Fonterra receives favourable tax ruling
Fonterra receives favourable tax ruling for National Foods shareholders
Fonterra announced today that National Foods shareholders will be eligible for rollover relief from capital gains tax if they choose Redeemable Preference Shares (RPS) as payment for their National Foods shares, provided certain requirements are satisfied.
Fonterra is offering National Foods shareholders $6.00 per share and it will offer $6.20 per share if it acquires at least 90 per cent of the shares in National Foods. Fonterra’s offer includes an option for shareholders to accept cash or RPS, or a mixture of both.
The Australian Taxation Office has issued a Class Ruling in relation to the RPS.
National Foods shareholders who are resident in Australia for tax purposes and who would be taxable on capital gains when they sell their National Foods shares, can now defer this capital gains tax (CGT) liability by choosing to receive RPS. The CGT liability will be deferred until they sell or redeem the RPS. The rollover relief is subject to Fonterra owning 80 per cent or more of National Foods shares.
The RPS entitle shareholders to a cumulative dividend of 7 per cent per annum. RPS are not the same as shares held by farmers supplying milk to Fonterra. They mature on 15 March 2010, but holders may redeem them at any time on 60 business days notice, or they may sell their interest privately.
Fonterra Chief Executive Andrew Ferrier said that Fonterra was pleased with the decision made by the ATO.
“We believe the RPS present a valuable opportunity for National Foods’ shareholders,” said Mr Ferrier.
“RPS offer a number of benefits, including an attractive annual dividend, a strong investment grade rating, and now of course we have confirmation of the availability of rollover relief from capital gains tax.”
Fonterra is currently finalising production of its Supplementary Bidder’s Statement which is expected to be mailed to National Foods shareholders next week. Shareholders should read this document carefully.
National Foods’ shareholders with any questions about the Fonterra offer can call our shareholder information line on 1800 333 360 (from Australia), 0800 776 646 (from New Zealand) or +612 9278 9259 (from all other countries) between 9am and 5pm Melbourne time.