to our Company Secretary, Justin Coss, to go through the question, time and voting mechanics for the meeting.

Thank you, Gen. The company has put measures in place today to ensure that all shareholders are given a reasonable opportunity to participate in today's meeting. As outlined in the notice of meeting, shareholders were able to register questions in advance of the meeting. These questions have been collated and the Chair will seek to address as many of these questions as possible. In addition, shareholders and proxies have the ability to ask questions during the meeting relating to the matters to be put to the meeting. If you are registered on the online platform as a shareholder or proxy holder, you can submit questions by selecting the Ask a Question tab at either the top or bottom of your screen. If you joined the meeting via phone, when the Chair calls for questions, you'll be prompted to press 1 on your keyboard should you wish to ask the question. I ask please keep your questions short and to the point so that as many shareholders as possible have the chance to ask a question. All questions will go through to the moderator for the meeting. Moderator will identify each person who asks a question, read out the question and will then pass the question to the Chair of the meeting. The Chair will either answer the question or pass it to the most appropriate person to answer. Please also note that if we receive multiple questions on the topic, we will amalgamate them together. We reserve the right to rule out questions that do not relate to the business of the meeting. We'll also not answer questions that are of the same or substantially similar to the questions that have already been answered. Otherwise, we will endeavor to answer as many of the questions asked as we can. Voting today will be conducted by way of a poll. The resolution will be passed as an ordinary resolution, meaning the resolution must be passed by more than 50% of all votes cast by eligible shareholders entitled to vote on that resolution, whether in person, by proxy, attorney or corporate representative. Shareholders and proxies attending online can vote via the platform, but if attending by phone, cannot vote via the phone. In order to provide you with enough time to vote, polling on the resolution is now open. If you are eligible to vote at this meeting, you can click the button at the bottom of your screen to get a voting card. You'll need to enter the shareholder or proxy details to register. Once you've registered, your voting card will appear with the resolution and present you with the voting options. Once you have finished voting on the resolution, please scroll down to the bottom of the box and click on the Submit Vote or Submit Partial Vote button. You do have the ability to change your vote up until the time voting ends, which is 5 minutes after the close of this meeting. At the conclusion of the meeting, a red bar with a countdown timer will appear at the top of the screen, advising the remaining voting time. If you have any questions about casting your vote online, please refer to the virtual meeting online guide or please call Link Market Services on 1 (800) 990-363 for assistance. And finally, the results of the polls will not be available until after the close of the meeting and will be announced on the ASX and posted on the company's website as soon as reasonably practical after the meeting closes. Are there any questions relating to the procedures of the meeting? As there are no further or any questions about the procedures of the meeting, I'll pass you back to our Chair, Genevieve Gregor.

Thank you, Justin. As indicated in the notice of meeting, the deadline for the lodgment of proxy forms was 10 a.m. on Monday, the 15th of August 2022. As indicated in the proxy form, I intend to vote all undirected proxies given to me in favor of the resolution. The resolution to be put to members today is now displayed on the slide, and I will open the floor to any questions relating to the resolution. The moderator will identify each person who asks the question, read out the question and pass it to me as Chair.

No questions, Chair.