Fonterra has advised that a public share listing will not be part of the capital structure consultation to begin shortly with farmer shareholders.

The news comes after great speculation regarding a possible listing on the New Zealand Stock Exchange; rumours which reportedly had farmers concerned.

Fonterra Chairman Sir Henry van der Heyden said the announcement addressed the speculation about the Co-operative’s capital structure review and would allow shareholders to debate the issues without needless distraction.

“Many of our shareholders have made it clear they want to retain 100% farmer control and ownership of their Co-operative,” he said.

Under Fonterra’s constitution, 75% of votes must support any change to capital structure.

“Taking a public listing off the table is a pragmatic, commonsense approach which reflects how our shareholders feel. It would be a waste of time and money to debate the merits of a public share listing when there is no prospect of securing a 75% vote,” Sir Henry advised. “This is the most important conversation we’ve had in our Co-operative since we formed Fonterra in 2001. We want to have it without the distraction of misplaced speculation that clouds our discussions.”

The Board, with the unanimous support of the Fonterra Shareholders’ Council, will discuss with farmers possible solutions around a three-step process that, if accepted by farmers, would take care of Fonterra’s capital structure issues for the immediate future.

At present Fonterra’s shares relate to milk production and are redeemable. This means at times of falling production, significant amounts of equity are lost from the balance sheet, affecting debt-to-equity ratios.

The consultation process with shareholders will begin on September 18.

Sir Henry said that, if farmers supported the first three steps, there were a number of options not involving public listing that they could consider for any fourth step.

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