Sunday, April 21, 2024

Fonterra share price concerns deepen

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Fonterra’s supply shareholding farmers and unitholders are concerned about the loss of share equity following the publication of the co-operative’s capital restructuring proposals.
Reacting to criticism that the DIRA bill tilts the playing field in Fonterra’s favour, chair Peter McBride says the new structure will in fact help level the playing field with foreign-backed competitors and is in NZ’s best interests.
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Chair Peter McBride says the most common questions from subsequent consultation have been the impact on share prices now and in the future with a farmer-only share market.

Opinion was divided on the capital impact of buying back the Fonterra Shareholders’ Fund (FSF) units. Farmers would also like more information on company performance and future earnings, which will be provided.

Fonterra was also reconsidering the share standard parts of the proposal, initially proposed at 1-for-4.

“We are reconsidering what settings strike the right balance between flexibility and alignment of interests between shareholders,” he said.

Sharemilkers and contract milkers might be included within the future share ownership structure.

McBride explained the effects of market uncertainty on the current market values of both supply shares and FSF units.

“The current share price and volatility is reflective of the period of particularly unusual trading during this consultation phase,” he said.

Consultation would be extended for two weeks, after which a detailed, revised proposal would be published followed by a second round of consultation.

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