Friday, March 29, 2024

No DIRA alignment between Fonterra, Govt

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The Government does not at this stage support an amendment to the Dairy Industry Restructuring Act (DIRA) to facilitate the proposed changes to Fonterra’s share and capital structure.
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Chair Peter McBride says he is confident Fonterra can provide the Government with the necessary assurances and work together to find a framework that supports the flexible shareholding structure.

The Government does not at this stage support an amendment to the Dairy Industry Restructuring Act (DIRA) to facilitate the proposed changes to Fonterra’s share and capital structure.

In a letter to Fonterra, Agriculture Minister Damien O’Connor has raised a risk of changes that weaken performance incentives on the company.

“I am particularly concerned that the current proposals would create a higher risk of diverging shareholder interests inside the co-operative, between farmers with minimum shareholdings for supply only and those with larger shareholdings held for investment purposes,” O’Connor wrote.

O’Connor said he was prepared to consider an “alternative, more balanced proposal” from Fonterra.

Chair Peter McBride has responded, saying the Government is looking for further assurance that the proposal supports contestability, drives performance and innovation, and protects alignment of shareholder interests.

“I am confident we can provide the Government with the necessary assurances and work together to find a framework that supports the flexible shareholding structure,” McBride said.

Fonterra will push ahead with the special meeting of shareholders on December 9, seeking a strong mandate for change from farmers, to strengthen its case to the Government.

The Notice of Meeting is more than 80 pages, containing detailed constitutional amendments and, at the end, O’Connor’s letter dated November 3.

McBride says he had subsequently met the minister and found “philosophical alignment” and the willingness to keep talking.

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