Fonterra to Put Trading Among Farmers to Vote

NZ - Federated Farmers has described Fonterra Cooperative Group announcing a special meeting that will see a final vote taken on Trading Among Farmers (TAF) as the right thing. Part of TAF is the creation of a ‘Shareholders Fund’ that will see units sold to private investors. Chairman of Fonterra, Sir Henry van der Heyden, said that the Board would hold a special meeting of shareholders on 25 June to discuss the detail of Trading Among Farmers, give shareholders a final vote and unify the Co-operative.
calendar icon 23 April 2012
clock icon 3 minute read

Sir Henry said the Board was in a challenging position because while the majority of shareholders was urging directors to get on with Trading Among Farmers, there was a small group of shareholders who had concerns and were particularly vocal in the New Zealand media.

"Firstly, this is in danger of splitting the shareholder base and is not in the best interest of Fonterra's future," Sir Henry said.

"Secondly, instead of having the discussion among farmers and resolving the matter in the family, the debate is now spilling into the international media and damaging Fonterra's reputation and our global partnerships."

Sir Henry said that he and Chief Executive Officer, Theo Spierings, had been in Asia last week and most people they met asked if the debate was impacting on the Co-operative's stability and reliability as a partner.

"We have to put a stop to this and use the special meeting to unify the shareholder base so that we can get on with implementing the new refreshed business strategy. At the moment all we are doing is destroying value and compromising potential business opportunities."

Sir Henry said that the minority group was under the misapprehension that the Board was implementing a package that was different from what they originally voted on. In 2010 nearly 80 per cent of farmers voted and 90 per cent voted in support of the proposal.

"Right now everything points to the fact that the final package will be the same as that originally outlined to shareholders in the several brochures distributed before farmers voted in 2010," he said.

Anything that had been developed in more detail, like the custodian, had already been discussed with shareholders and their input had influenced the Board's final decision.

By 25 June due diligence on TAF will be complete, the Board will have addressed the four preconditions and Council will have had the opportunity to consider the fifth precondition. Legislation is likely to be through the House.

"Therefore the Board will be in a position to give unqualified assurances on 100 per cent control and ownership," Sir Henry said. “We will be able to answer everyone's questions with absolute confidence and the meeting will serve to remind all shareholders of the detail of the Trading Among Farmers package.

"It will also be an opportunity for the Board and independent advisors to outline what they found in due diligence and for the Board and Council to outline the process observed on the five preconditions," Sir Henry said.

But Sir Henry added that if due diligence or the Board or Council's discussions uncovered any thing that was significantly different from what was originally outlined in 2010 or that required further constitutional change, the Board will also use this meeting to put any additional resolutions.

"But if 100 per cent control and ownership is certain and all the preconditions are met, the final vote is likely to support the 2010 decision and TAF will be implemented as planned in November this year," Sir Henry said.

“Trading Among Farmers and the proposed Shareholders Fund is increasingly topical, so we must thank the Board for trusting shareholders with the final say,” says Willy Leferink, Federated Farmers Dairy chairperson.

“Farmers like me voted for the principle of a shareholders fund but that was two years ago and was based on a concept. We also thought it was tied to the cooperative’s constitution and not legislation currently before Parliament.

“There’s realisation that if we go down the TAF route, the Board doesn’t need to go back to farmer-shareholders until the fund hits 25 percent of the cooperative’s equity.

“This is a major decision for shareholders and shareholders must go into this with their eyes wide open.

“The Shareholders Fund and its focus on dividend are envisaged as a counterweight to farmers getting the most for the milk they produce. All we want is for farmer-shareholders to be given the chance to have a final say as this is their cooperative and its future rests with them."

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