Momentous day for Fonterra Cooperative Group

Federated Farmers is hailing the decisive 89.85 percent vote in favour of the final leg of Fonterra’s capital structure review as the most momentous thing in the Cooperative’s history, since it was formed in October 2001.

“This is truly a red letter day for New Zealand’s dairy industry and for Fonterra Cooperative Group,” says Lachlan McKenzie, Federated Farmers Dairy chairperson.

“We have a decisive yes vote to commence internal share trading. This secured nearly 90 percent approval off a turnout of just under 78 percent. Given that’s almost the same turnout as for the 2008 General Election, I’m safe to say it’s decisive.

“I think Fonterra’s Board, management and staff need to take a huge bow for the way the consultation has been managed and delivered. It was cohesive, insightful and executed in such a way that shareholders were given the confidence they needed to vote yes.

“This vote now means that the bogey of capital redemption risk to Fonterra will subside once some key conditions have been met. Assuming that, this has potential to become one of the highest value markets in New Zealand but that’s still around a year off.

“Critically, shareholders will retain total control.

“A new Fonterra Shareholders Fund is in the offing but of course we still have to pass some milestones. This will enable unit holders to have exposure to New Zealand’s largest export but frankly I see this as a flexible extension to the public securities Fonterra currently issues.

“There’s no way farmers would countenance giving voting rights or milk payment to those who have no skin in the game. That’s why Fonterra is still 100 percent owned by farmers and headquartered in New Zealand.

“Farmers have seen the adverse results from demutualisation overseas and that has driven a strong sense of farmers wanting to control the destiny of farmers.

“What this vote now means is that Fonterra can plan for strategic growth as the recent acquisitions in the United States and Europe show. We are part of the largest dairy exporting company on earth and I see a very bright future ahead for us,” Mr Mckenzie concluded.