KEY POINTS:
Shareholders of NZX-listed Dairy Equity yesterday voted to start the process of winding up the company, which was created to get exposure to dairy giant Fonterra.
At its first annual meeting in Auckland yesterday, chairman Peter Jensen said the shareholders had voted in favour of a resolution to investigate the steps necessary to realise investments and return the net proceeds to investors.
The board agreed to update shareholders by the end of January, with any move to wind up the company requiring another meeting and 75 per cent approval.
"I think the insecurity provided by Fonterra suggesting the capital restructure and really the surprise in the dramatic drop in the value-added component of their share, those two things in particular really put us in a situation where [it was] pretty hard to continue," Jensen said.
The company bought the beneficial ownership of Fonterra's fair value shares held by farmers and thereby the rights to the value-added portion and the capital returns from changes in share value.
However, a capital structure review by Fonterra could see all its assets listed on the stock market under a new company in 2010, while this season's record forecast total payout of $6.40 included a 20c value-add component, down from 59c last year.
"I think for us who worked for nearly three years on this concept it's rather disappointing," Jensen said.
The directors would investigate options for a full or partial sale of the business, or the realisation of assets and their return to shareholders, the company said.
Another resolution was passed to amend the issue price of the company's 92.2 million shares to 50c with no further calls to be made - meaning a total of $46.1 million had been raised, with $21.3 million invested.
The company had made a profit in the first year, paid a dividend and the directors believed that after extracting the value of the company shareholders would be reasonably close to the investments they had made.
