The Demerger is proposed to occur by way of the Demerger Scheme, Capital Reduction and Demerger Dividend, which will result in 90% of the UMG Shares being distributed to, or for the benefit of, GrainCorp Shareholders. GrainCorp will retain a minority ownership interest of 10% of the UMG Shares on issue immediately following the Demerger. If the Demerger becomes Effective, Eligible GrainCorp Shareholders (other than Selling Small Shareholders) will be entitled to one UMG Share for every GrainCorp Share they hold as at the Demerger Scheme Record Date.

If the Demerger is implemented, UMG, which is currently a wholly-owned subsidiary of GrainCorp, will become a standalone entity listed on the ASX.

Refer to section 5.1 of the Demerger Scheme Booklet.

Refer to section 5.1 of the Demerger Scheme Booklet.

The GrainCorp Board believes that the Demerger will unlock significant value for GrainCorp Shareholders by establishing two ASX-listed agribusinesses that are well-positioned for growth.

The Demerger will provide UMG and GrainCorp with increased flexibility to implement independent operating strategies to drive long-term shareholder value and allow them to attract investors with different investment preferences.

The Demerger will allow GrainCorp Shareholders to choose whether to directly invest in one or both of GrainCorp and UMG after the Demerger based on their individual investment objectives, risk tolerances and desired sector exposures.

A summary of the advantages of the Demerger is set out in Section 1.3 of the Demerger Scheme Booklet.

UMG is currently a wholly-owned subsidiary of GrainCorp. If the Demerger is implemented, UMG will be a standalone company and listed on the ASX.

Refer to section 2 of the Demerger Scheme Booklet.

Refer to section 3.6(a) of the Demerger Scheme Booklet.

GrainCorp will retain a minority ownership interest of 10% of the UMG Shares on issue immediately following the Demerger to provide additional balance sheet resources and financing flexibility.

Refer to section 3.6(a) of the Demerger Scheme Booklet.

There are no escrow or similar restrictions on the disposal by GrainCorp of any or all of the Retained UMG Shareholding. In determining whether to retain or dispose of any or all of the Retained UMG Shareholding after implementation of the Demerger, GrainCorp will have regard to, among other things, the capital requirements of the GrainCorp Post-Demerger Group and the market value of the Retained UMG Shareholding at the relevant time.

Refer to section 3.6(a) of the Demerger Scheme Booklet.

The GrainCorp Directors unanimously recommend that GrainCorp Shareholders vote in favour of the Demerger Resolutions to be considered at the Demerger Scheme Meeting and General Meeting.

The reasons for this recommendation are set out in Sections 1.1 and 1.3 of the Demerger Scheme Booklet.

The number of GrainCorp Shares held by or on behalf of each GrainCorp Director as at the date of the Demerger Scheme Booklet is set out in Section 7.1 of the Demerger Scheme booklet.

Refer to section 1.1 of the Demerger Scheme Booklet.

The Independent Expert has concluded that the Demerger is in the best interests of GrainCorp Shareholders.

A copy of the Independent Expert’s Report is set out at Attachment A to the Demerger Scheme Booklet.

Refer to attachment A.

The key advantages of the Demerger include:

• after the Demerger is implemented, GrainCorp and UMG will have separate boards and management teams empowered to pursue independent strategies and operational initiatives;
• the Demerger will enable and accelerate a number of simplification and cost reduction initiatives across GrainCorp;
• the Demerger will allow each of GrainCorp and UMG to implement tailored capital structures and financial policies appropriate for each business’ characteristics;
• the Demerger will allow each separate ASX-listed company to appeal to investors with different investment strategies and preferences; and
• given the interest in GrainCorp’s portfolio before the Demerger (as described in Section 1.2(b) of the Demerger Scheme Booklet), after the Demerger, there will remain the potential for GrainCorp, UMG or other GrainCorp portfolio businesses to be sold to a third party, potentially delivering a control premium to GrainCorp Shareholders and/or UMG Shareholders at the relevant time.

These advantages, together with other advantages of the Demerger, are described in more detail in Section 1.3 of the Demerger Scheme Booklet.

The key disadvantages of the Demerger include:

• after the Demerger is implemented, GrainCorp and UMG will be separate, ASX-listed companies that are smaller and less diversified than GrainCorp as at the date of the Demerger Scheme Booklet;
• there will be significant one-off transaction costs of approximately $49 million associated with the Demerger. Approximately: $20 million of these costs were incurred in the period to 30 September 2019, $15 million of these costs are expected to be incurred in the period from 1 October 2019 up to the time of the Meetings, with $14 million of these remaining costs expected to be incurred after the Meetings (and are conditional on the Demerger Resolutions being approved by the Requisite Majorities at the Meetings);
• as a result of the Demerger, ongoing corporate and operating costs, including ASX listing and board-related costs, will be incurred by UMG;
• following the Demerger, each of UMG and GrainCorp will have separate debt financing facilities, which may incur total costs that exceed GrainCorp’s current financing costs;
• following the Demerger, each of UMG and GrainCorp is likely to have reduced weighting in various stock market indices compared to GrainCorp as at the date of the Demerger Scheme Booklet and, as a result, there may be less trading liquidity; and

some GrainCorp Shareholders may not be eligible to receive UMG Shares as part of the Demerger (and will instead receive cash proceeds from the sale of those UMG Shares under the Sale Facility), or may be unable to retain UMG Shares or GrainCorp Shares after the demerger.

These disadvantages, together with other disadvantages of the Demerger, are described in more detail in Section 1.4 of the Demerger Scheme Booklet

UMG will be subject to risks which may adversely affect its operating or financial performance, and the investment return or value of UMG Shares, after the Demerger. Many of these risks are existing business risks to which GrainCorp Shareholders are already indirectly exposed as a result of their shareholding in GrainCorp, while others arise out of, or increase as a result of, UMG becoming a standalone, ASX-listed company, independent from GrainCorp following the Demerger.

These risks are described in detail in Section 4.3 of the Demerger Scheme Booklet. You should review this Section before deciding whether or not to vote in favour of the Demerger Resolutions.

The key remaining steps to implement the Demerger are:

• approval of the Demerger Scheme by GrainCorp Shareholders at the Demerger Scheme Meeting;
• approval of the Capital Reduction by GrainCorp Shareholders at the General Meeting;
• Court approval of the Demerger Scheme at the Second Court Hearing; and
• lodgement of the Court order with ASIC, which will cause the Demerger Scheme to become Effective.

Following lodgement of the Court order with ASIC, the Demerger Scheme will become Effective and will be implemented. This will involve the Demerger Distribution Amount being applied by GrainCorp, on behalf of GrainCorp Shareholders, as consideration for the transfer to Eligible GrainCorp Shareholders and the Sale Agent (on behalf of Selling Shareholders) of one UMG Share for every GrainCorp Share held on the Demerger Scheme Record Date. The UMG Shares to which Ineligible Foreign Holders and Selling Small Shareholders would otherwise be entitled will be transferred to the Sale Agent and sold, as explained in Section 5.6 of the Demerger Scheme Booklet. No amount of cash will be paid to GrainCorp Shareholders as a result of the Demerger Distribution.

If the Court approves the Demerger Scheme, UMG Shares are expected to trade separately on the ASX from Tuesday, 24 March 2020, initially on a deferred settlement basis.

Trading of UMG Shares on the ASX on a normal settlement basis is expected to commence on Thursday, 2 April 2020.

Section 5 of the Demerger Scheme Booklet contains further details of the Demerger, including a description of the approval thresholds for the Demerger Resolutions and other Conditions Precedent that must be satisfied for the Demerger to proceed.

GrainCorp Shareholders registered on the GrainCorp Register as the holders of GrainCorp Shares at the Demerger Scheme Record Date may be eligible to receive UMG Shares as part of the Demerger, depending on the location of their registered address.

GrainCorp Shareholders whose registered address on the GrainCorp Register at the Demerger Scheme Record Date is in one of the following jurisdictions will be Eligible GrainCorp Shareholders:

• Australia and its external territories, The Bahamas, Canada, Germany, Hong Kong, Isle of Man, New Zealand, the United Kingdom and the United States; or
• any other jurisdiction in which GrainCorp reasonably believes it is not prohibited or unduly onerous or impractical to implement the Demerger and to transfer the UMG Shares to the GrainCorp Shareholder.

Ineligible Foreign Holders, being GrainCorp Shareholders whose registered address on the GrainCorp Register at the Demerger Scheme Record Date is outside the jurisdictions listed above, will not receive UMG Shares and should refer to Sections 5.5 and 5.6 of the Demerger Scheme Booklet for further information about the treatment of their Demerger Entitlements.

Refer to section 5.8(a) of the Demerger Scheme Booklet.

In addition, Eligible GrainCorp Shareholders who are Small Shareholders may elect to have the UMG Shares to which they are entitled sold on the ASX by the Sale Agent and the Sale Facility Proceeds remitted to them under the Sale Facility. Small Shareholders who do not make an election to participate in the Sale Facility will receive UMG Shares.

The amount of money received by each Selling Shareholder will be calculated on an averaged basis so that all Selling Shareholders receive the same price for each UMG Share sold on their behalf (subject to rounding down to the nearest whole Australian cent).

Refer to section 5.5 and 5.6 of the Demerger Scheme Booklet.

• Ineligible Foreign Holders; and
• Small Shareholders who have lodged a valid Sale Facility Election Form (which has not subsequently been withdrawn).

Under the Sale Facility, the Sale Agent will, as soon as reasonably practicable (and in any event no more than 20 Business Days after the Demerger Implementation Date), sell those UMG Shares on the ASX. The Sale Facility Proceeds (free of any brokerage costs or stamp duty, but after excluding any interest and deducting any applicable withholding tax) will be despatched to Selling Shareholders. It is expected that the Sale Facility Proceeds will be despatched to Selling Shareholders on or before Friday, 15 May 2020. The Sale Facility Proceeds will be calculated on an averaged basis so that all Selling Shareholders receive the same price for each UMG Share sold on their behalf (subject to rounding down to the nearest whole Australian cent). Selling Shareholders will not receive any interest on the Sale Facility Proceeds in respect of their UMG Shares.

Refer to section 5.6(c) of the Demerger Scheme Booklet.

A Demerger Participant will be an Ineligible Foreign Holder for the purpose of the Demerger if their registered address on the GrainCorp Register as at the Demerger Scheme Record Date is in a jurisdiction outside one of the following jurisdictions:

• Australia and its external territories, The Bahamas, Canada, Germany, Hong Kong, Isle of Man, New Zealand, the United Kingdom and the United States; or
• any other jurisdiction in which GrainCorp reasonably believes it is not prohibited or unduly onerous or impractical to implement the Demerger and to transfer the UMG Shares to the GrainCorp Shareholder.

Ineligible Foreign Holders are ineligible to receive UMG Shares under the Demerger. If you are an Ineligible Foreign Holder, the number of UMG Shares to which you would have been entitled to receive on the implementation of the Demerger will be transferred to the Sale Agent. The Sale Agent will sell those UMG Shares through the Sale Facility.

Please refer to Section 5.6(c) of the Demerger Scheme Booklet for further details of the Sale Facility.

Eligible GrainCorp Shareholders who individually hold 500 or fewer GrainCorp Shares at the Demerger Scheme Record Date will be Small Shareholders.

Small Shareholders who do not wish to receive UMG Shares may elect to participate in the Sale Facility by completing and returning the enclosed Sale Facility Election Form so that it is received by the GrainCorp Registry by the Sale Facility Election Time, being 5:00pm on Monday, 23 March 2020.

If you are a Small Shareholder as at the Demerger Scheme Record Date who has made a valid Sale Facility Election and has not withdrawn that Sale Facility Election, the number of UMG Shares to which you would have been entitled to receive on the implementation of the Demerger will be transferred to the Sale Agent. The Sale Agent will sell those UMG Shares through the Sale Facility and remit the Sale Proceeds to you (free of any brokerage costs or stamp duty but excluding any interest and after deducting any applicable withholding tax).

The amount of money received by each Selling Shareholder will be calculated on an averaged basis so that all Selling Shareholders receive the same price for each UMG Share sold on their behalf (subject to rounding down to the nearest whole Australian cent).

Please refer to Section 5.6(c) of the Demerger Scheme Booklet for further details of the Sale Facility.

If you are an Eligible GrainCorp Shareholder (other than a Selling Small Shareholder) and the Demerger is implemented, you will hold one UMG Share for every GrainCorp Share you held at the Demerger Scheme Record Date.

Refer to section 5.8 of the Demerger Scheme Booklet.

Refer to section 5.1 (b) (Step 5) and 5.8 (b) of the Demerger Scheme Booklet.

• GrainCorp will undertake the Capital Reduction in accordance with the Capital Reduction Resolution;
• the GrainCorp Board will pay the Demerger Dividend;
• GrainCorp will apply the Demerger Distribution Entitlement in respect of each Demerger Participant in accordance with the terms of the Demerger Scheme; and
• GrainCorp will transfer the UMG Shares to Eligible GrainCorp Shareholders (other than Selling Small Shareholders) and the Sale Agent (in respect of Selling Shareholders) and register the transfers in the UMG Register.

The Demerger Implementation Date is currently expected to be Wednesday, 1 April 2020.

Refer to section 5.1 (b) (Step 5) and 5.8 (b) of the Demerger Scheme Booklet.

• the Capital Reduction will not be undertaken by GrainCorp;
• the GrainCorp Board will not declare the Demerger Dividend;
• Eligible GrainCorp Shareholders will not receive UMG Shares (or, in the case of Selling Shareholders, they will not receive the Sale Facility Proceeds from the sale of UMG Shares);
• GrainCorp Shareholders will retain their current holding of GrainCorp Shares (unless they otherwise sell their GrainCorp Shares);
• GrainCorp will continue to own UMG and UMG will continue to operate as a division of GrainCorp;
• the changes to the GrainCorp Board and executive leadership team described in Sections 2.10 and 3.7 of the Demerger Scheme Booklet will not occur;
• the advantages of the Demerger described in Section 1.2 of the Demerger Scheme Booklet will not be realised;
• the disadvantages and risks of the Demerger described in Sections 1.4 and 4 of the Demerger Scheme Booklet will not arise;
• the GrainCorp Board may consider alternatives for the UMG Business; and

significant one-off transaction costs in relation to the Demerger (as described in Section 1.4(b) of the Demerger Scheme Booklet) will have already been incurred by GrainCorp and UMG

Refer to section 5.2 (b) of the Demerger Scheme Booklet.

The Demerger Scheme Meeting will be held at 10:00am on Monday, 16 March 2020 at Hilton Hotel, 488 George Street, Sydney NSW 2000.

General Meeting

The General Meeting will be held at 10:30am (or as soon as practicable after that time following the conclusion of the Demerger Scheme Meeting) on Monday, 16 March 2020 at Hilton Hotel, 488 George Street, Sydney NSW 2000.

Refer to section 5.4 (a) and 5.4 (b) of the Demerger Scheme Booklet.

At the Demerger Scheme Meeting, you are being asked to vote on whether to approve the Demerger Scheme by voting in favour of, or against, the Demerger Scheme Resolution. The Demerger Scheme Resolution is set out in the Notice of Demerger Scheme Meeting in Attachment E.

General Meeting

The Capital Reduction (together with the Demerger Dividend) will form the consideration for the transfer of the UMG Shares to GrainCorp Shareholders (and the Sale Agent, on behalf of Selling Shareholders) under the Demerger.

At the General Meeting, you are being asked to vote on whether to approve the Capital Reduction by voting in favour of, or against, the Capital Reduction Resolution.

The Demerger Scheme can only be implemented if the Capital Reduction Resolution is passed by the Requisite Majority at the General Meeting.

The Capital Reduction is conditional on the Demerger Scheme becoming Effective. This means that GrainCorp will not undertake the Capital Reduction unless the Demerger Scheme becomes Effective.

The Capital Reduction Resolution is set out in the Notice of General Meeting in Attachment F.

Refer to section 5.4 (a) and 5.4 (b) of the Demerger Scheme Booklet.

For the Demerger Scheme to proceed, votes “in favour of” the Demerger Scheme Resolution at the Demerger Scheme Meeting must be received from a Requisite Majority of Shareholders. A Requisite Majority for the Demerger Scheme Resolution is:

• a majority in number (more than 50%) of GrainCorp Shareholders who are present and voting either in person or by proxy, attorney or, in the case of corporate GrainCorp Shareholders, by corporate representative; and
• at least 75% of the total number of votes cast on the resolution to approve the Demerger Scheme.

General Meeting

For the Capital Reduction to be approved, votes “in favour of” the Capital Reduction Resolution at the General Meeting must be received from a Requisite Majority of votes cast at the General Meeting, being at least 50% of the votes cast on the resolution by GrainCorp Shareholders who are present and voting at General Meeting, either in person or by proxy, attorney or in the case of a corporation its duly appointed corporate representative.

Refer to section 5.4 (a) and 5.4 (b) of the Demerger Scheme Booklet.

Refer to section 5.4 (a) and 5.4 (b) of the Demerger Scheme Booklet.

Demerger Scheme Meeting

You may vote in person by attending the Demerger Scheme Meeting to be held at 10:00am on Monday, 16 March 2020 at Hilton Hotel, 488 George Street, Sydney NSW 2000.

Alternatively, you may vote by completing and lodging the yellow Demerger Scheme Meeting Proxy Form that is enclosed with the Demerger Scheme Booklet. The Demerger Scheme Meeting Proxy Form can be lodged in person, by mail, by fax or electronically by visiting the GrainCorp Registry’s website, www.linkmarketservices.com.au.

You can also vote by appointing a corporate representative (if you are a corporate shareholder) or an attorney.

Full details of how to vote at the Demerger Scheme Meeting and how to lodge a Demerger Scheme Meeting Proxy Form, corporate representative appointment or power of attorney are set out on page 15 of the Demerger Scheme Booklet (“How to vote on the Demerger Resolutions”).

General Meeting

You may vote in person by attending the General Meeting to be held at 10:30am (or as soon as practicable after that time following the conclusion of the Demerger Scheme Meeting) on Monday, 16 March 2020 at Hilton Hotel, 488 George Street, Sydney NSW 2000.

Alternatively, you may vote by completing and lodging the green General Meeting Proxy Form that is enclosed with the Demerger Scheme Booklet. The General Meeting Proxy Form can be lodged in person, by mail, by fax or electronically by visiting the GrainCorp Registry’s website, www.linkmarketservices.com.au.

You can also vote by appointing a corporate representative (if you are a corporate shareholder) or an attorney.

Full details of how to vote at the General Meeting and how to lodge a proxy form, corporate representative appointment or power of attorney are set out on page 15 of the Demerger Scheme Booklet (“How to vote on the Demerger Resolutions”).

Refer to Page 15 (“How to vote on the Demerger Resolutions”), Sections 5.4(a) and 5.4(b) Notice of Demerger Scheme Meeting at Attachment E, Notice of General Meeting at Attachment F.

If GrainCorp Shareholders who support the Demerger do not vote at the Meetings, there is a risk the Demerger will not be approved and, therefore, will not be implemented.

If you do not vote or vote against the Demerger Resolutions, but these resolutions are approved by the Requisite Majorities of GrainCorp Shareholders, then, subject to the other Conditions Precedent to the Demerger (including Court approval at the Second Court Hearing) being satisfied, the Demerger will be implemented and binding on GrainCorp, UMG and all GrainCorp Shareholders, including those who did not vote or voted against the Demerger Resolutions.

The results of the Demerger Scheme Meeting and General Meeting will be available shortly after the conclusion of the Demerger Scheme Meeting and General Meeting and will be announced to ASX once available.

If you have any further questions about the Demerger Scheme Booklet or the Demerger, please call the GrainCorp Shareholder Information Line on 1300 883 034 (within Australia) or +61 1300 883 034 (outside Australia) Monday to Friday between 8:30am and 7:30pm (Sydney time). Please note that the GrainCorp Shareholder Information Line cannot provide any financial, taxation or investment advice and cannot give an opinion on the merits of the Demerger. If you have any questions about your individual financial or taxation circumstances, please contact your financial, legal, taxation or other professional advisers.