Vote winds up Dairy Equity

Dairy Equity's shareholders have voted to allow the company to be wound up and capital to be returned to them.

Company chairman Peter Jensen said that calculations based on Fonterra's planned share price of $4.52 a share and value-added component of 45c a share represented a 10 per cent yield, pre-tax, "which I think is a pretty competitive return in the current market".

Jensen also predicted there "could well be interest" from parties seeking to buy its book of Fonterra shares and to use its intellectual property to invest further in the equity of the dairy co-operative.

Fonterra only sells shares to member farmers, but Dairy Equity operated through SWAPs agreements with dairy farmers, which involve Dairy Equity agreeing to buy fair value shares for each kilogram of milksolids farmers supplied to Fonterra.

The company said it would immediately return a further 11c a share of capital to investors who are shareholders on June 30. The distribution will be paid on July 3 and will leave the company with cash reserves of around 0.5c a share.

- NZPA