7 Sep 2009

Fonterra to outline plans for new capital structure

1:53 pm on 7 September 2009

Dairy co-operative Fonterra is expected to outline its plans next week for overhauling its finances, after it ruled out listing the company on the sharemarket.

Radio New Zealand's economics correspondent says Fonterra is likely to put a proposal to farmers that includes de-linking share ownership from milk supply.

Federated Farmers chairman Lachlan McKenzie says there are plenty of other options for Fonterra to raise money for expansion, such as retaining more of its earnings from milk, rather than paying them all out to farmers.

A review of the company's capital structure is due to begin on 18 September, and the company will begin consulting farmers.

Fonterra paid out $600 million last year to buy shares from farmers who reduced supply because of the drought.