Shareholders back Fonterra restructuring

Fonterra's capital restructuring has been given the go-ahead by its farmer shareholders, in what is being hailed as a positive vision for the co-operative's future.

More than 300 farmers were at the co-operative's annual meeting in Ashburton yesterday.

Farmers voted 89 per cent in favour of the first resolution of restructuring which will allow farmers to hold shares up to 120 per cent of their milk production. The current limit for most farmers was closer to 100 per cent. The extra shares would be unconnected to milk supply.

The second resolution has shares re-valued to reflect that they are not freely tradeable on the market.

This also received an 89 per cent shareholder vote. A third resolution on housekeeping changes to the capital restructuring was passed by a 92 per cent vote.

The changes required 75 per cent shareholder approval to take effect.

"It's an outstanding result," Geraldine dairy farmer Brian Tremewan said. He voted for all three resolutions in recognition of the support that the Fonterra board of directors had shown shareholders.

Ashburton dairy farmer Bryan Beeston said the vote was a big step forward for Fonterra. "It's a whole new chapter in the dairy industry and it's happened here in Ashburton."

Having 89 per cent of shareholders voting yes was outstanding. "It's a good result for a lot of hard work."

The changes opened the door for a lot of new opportunities for shareholders and Fonterra's board of directors.

The resolutions received unanimous support from Fonterra's shareholders council and this provided a good platform for the co-operative to embark on the third stage of capital restructuring, Mr Beeston said.

That stage would have Fonterra move to a system where farmers buy and sell shares among themselves, rather than through the co-operative. This would have a separate consultation process next year. "The next stage should be quite easy to work through," Mr Beeston predicted.

Fairlie dairy farmer Leonie Guiney said the capital structure changes were a positive step for Fonterra's future. "The first two resolutions put Fonterra in a more secure future."

The capital structure changes aimed at stopping large amounts of money shifting in and out of Fonterra's balance sheet each year as milk production fluctuates.

It also sought to ensure Fonterra has the share equity needed to fund profitable business opportunities to drive a higher payout to dairy farmers.

The high vote expressed great confidence in the co-operative and its future, said Fonterra chairman Sir Henry van der Heyden.

"It is also a great comment on our farmer shareholders. They told us they wanted to retain 100 per cent control and ownership of our co-operative. They said, 'Give us the opportunity to back our co-operative'. Today they have stepped up to the plate in a big way to strengthen our co-op."

- © Fairfax NZ News