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Positive Response To Fonterra Capital Notes Offer

Thursday 22 November 2001


Fonterra Co-operative Group Ltd’s NZ$200 million capital notes offer, which opened on 5 November 2001 and is scheduled to close on 28 November, has met with an overwhelmingly positive response from public investors. The notes provide an opportunity for non-dairy farmers to invest with New Zealand’s largest company and biggest export industry.

Bryce Houghton, Fonterra’s Group Controller, said the company was pleased with the strong response to the offer. “The offer was fully-allocated to investors within a few days of opening. We see this as a positive sign of an active and liquid secondary trading market, expected to operate from 3 December.”

The capital notes have an initial minimum interest rate of 7 percent 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 percent.

The notes enable the public to invest in the dairy industry without conferring any ownership rights. “The keen interest shown in the notes is illustrative of New Zealanders’ confidence in the dairy industry,” Mr Houghton said.

Ownership of Fonterra remains restricted to New Zealand dairy farmers in proportion to supply. The 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 employs nearly 20,000 people, and manufactures and markets dairy products to customers in 120 countries around the world. The company 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 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

Inquiries: Matthew Hooton
Fonterra Co-operative Group Ltd
+64 9 2565404

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