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Fonterra - Source: ONE News -
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Dairy co-operative Fonterra will take its second shot at capital restructuring, though any reform will be done in stages.
The co-op's farmer-shareholders will be asked to vote on up to four stages as Fonterra looks to provide capital growth and address the risk of having redeemable shares, according to the New Zealand Herald.
Fonterra's initial capital restructuring plans - dividing the co-operative into a supplier-owned co-op and a listed company - began in 2007 but fell over after failing to win the required shareholder support.
Tim Fulton, editor at New Zealand Farmers Weekly says the problem the first time around was not so much the essence of the plan but the board's assumption that farmers would get on board.
This time, he says Fonterra's board is taking a softly, softly approach.
"I notice that the shareholders' council has been very tight-lipped on this one. They've been right there in the camp with Fonterra making sure that they're well informed about where Fonterra's going with the second plan," he says.
The first key date is likely to be Fonterra's annual meeting on November 18, though it is not known whether farmers will be asked to vote then.
Fulton believes the advantage the Fonterra board has this time around is that the dairy farming environment is much tougher - dairy commodity prices are down and this season's forecast payment at $4.55 per kilo of milk solids is vastly smaller than last year's payout of $7 a kilo.
Fulton says this may make it easier for Fonterra to convince farmers that capital restructure is needed to improve the co-operative's liquidity and equity.
Fonterra has a three-part growth strategy which includes
building its overseas business, building its ingredients business
portfolio and shifting focus from cross border trade to being
behind borders, such as its current dairy projects in China.
