Dairy Equity Secures First Swap Agreements

DATE: 22 September 2006

Dairy Equity Secures First Swap Agreements

Newly Listed Dairy Equity Limited (DEL) today announced that it has so far committed to acquire the beneficial ownership of $2.2 million worth of Fonterra Fair Value SWAP shares which it will settle shortly.

DEL Chairman Peter Jensen said “acquisition of these SWAP shares is particularly meaningful in that it provides endorsement of the SWAP opportunity for both Fonterra suppliers and DEL shareholders.

Mr Jensen said that going forward, DEL will be appraising the market of its progress in a way that ensures compliance with its NZSX Listing Rules continuous disclosure obligations.

“While we have a healthy pipeline of potential transactions, DEL will not be making announcements every time it signs a new SWAP agreement,” he said.

The company also confirmed that it would be maintaining its current SWAP price of $6.56/Fair Value share in light of yesterday’s update by Fonterra that it is forecasting a VAC payment of 45 cents per Fair Value Share, and restating last season’s VAC return to 25 cents.

DEL Manager, Geoff Taylor, said “DEL regards Fonterra’s change to separate the returns on its shares from its payments for milk as positive for all shareholders. Fonterra shareholders can now recognize the cost of capital and that Fair Value Shares are a discretionary investment beyond the farm gate”

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