12 Apr 2010

Fonterra's capital restructuring proposal up for discussion

6:31 am on 12 April 2010

Fonterra is beginning a series of farmer shareholder meetings through the country to discuss the third stage of its capital restructuring proposal, that allows farmers to trade shares among themselves.

Both the company and its shareholders council say the move will not dilute farmer ownership and control of the co-operative.

The proposal includes a new Shareholders Fund, which farmers needing a cash injection would be able to draw on by selling it the dividend income and any gain in value from their shares.

Outside investors would be able to gain access to that income source by buying units in the fund.

Fonterra's chief executive Andrew Ferrier emphasises that they can't buy the actual shares or hold voting rights.

He says neither the fund, nor the investors in the fund, will have any stake in the management of Fonterra because the shares rest only with farmers.

The meetings began on Monday. Fonterra's 10,500 shareholders vote on the proposal in June or July.