Council Minutes - Town of Cambridge

COUNCIL MINUTES
TUESDAY 20 DECEMBER 2011
Item 3 - City of Stirling Withdrawal
A progress report updated all MRC members on the progress made in relation to the facilitation
and timely conclusion to the withdrawal process.
In progressing this matter, appointed consultants PricewaterhouseCoopers (PWC) have
presented their Stage 2 report, summarising the assets and liabilities of the MRC. Two
valuation scenarios have been presented valuing assets between $30.1 to $47.8 million and
$29.3 to $41.3 million. The City of Stirling's equity portion is 1/3 or 33.33%.
The City of Stirling has confirmed a "withdrawal proposal" consisting of the following elements:-
Financial settlement of $11.14 million
Release from the BioVision Guarantee
Retention of their ownership in Tamala Park
Included in the report was a position from the City of Perth. No other MRC member Council
has presented a comprehensive comment in relation to the valuation and financial commitment
to financial settlement or release from BioVision Guarantee.
Having reviewed the PWC report, the following comments are made:-
The Town does not support the Discount Cash Flow methodology used by PWC to
assess the valuation as the Mindarie Regional Council is a cost recovery business.
The PWC financial model allows for a low and high scenario assuming members will pay
$135 per tonne and $140 per tonne and it is considered highly unlikely that the member
Councils would agree to pay the higher rate per tonne. Therefore the assumption is
questionable and results in an over inflated value of the business.
As a result of the settlement request by City of Stirling of more than $11 million, the other
member Councils are considering what a reasonable exit price should be and
negotiations are continuing with the City of Stirling.
It is noted the heads of agreement expired in April 2011 and the Town decided not to
agree to extending the expiry period although it did agree to continue negotiations to
allow City of Stirling to withdraw from the Mindarie Regional Council.
To honour the commitment given in the Heads of Agreement signed by all seven MRC
members on 3 August 2010, all seven member Councils are required to give the MRC direction
on the terms of withdrawal. It was proposed to empower an occasional committee of MRC
elected members to negotiate with the City of Stirling on the terms of withdrawal. The City of
Stirling has authorised its Chief Executive Officer and Mayor to negotiate the final valuation with
the MRC. It was emphasised that all member Councils should strive to reach agreement with
the City of Stirling in a timely manner, rather than risk the potential of further Supreme Court
action or having the matter decided by the Minister.
It has been noted, City of Stirling cannot withdraw from the BioVision Guarantee without
BioVision and ANZ Bank support and both are not obliged to do so. Conversely, the other
MRC members are obliged to take over all or a portion of the City of Stirling's guarantee.
The Council subsequently decided on an amended recommendation as follows:-
That:-
1. A Working Group comprising the Mindarie Regional Council Chairman and Chief
Executive Officer, and the participant local government mayors and/or their elected
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