Fonterra may be forced to look for outside investors after less than a third of its shareholders bought new shares in the cooperative, according to a business commentator.
Fonterra says 30% of its 10,500 farmers bought 60 million shares, for $271 million. The offer had the potential to raise more than $1 billion.
Milford Asset Management's Brian Gaynor says Fonterra's board will be disappointed with the take-up and will now have to choose between scaling back its expansion plans, or looking for new investors outside the company.
Agricultural commentator Stuart Locke from the University of Waikato, also says Fonterra will need more outside investment.
Fonterra says it won't be clear until the end of the season how many farmers were buying more shares to match production forecasts, or just extra shares to top up their income, so-called "dry" shares.
Chairman Sir Henry van der Hayden says he's pleased with the outcome, even though it does not solve the risk that redemptions pose to the balance sheet.
Farmers will have an opportunity to buy up to 120% of their milk production in new shares at the end of each dairy season.
Next stage
The Shareholders Council has begun talks with the Fonterra board on the next stage of the capital restructuring process: whether to allow farmers to trade "dry" shares amongst themselves.
