Friday, April 26, 2024

Fonterra’s capital restructure to go to a vote

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Fonterra’s flexible shareholding proposal and capital restructure will go to shareholders at a special general meeting on December 9.
Fonterra chair Peter McBride says moving to the new flexible shareholding structure will keep the co-op on track to meet its 2030 strategic goals.
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BACKING: Peter McBride says there has been widespread support for Fonterra’s amended shareholding proposal.

Fonterra’s flexible shareholding proposal and capital restructure will go to shareholders at a special general meeting on December 9.

Chair Peter McBride said there has been widespread shareholder feedback and support for the amended proposal released on September 23, followed by another round of farmer consultation.

Fonterra’s Co-operative Council has already voted 92% in support of the recommended changes.

The constitutional amendments will require 75% approval in votes cast by eligible farmers.

Changes will also be needed to the Dairy Industry Restructuring Act, which means working with the Government.

Fonterra is aiming for June 1, 2022, the start of the next dairy season.

What was dubbed the flexible shareholding structure on September 23 allows for a minimum supply requirement of one share for every three kilograms of milksolids produced.

A maximum shareholding limit of four times production would be set.

Only farmers would be able to buy and sell supply shares and the Fonterra Shareholders’ Fund (FSF) would be capped, removing the mechanism of swapping shares for fund units.

More types of farmers could hold shares, such as sharemilkers, contract milkers and farm lessors.

New farmers would have up to six seasons to share up.

Exiting shareholders would have 15 seasons, reducing to 10 seasons over time, to sell their shares.

Additions just announced are the introduction of thresholds on the total number of shares on issue (plus or minus 15% of total milk supply), and less than 25% of shares to be held by ceased suppliers.

The overall limit on the size of the FSF will be reduced from 20% to 10% of total shares on issue, but the fund is currently at 6.7%.

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