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BIG READ: Push begins to oust Mackay Sugar board

Cane grower Noel Durnsford wants to see the current Mackay Sugar board replaced.
Cane grower Noel Durnsford wants to see the current Mackay Sugar board replaced. APN Photo Library

TWO cane growers are looking to recruit farmers willing to take on board positions at Mackay Sugar, and once they have enough they will ask the current board of the milling company to resign.

If they refuse, Noel Durnsford and Russell O'Neil have vowed to take action geared at forcing them out.

It wouldn't be the first time a petition has been launched against those in the company's top jobs - there was a failed attempt in December 2014 - but given the dismal 2016 crushing season Mr O'Neil didn't think it should come as a surprise.

Despite being the longest crushing season in decades, 350,000-400,000 tonnes of cane were left in the field at the end, on the back of poor milling performance and wet weather.

"We're calling on them to realise it's in the best interests of the Mackay community that they step down," Mr Durnsford said.

"This board has failed to do much in terms of fixing anything.

"I know they have tried... but there has to be sweeping changes. If I was on the board (with the company in this situation) I would resign, I wouldn't even have to be asked."

The pair believes the situation has become so critical that unless the board is changed they are confident Mackay Sugar will be lost.

"I want to see a milling employee pass me in the street in 10 years time and see they've still got 'Mackay Sugar' on their work shirt," Mr O'Neil said.

"I don't want to see a foreign company's name sitting there."

Mackay Sugar chairman Andrew Cappello points out that under the constitution shareholders have the chance to replace board members each year.

They had that chance three months ago and would have another in nine months.

"That is the process in place to provide stability and to minimise risk to the company. If we deviate from the constitution the business becomes a shambles," Mr Cappello said.

He did not want to comment further.

At the annual general meeting on October 27, 2016, both Mr Durnsford (pictured right) and Mr O'Neil put up their names for board positions but fell short - by 59 votes and 172 votes respectively.

Mr Durnsford also put up his hand in 2015 but was edged out by current grower director Sydney Gordon - by 11 votes.

Grower Noel Durnsford.
Grower Noel Durnsford. CONTRIBUTED.

Mr Durnsford believes the past three months have revealed to shareholders the extent of the management problems within the company.

If the vote was to be held again today, he believes the outcome would be different.

Mr O'Neil had also worked for Mackay Sugar between 2006-2010 but was sacked, following a dispute with management.

He didn't think this should affect his chance to sit on the board.

If they did find themselves on the Mackay Sugar board, Mr Durnsford said, they would strive to return efficiency to the mills and profitability to the company, but would first make the tough decisions to ensure it survived.

For starters Mr Durnsford believes the corporate structure should be overhauled and the management reduced by "possibly as much as 70 people".

"Mackay Sugar has to be run lean and mean if we are to survive this," he said.

He would then bring in experienced former mill personnel to 'troubleshoot' the milling infrastructure and operation to try to make immediate gains without large capital outlay.

While the pair still needs to secure three more growers to fill the board seats, Mr O'Neil said they were in talks with a number of people potentially willing to take on the role.

"I don't (particularly) want a board position," he said. "If the current board was doing their job and we were profitable I would not be saying boo."

Current grower directors Lee Blackburn, Lawrence Bugeja and Sydney Gordon all declined to comment.

Grower director Paul Manning could not be contacted.

Former petitioner defends Mackay Sugar directors

GARY Parkinson won't be supporting any push to remove the Mackay Sugar board this time around.

Two years ago the Marian mill area cane grower and contractor was a driving force behind a petition to remove current Mackay Sugar chairman Andrew Cappello and grower director Sydney Gordon. It was defeated 263 votes to 400.

At the time he was concerned that the board was prioritising expansion rather than the upkeep of the sugar mills.

Even though the directors retained their positions, Mr Parkinson deemed the petition a success as it gave the board "the shake up it needed". He believes they have since refocused on the core sugar milling business, despite not having the finances for large maintenance spending.

Quinton Hildebrand, the then-chief executive officer, also left soon after.

But the trouble was, debt incurred through investments made during the lead-up to the 2014 petition had restricted the board's ability to spend on the mill, which Mr Parkinson believes contributed to the poor milling performance this season.

So while he acknowledges it was "the hardest season" the industry had ever seen, he believes it always would have been, regardless of who was in charge.

"Not one person denies the milling performance has let us down. Even the directors will not deny that," Mr Parkinson said.

"It wouldn't matter who was in there... we'd still be in the same position as what we are now.

"We've all got to work together to get through this."

He believes the current board needs to be kept on because they are up to speed on the company's strategy moving forward.

The fact the people leading the push for the board's removal - Noel Durnsford and Russell O'Neil - put up their hands for election at the recent annual general meeting but were not chosen also frustrates Mr Parkinson.

He claims they were taking advantage of the low morale within the industry to secure themselves a board position. Mr Durnsford and Mr O'Neil rejected this claim.

"I do not believe in the way these blokes are approaching it. They've had a couple of cracks at being directors and that, they got knocked down," Mr Parkinson said.

"I think the board we've got is the board we've got. They've got to see this through.

"Any change in the board now would be critical. They're all up to speed with what's been going on."

If people wanted to do something positive for the company, he said, he called on them to send ideas forward to the board, rather than challenging it.

And while others have argued Mackay Sugar needs those with experience to come in and lend advice, Mr Parkinson said the company needed to be looking forward to new ideas.

He was also frustrated at calls for the Mackay Sugar board to brief shareholders on the contents of a draft report from capital raising firm Kidder Williams as soon as possible.

Mr Cappello was handed the report on Monday and has said he will report back to shareholders on it before the end of February.

"They've got to analyse it, they've got to see what would work, they've got to consult people within their management team," Mr Parkinson said.

"So then they can come to the shareholders and say 'These might be our options'. They've got a duty of care to read through that thoroughly."

While he acknowledges that changes to the cane payment system, made to pay farmers for molasses and fibre, may need to be discussed, he also points out that a lot of people invested in the industry heavily with the idea that formula would be there.

However, he supports a suggestion that Mackay Sugar to apply to the Federal Government's $5b Northern Australia Infrastructure Facility for the funding to secure it's survival.

While some have expressed the view that taxpayers' money shouldn't be invested into a company riddled with debt, Mr Parkinson points out the fate of Mackay Sugar affects the whole region's economy.

"We all have downturns," he said.

"(But) the flow-on effects from the sugar mill are massive."

Topics:  andrew cappello mackay sugar


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