Farmers vote to trade shares
Fonterra shareholders ha ve voted overwhelmingly in favour of introducing share trading amongst themselves to ease a major risk to the dairy giant's balance sheet and provide permanent capital for growth.
Fonterra said the vote in support of share trading, likely to be under way within 15 months, was 89.85 per cent, after a huge voting response of 79 per cent among the cooperative's 10,500 farmer owners.
Around 50 per cent of the votes were posted using the internet, the company said.
The voting response is the biggest since Fonterra, New Zealand's biggest company, was created nine years ago.
Directors needed 75 per cent support for their share trading proposal. BusinessDay understands most votes were cast before today's voting meetings around the country.
The vote was billed by Fonterra as the most important for its future since the ballot called for its creation in 2001.
Share trading is the third leg of a major capital restructure designed to remove a serious share redemption risk to Fonterra's balance sheet and provide it with stable capital.
Under the present capital structure Fonterra must cash up farmers' shares when they leave the cooperative or reduce milk supply. Fonterra's balance sheet shed hundreds of millions of dollars in the past two years because of drought-reduced milk supply.
Share trading between farmers will transfer the risk to the farmer owners of the $16 billion annual revenue cooperative. Only farmers will be able to own and trade the shares, but the public and dairy industry stakeholders will be able to buy units in a new shareholders fund to be established. The fund will be a cash cow for farmers needing cashflow, buying the rights to their share value and dividends while the share ownership remains with the farmer.
There will be no market listing as part of the restructure.