Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


Fonterra now has $1 billion available for debt reduction

By Rebecca Howard

Sept. 25 (BusinessDesk) - Fonterra Cooperative Group said it has agreed to sell its 50 percent stake in DFE Pharma for $633 million and now has over $1 billion available to repay debt.

Fonterra is in the midst of a cooperative-wide strategic review after reporting its first loss in the year ended July 31, 2018 and is poised to report its second annual loss tomorrow.

In August, it scrapped its dividend as it slashed the carrying value of assets around the world and signalled it expects to report a loss of $590-675 million for the year, a 37-42 cent loss per share

Fonterra has already sold ice cream maker Tip Top and earlier this year said DFE Pharma, a 50 percent joint venture with Royal Friesland Campina, was identified for sale due to the substantial capital required for future growth.

The stake was sold to CVC Strategic Opportunities II, a fund managed by CVC Capital Partners, a private equity and investment advisory firm managing approximately US$83 billion of assets in 73 companies worldwide, said Fonterra chief executive Miles Hurrell.

The sale will be settled with a cash payment of $537 million, payable on completion of the sale, plus an interest-accruing vendor loan of $96 million for a term of up to 15 years. Built into the deal is a potential additional payment of up to $44 million, depending on DFE’s performance over two years.

The sale is subject to regulatory approvals from competition authorities.

Hurrell said Fonterra will continue to have a long-term supply agreement with DFE Pharma.

“A big part of the success of DFE Pharma has been the high-quality lactose produced by the team at Fonterra’s Kapuni site in Taranaki and it is a good outcome to be able to continue to supply this,” he said.

Hurrell said the sale is an “important milestone” in Fonterra’s plan to lift its business performance.



© Scoop Media

Business Headlines | Sci-Tech Headlines


$7.5 Billion Surplus: Government Accounts "Show Strong Economy"

“The surplus and low levels of debt show the economy is in good shape. This allows the Government to spend more on infrastructure and make record investments in health and education,” Grant Robertson says. More>>


New OIO Application Trumps Judicial Review: OceanaGold Cleared To Buy Land For Waihi Tailings Expansion

In a surprise turnaround, the government has given OceanaGold a greenlight to buy land to expand its Waihi mine after the application was previously turned down by Land Information Minister Eugenie Sage. More>>


Christchurch Rebuild: Fletcher Sued For $7.5m Over Justice Precinct

Fletcher Building is being sued for $7.5 million by utilities contractor Electrix, one of the subcontractors on the Christchurch Justice and Emergency Services Precinct. More>>

Three New Drugs: PHARMAC Signs Bundle Deal For More Cancer Medicines

420 New Zealanders with lung cancer, breast cancer, multiple sclerosis and respiratory disease will benefit each year from a bundle deal PHARMAC has finalised with a medicine supplier. More>>


"Levels Playing Field": Government Responds To Electricity Price Review

The changes announced today include: • Supporting new and independent retailers by requiring the big power companies to sell into the wholesale market at affordable rates. • Extending discount rates to all customers • A pilot scheme to help customers who have not switched power providers before to shop around for better deals... More>>