Farmer-share­hold­ers get Fon­terra choice

Matamata Chronicle - - Rural Delivery -

Arecord 3000-plus farm­ers turned out to Fon­terra’s na­tional round of share­holder meet­ings. The farmer-owned co-op­er­a­tive has started col­lect­ing re­sponses to three op­tions put to share­hold­ers on the con­tentious is­sue of a ‘‘cus­to­dian’’ for the le­gal ti­tle of their shares un­der the trad­ing among farm­ers (TAF) plan.

A com­pany spokesman said there was no clo­sure date as yet for feed­back.

How­ever, with a Novem­ber in­tro­duc­tion for TAF in their sights, Fon­terra di­rec­tors told share­hold­ers a ‘‘TAF train­ing pack­age’’ be­gin­ning in June had been set up for them, as well as for share­bro­kers and ru­ral pro­fes­sion­als.

Af­ter a back­lash last year from share­hold­ers to news they would have to sur­ren­der le­gal ti­tle to their shares to a cus­to­dian if they en­gaged in as­pects of the share trad­ing pro­posal, Fon­terra lead­ers went back to the draw­ing board and last week pre­sented rat­tled farm­ers with three new op­tions around the cus­to­dian is­sue.

Op­tion one was a Fon­terra-owned cus­to­dian; two, a farmer trust cus­to­dian; three, retaining le­gal ti­tle with farm­ers.

Farm­ers heard that the board rec­om­mended op­tion two, which would see the cus­tody of shares in­vested in the pro­posed Fon­terra Share­hold­ers Fund owned by a trust con­trolled di­rectly by farmer-share­hold­ers.

While op­tion three at first blush would ap­pear the easy choice for farm­ers wor­ried about los­ing con­trol and own­er­ship of Fon­terra to mar­ket in­vestors who will be in­vited to in­vest in listed units of Fon­terra shares un­der TAF, Waikato Fed­er­ated Farm­ers pres­i­dent James Houghton noted that as an in­vestor, he would not want to put money into a com­pany where the shares were tightly held by Fon­terra farm­ers.

Fon­terra is propos­ing TAF as part of an on­go­ing cap­i­tal re­struc­ture to se­cure its bal­ance sheet from washout when farm­ers want to exit the co-op­er­a­tive and cash in their milk sup­ply-linked shares.

The world’s lead­ing dairy ex­porter also wants the ex­tra cap­i­tal unit in­vestors could pro­vide to fur­ther its growth am­bi­tions. But some farm­ers with cold feet fear TAF is the first step to Fon­terra be­ing listed on the share­mar­ket.

Un­der the pro­posal, farm­ers would be able to place shares with a Fon­terra Share­hold­ers’ Fund and be paid the share value for the rights to div­i­dends and any change in mar­ket value, while retaining vot­ing rights.

When a farmer wanted to place shares with the fund they would place a sell or­der on the fund mar­ket and once a trade was matched with a unit in­vestor the farmer would trans­fer the share to a cus­to­dian, which would hold the le­gal ti­tle.

To re­gain the eco­nomic in­ter­est of shares, farm­ers would need to buy new shares or units, which could be con­verted back into shares by ap­ply­ing to take them out of the cus­to­dian’s ‘‘locked box’’.

Farm­ers have yet to get hard TAF de­tails, and their watch­dog share­holder coun­cil has yet to OK TAF, but with farm­ers hav­ing voted over­whelm­ingly for the con­cept in 2010, the di­rec­tors are clearly forg­ing ahead with their plans. At last week’s meet­ing they said: ‘‘All go­ing well, we ex­pect the final TAF pack­age to come be­fore the board in the first half of the year and coun­cil by Au­gust this year for ap­proval.’’

Newspapers in English

Newspapers from New Zealand

© PressReader. All rights reserved.