- Agriculture company GrainCorp has executed an insurance deal with White Rock Insurance
- The 10-year deal will help the company combat droughts affecting its business, which caused a $59 million loss recently, the worst in a decade for the company
- GrainCorp will make $10 million annual payments for a secured $15 per tonne inside the agreed upon threshold of harvest, effective from the end of this financial year onwards
Grain storage and transporters GrainCorp just executed an insurance deal to put the company’s mind at ease.
The 10-year deal, which was first announced in early April this year, was signed with White Rock Insurance.
The purpose of the contract is aimed at smoothing the company’s cash flow and operations across the East Australian ‘volatile’ agriculture market, namely combatting droughts.
Today’s deal comes as no surprise when a recent drought hit the company with a $59 million loss. This loss affected the company to make its lowest half-year grain production in a decade.
Slated to take effect at the end of this financial year, the contract indicates GrainCorp to make annual payments of $10 million to put the company worries at ease.
GrainCorp will receive a fixed payment of $15 per tonne for each harvest between an agreed 15.3 million tonnes and 19.3 million tonnes.
“The Contract will smooth GrainCorp’s cash flow and allow for longer-term capital allocation and business planning through the cycle,” GrainCorp CEO, Mark Palmquist said.
Share prices in GNC are trading for an even eight dollars right now, a 3.76 per cent premium from yesterday’s closing price of $7.77. The company’s market cap is currently set to $1.764 billion.