Fonterra expects about half its dairy farmer shareholders to be able to buy up the additional shares it is offering them.
New Zealand's largest company has issued details of a proposal to raise money by selling shares to farmers, on top of what they already possess.
Referred to as ''dry shares'', they would not be linked to milk production as current shares are, and would have no voting rights. Farmers would be entitled to hold total shares with a value of up to 120% of their milk production.
Fonterra chairman Sir Henry van der Heyden says he is confident farmers will give the share offering their support. He says the share offering could realistically net the company more than $400 million.
Chief executive Andrew Ferrier says the money will be used to pay off debt, and will also go towards investing in growing the cooperative.
The cooperative announced the move as a way of increasing funding for expansion without opening the company to public listing.
Sir Henry says farmers have made it clear they want to retain complete control of the business and the share offering will meet that demand.
Fonterra is proposing a three-step process, which it says should take care of its capital funding needs for about five years.
The proposal is also aimed at stopping redemption risk, where large amounts of money flow in and out of the balance sheet each year as milk production fluctuates.
The value would be temporarily held at $4.52 per share until the restricted market settles. Farmers would eventually buy and sell shares among themselves, rather than through Fonterra.
Farmers will be consulted about the plan over the next fortnight. If feedback is positive, voting on the proposal will take place at the cooperative's annual meeting in November.
The Shareholders Council says it supports the concept.