The government has given Fonterra the green light for its capital restructure with changes expected to come into force in March.
The co-op which has about 10,000 farmers wanted to revamp its capital structure to reduce the number of shares farmers need to hold to join the company from one share per kilogram of milk solids, to one share per three kilograms.
The new structure would also allow different types of farmers to hold shares in the company and cap the size of the associated shareholders’ fund to 10 percent of all shares on issue.
The changes are aimed at securing the company’s financial future and retaining farmers, amid the prospects of falling milk supply and competition from other milk processors that do not require capital investment from farmers.
An amendment to the the Dairy Industry Restructuring Act which was needed for the restructure to take place passed its third reading in Parliament last night.
Fonterra chairperson Peter McBride said the passing of the bill provided farmer owners the clarity they have been wanting and meant the business could move ahead with implementing the flexible shareholding capital structure in late March 2023.
He said the timing was based on a number of considerations.
“We believe late March is the best date for implementation because it avoids our share trading black-out period associated with the co-op’s interim results.
“It also gives shareholders time to fully digest the detailed information we will be sending through ahead of the implementation date, and to seek advice from their financial advisors.”
Fonterra intends to confirm the final implementation date at the same time as its interim results are announced – due on 16 March 2023.