Fonterra vote clears first hurdle

Fonterra's restructuring gets underway

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A capital restructure of New Zealand's biggest company Fonterra got underway today with farmer-shareholders voting in stages one and two of a three stage rejig at their annual meeting.

Shareholders voted 89 per cent in favour of a proposed first step to offer farmers the opportunity to buy 20 per cent more shares, unconnected to milk supply.

The proposal required 75 per cent support. This first stage clears the way for the Fonterra board to raise up to $900 million a year more for the capital starved dairy cooperative.

More than 89 per cent of shareholders also approved the second stage proposal, which see their shares revalued to reflect they are not freely-tradeable on the market.

This step also needed 75 per cent backing.

The favourable voting will enable Fonterra, which had revenues last year of $16 billion, to forge ahead next year with a stage three proposal to introduce share trading among farmers, releasing Fonterra from the capital-draining obligation to redeem the value of a farmer's shares when they exit the company for whatever reason.

More than $600 million washed out of the company's balance sheet last year when drought shrunk milk supply.

Around 350 of Fonterra's 10,500 shareholders turned out to the annual meeting.

It is the giant farmer-owned cooperative's second attempt at a capital restructure.

An earlier proposal that involved a partial market listing of shares provoked farmer fury forcing the board of directors to turn their thinking to a solution that kept cooperative principles.

- © Fairfax NZ News