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Dairy Equity, the NZX-listed firm which tried to provide non-farming investors with exposure to the dairy boom, is calling it a day and plans to sell assets and return cash to its investors.
Dairy Equity listed on the stock exchange in September 2006 in a bid to give the public a chance to gain exposure to Fonterra.
The investment company has been able to gain exposure by purchasing the rights to the value added portion of farmers' fair value shares.
But the proposal by Fonterra to keep its farmer co-operative but shift all its assets, liabilities and operations into a second company which could then list on the stock exchange has largely made Dairy Equity redundant.
If Fonterra lists in 2010, investors would be able to get direct exposure to its shares either through the 20 per cent proposed initial public offer or up to 35 per cent of shares which would be tradeable on the exchange.
Dairy Equity directors yesterday announced that the firm would seek a High Court Order that would enable it to return $20 million of cash assets to shareholders. This was the only practical way of returning capital to shareholders in a tax efficient manner whilst maintaining the company and the balance of its assets for sale, the board said.
Dairy Equity chairman, Peter Jensen, said the decisions were a consequence of the shareholder resolution passed at shareholder meeting last month.
Obtaining a court order to facilitate the return of capital is expected to take up to six weeks. By the time the company is in a position to return cash, it would also have a better appreciation of the sale value and options for its non-cash assets.
These assets include investments in Fonterra Fair Value Shares and related intellectual property, and the value of its NZSX listing.
"We are writing to potential purchasers, advising them of the sale process, inviting them to indicate the assets they are interested in and the price they would be prepared to pay," he said.
"We also invite interested parties to contact the company to ensure they are included in the sale process," said Jensen.
