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Fonterra will reveal closely kept details of its capital restructure on Friday as it moves to stabilise and unravel its complex capital base.
Under its current co-operative structure future growth opportunities are stifled by a lack of liquidity and equity.
The restructure follows Fonterra's initial capital restructuring plans - dividing the co-operative into a supplier-owned co-op and a listed company - which began in 2007 but fell over after failing to win the required shareholder support.
Jenni McManus of Fairfax Media says Fonterra will likely address its redemption risk which requires the co-op to buy back shares from farmers exiting the business.
"(Fonterra) says its problem is that it can have invested in an asset that has the life of say 30 years and yet you don't know how much capital you're going to have on your balance sheet at the end of the next year, so it's very difficult for them to form a good base for expansion," she says.
It is also understood Fonterra will create an investment vehicle to improve its equity as it looks to become a global food business. This would be via a 'dry' share system unrelated to milk production which allows farmers to buy and sell shares between themselves.
"I think farmers are basically being led very gently along the path to which raising more capital for the company's needs but still retaining everything squarely within a co-op," NZ Farmers Weekly editor Tim Fulton said last week.
Fonterra says it is confident it will manage to get the 75% of farmer-shareholder support required to make changes.
It is understood that changes will happen in up to four stages over a period of around four years.
Business editor Corin Dann will have the full story on
Fonterra's changes on ONE News at 6pm on Friday.
