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Fonterra Capital Notes Offer Opens Today

Fonterra Co-operative Group Ltd's NZ$200 million Capital Notes Offer opens today, offering an opportunity for non-dairy farmers to invest with New Zealand's largest company and biggest export industry. The Capital Notes are being offered under an Investment Statement dated 25 October 2001.

Graham Stuart, Fonterra's Chief Financial Officer, said the Capital Notes offer "an initial interest rate significantly return above the risk-free rate and a solid credit rating, and as such they are should be an an extremely attractive proposition to a wide range of investors".

The Capital Notes will have an initial minimum interest rate of 7% through to 10 July 2002, at which date the rate is reset and thereafter reset annually to a margin over the 12 month Government Stock rate. At the current Standard & Poors credit rating of A+ for the Notes, this margin is 1.7%. More detailed information is described in the Investment Statement.

"The Notes should offer ongoing security and stability of performance in so much as the margin payable is linked to the the Notescredit rating," Mr Stuart said. "Liquidity is afforded by the company and shareholders of the company as well as the investor community."

A series of presentations on the Offer have been made to NZSE Member Firms and Advisers of the Lead Managers throughout the country, and have been met with a very positive response.

The Offer opens on 5 November and closes on 28 November unless fully subscribed earlier. The principal amount of Capital Notes an individual investor can apply for, is $5000 and in multiples of $1000 thereafter.

The Lead Managers for the Offer are ABN AMRO Craigs, Forsyth Barr/Forsyth Barr Frater Williams and Westpac Institutional Bank.

The Fonterra Capital Notes Offer provides an opportunity for the public to invest in the dairy industry without conferring any ownership rights. Ownership of Fonterra remains restricted to New Zealand dairy farmers in proportion to supply. The Fonterra Capital Notes provide a mechanism for exiting shareholders to receive fair value for their stake in the business. The use of Capital Notes for shares surrendered by dairy farmers allows optimal management by Fonterra of its capital resources on an ongoing basis.

Fonterra Co-operative Group Ltd has shareholders' equity of NZ$5 billion, partially funding more than NZ$12 billion in assets, which generate revenues of in excess of NZ$14 billion per annum. With employs nearly 20,000 staffpeople, who and manufactures and markets dairy products to customers in 120 countries around the world. Fonterra generates more than 20 percent of New Zealand's export earnings and more than 7 percent of its GDP.

Application has been made to the New Zealand Stock Exchange for permission to list the Capital Notes and all the requirements of the Exchange relating thereto that can be complied with on or before the date of this announcement have been duly complied with. However, the Exchange accepts no responsibility for any statement in this announcement.

END


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