Fonterra Shareholders Vote
5 May 2005
Fonterra Shareholders Vote in new Capital Structure
Fonterra shareholders have given two resolutions introducing a new capital structure to the Co-operative their overwhelming support.
More than 90 percent of the 62 percent of shareholders voting at today's Special Meeting voted in favour of the proposed changes to Fonterra's capital structure, which will come into effect at the start of the 2006/07 season.
Fonterra chairman Henry van der Heyden said shareholders had voted for measures that will give the company's capital structure additional flexibility to meet the needs of both the business and its shareholders.
"We also have a much simpler capital structure following the decision to replace both Peak Notes and Supply Redemption Rights," said Mr Van der Heyden. "The flexibility for shareholders comes in managing growth of milk supply, without placing additional pressure on capital, and bringing in additional measures to manage one-off seasonal fluctuations in supply, again without pressuring capital."
"At the moment suppliers must buy shares and peak notes to match their milk production, but the new measures provide flexibility around that requirement. Now our shareholders can opt for contracts and have additional flexibility to manage seasonal fluctuations in their supply.
"From a business point of view these measures provide alternatives to ensure we capture growth in milk, while at the same time reducing the risk of redemptions and providing another entry point for new farmers to the Co-operative."
The changes mean Fonterra shareholders will now have just one instrument for their capital holdings in the Co-operative - a Fair Value Share - while a system limiting milk sourced from contract supply to just 15 percent of the total milk supplied to the Co-operative has also been introduced.
About 1,500 Fonterra shareholders attended one of the seven meeting venues - linked by satellite - and more than 5000 shareholders voted by proxy.
"That's a very pleasing turnout and one of the highest I can recall for a vote," said Mr Van der Heyden. "This sort of involvement shows the strength of a co-operative working at its best. Some may criticise it as a slow process but this result shows it is effective.
"Today's meeting was the culmination of extensive consultation with shareholders, a process that has created a benchmark for future consultation. Our farmers have been very involved in reaching a decision that will enable the business to continue its success."
The final results of voting at the Special Meeting were:
Percentage in favour
That the constitution of the Company be altered to facilitate the replacement of Peak Notes with a Capacity Charge, the removal of Supply Redemption Rights, and the introduction of Excess Shares and Unshared Supply.
That the constitution of the Company be altered to facilitate the introduction of a new form of milk supply contract that is subject to a 15 percent annual limit.