Fonterra plans for retail investors
Fri, 01 Jun 2012 6:27p.m.
By Simon Shepherd
Details have been unveiled for a plan to allow retail investors to tap into Fonterra’s profits.
But first, the co-op first has to convince its farmer-owners that the deal will still leave them in control.
Fonterra turns over $20 billion a year, is the worlds fifth largest dairy company, yet shareholding Fonterra farmers find it hard to free up their cash.
Because of this the dairy giant is considering its biggest ever restructure.
Farmers would be able to trade Fonterra shares with each other on a new farmers-only market. They could also sell them to a custodian, who can trade them in a new shareholders fund listed on the stock exchange. Those units would earn dividends, but would not have voting rights.
Yet farmers worry if that new fund gets too big, outside investors could influence the Fonterra board.
To ease concerns, Fonterra would cap the new fund of non-voting units to 20 per cent of Fonterra shares.
Willie Leferick of Federated Farmers says that farmers are pleased their concerns have been taken into account.
“We take heart that the board have listened to our concern. It’s up to the shareholders now to make they are comfortable with the whole proposal,” he says.
But dairy farmers such as Leonie Guiney say that inviting outside investors will lead to farmers losing control.
They will lose control because we are inviting people with entirely opposing drivers. We want milk price, they want dividend price, the two can’t be reconciled,” he says.
Fonterra shareholding farmers now have a month to digest the detail before it gets put to the vote. If successful, and the board agrees and the financial conditions are right, the new fund will be launched in November.
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2/06/2012 7:40:02 a.m.
Fair Kiwi wrote:
Fonterra, by capping the new fund of non-voting units to 20% will be similar to most Australia Commercial Banks operating in NZ...Farmers nothing to fear!
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