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Bonlac Farmers To Vote On Fonterra Proposal

Bonlac Farmers To Vote On Fonterra Proposal

In less than one month's time farmer shareholders of Victorian-based Bonlac Supply Company will be asked to vote on a proposal to fundamentally restructure Bonlac Foods Limited. Today, Bonlac Foods Limited signed an agreement with Bonlac Supply Company and Fonterra Co-operative Group which, if accepted by Bonlac's shareholders, will see Fonterra increase its stake in Bonlac Foods from 25 per cent to 50 per cent with Bonlac Supply Company, a cooperative of Victorian and Tasmanian dairy farmers, owning the other 50 per cent.

Jay Waldvogel, acting Chief Executive Officer of Fonterra Co-operative Group said "It is a logical, pragmatic and fair solution that provides value to both parties. It addresses the current situation of Bonlac Foods and achieves longer-term benefits for everyone involved. "We have worked together with both Bonlac Supply Company and Bonlac Foods for several months to come up with a solution that will secure the future of Bonlac Foods. The proposed restructuring draws on the strengths of both Bonlac Supply Company and Fonterra. It will take substantial costs out of Bonlac Foods and deliver significant bottom line benefits," he said.

Should Bonlac shareholders vote for the proposal, Fonterra will commit to buy all of Bonlac Foods' production and assume responsibility for all global sales and marketing. In addition, Fonterra will forgo some existing commercial arrangements and provide management services that will allow Bonlac Foods to significantly rationalise its overheads and improve its financial performance.

"By working together, we can provide our customers with superior service and thereby strengthen our respective positions in the competitive global dairy marketplace," said Mr Waldvogel.

Mr Waldvogel said Fonterra welcomed the decision to move ahead by the Bonlac Supply Company board.

"Bonlac Supply Company shareholders and staff have faced uncertainty for long enough. We have a joint Fonterra-Bonlac transition team on standby and ready to commence implementation should we receive the support of Bonlac Supply Company's farmer shareholders on September 5," he said.

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