Fonterra refutes public buy-in reports

Mooted changes would not allow the public to invest directly in Fonterra, its shareholders' council says. Photo / Sarah Ivey

The Fonterra Shareholders' Council has hit back at suggestions that mooted changes to the co-operative's capital structure will allow the public to invest directly in the dairy giant.

Fonterra Shareholders' Council chair Blue Read today refuted media headlines that imply the public will be able to buy into the farmer-only co-operative as part of the trading among farmers concept.

Fonterra yesterday announced the third stage of its capital restructure which would allow farmers to trade shares among themselves, rather than shares being issued or redeemed at a price set by the Fonterra board.

Part of the outlined changes included a Fonterra Shareholders Fund, which could help free up cash for farmers.

The fund would pay farmers for the right to receive dividends and the gain, or loss, from any change in value of shares. This would enable farmers to buy new shares or retain shares they would otherwise have to sell.

The fund would raise money by selling investment units and investors could include sharemilkers, retired farmers, institutions and members of the public.

Unit holders in the fund would not own shares in Fonterra, nor would they have any voting rights, Read said.

All voting rights would remain with the shareholders, who would still own their shares, he added.

Most importantly, supplying shareholders would continue to be paid their full share-backed milk price and would retain all voting rights in their shares based on their share-backed milk solids.

"We have been very clear. It is essential Fonterra is 100 per cent owned and controlled by its supplying shareholders. Farmers have told us this is what they want," Read said.

Fonterra is currently consulting with shareholders on the proposal, before coming back to the table in early May to discuss feedback.

A final recommendation will be made to farmers in June, before a shareholder vote takes place in July.