Farmers question Fonterra proposal
Fonterra will no longer be 100 per cent supplier-owned if a shareholder fund is created as part of the share trading among farmers proposal, say opponents as New Zealand’s biggest company gears up for a fresh debate on its capital restructure plan.
Fonterra dairy farmer Andrew Cryer of Franklin, and Lachlan McKenzie, former chairman of Federated Farmers’ dairy wing, said once shares are held by a ‘‘nonsupplying entity’’ – such as the proposed shareholders fund – the co-op could not be deemed 100 per cent supplying shareholder-owned.
‘‘The shareholder fund, no matter however it is constructed with smoke and mirrors, is a nonsupplying entity,’’ the pair said.
‘‘Therefore under [Fonterra chairman] Sir Henry van der Heyden we will only have 100 per cent control and no longer 100 per cent supplier ownership if the proposed fund comes to fruition.’’
Fonterra’s co-operative principles said shares could only be held by supplying shareholders, they said. ‘‘Is the shareholders fund a Trojan horse to get Fonterra listed on the NZX?’’
Cryer called for Fonterra to provide farmers with advance details on the material to be presented to them at Trading Among Farmers (TAF) meetings around the country starting on January 31.
Without details to digest before the meetings, farmers could not have an informed debate, ‘‘so the meetings only will have half the value’’, Cryer said.
A Fonterra spokesman
said material would be available on Fonterra’s Fencepost website a day before the meetings started.
Ninety per cent of shareholders had in 2010 ‘‘voted in support of the shareholders fund’’, he said.
Cryer agreed farmers had supported ‘‘a perception’’ of TAF that year. But it had since become clear the proposal involved ‘‘outside investors’’, he said.
Under the proposal, which needs legislation, farmers needing cashflow would 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.
Cryer and Mckenzie said Fonterra had a good balance sheet and did not need the shareholders fund. ‘‘Current options for capital are retentions, new shares and debt. The indication is that Fonterra had around $600 million of new capital last financial year [which] suggests new capital is not an issue.’’