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Shareholders’ Council Evaluating Capacity Proposal

Shareholders’ Council Evaluating Capacity Adjustment Proposal

Fonterra’s Shareholders’ Council is committed to ensuring that no stone is left unturned in assessing the co-operative’s Capacity Adjustment Proposal.

Shareholders’ Council Chairman, Tony O’Boyle, said today that the Council must ensure it follows a robust process in determining whether Fonterra’s Capacity Adjustment Proposal is in the best interests of shareholders and is fair and equitable.

The 46 member Council, which represents Fonterra’s shareholders, has been instrumental in bringing about the proposal to amend the co-operative’s capital structure. In August 2002 the Council formally asked the Fonterra Board to commission a special report on an appropriate capital structure to address shareholders’ concerns with Peak Notes. In January 2003 the Council went further, recommending to the Board the removal or simplification of Peak Notes.

Since that time, the Council has been in active consultation with shareholders and has provided feedback to the company on the Capacity Adjustment Proposal. Mr O’Boyle said Council members had facilitated an extensive consultation process, chairing the recent round of nationwide consultation meetings on the proposal.

“The Capacity Adjustment Proposal is a critical issue for shareholders. It is paramount that all shareholders gain a full understanding of the proposal and are fully aware of how it will affect them on their individual farms.

“The Council needs to ensure shareholders are provided with the information required to be able to make a well informed decision. And likewise the Council needs to be well informed before we can make a decision or provide any leadership to shareholders on the proposal which affects their capital investment in their co-operative.”

The Council has set aside a full day to debate the merits of the proposal when it next meets.

“Council will be able to advise shareholders of our position once we have received the final proposal from the company and had an opportunity to consider and discuss it in detail,” Mr O’Boyle said.

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