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Eur500 Million Debt Issue

Wednesday 8 May 2002

Fonterra Co-operative Group Ltd has completed its first major debt raising in international capital markets. The company has issued EUR500 million (NZ$1,018 million) of Eurobonds under its recently established Euro Medium Term Note (EMTN) programme. The funds will be used to retire maturing commercial paper.

Fonterra's Group Controller, Bryce Houghton, said short-term debt had been used extensively through the dairy industry merger process and the company was now reducing its liquidity risk by extending its debt maturity profile. He said the issue was over two times oversubscribed.

Group Treasurer Mary-Jane Daly said heavy demand for the bonds from Europe and Asia indicated widespread confidence in Fonterra, despite its name being new to investors and a tight issuing margin of 40 basis points over mid swaps. She said the bonds have started trading in the secondary market at only 1-2 points below the issue rate, which demonstrates that they were well priced from Fonterra's perspective.

Deutsche Bank and Schroder Salomon Smith Barney (Citigroup) arranged the EMTN programme and were Joint Lead Managers of the issue. ABN Amro and UBS Warburg were included as co managers. The Bonds are for a five-year term, maturing 21 May 2007, and will pay a fixed coupon rate of 5.25%. Settlement of the bonds takes place on 21 May 2002. The debt issue and the company is rated AA- long term from Standard and Poor's and Fitch rating agencies.

END

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