MEDIA RELEASE
By Farmers for a Better Dairy Deal
www.dairynz.org
14 June 2001
Global Co:
Unwary Farmers To Receive Monopoly Money
“Global Co seems content to let dairy farmers believe its capital notes will be virtually cash”, said Mark Masters on
behalf of Farmers for a Better Dairy Deal.
“That’s a real trap for the unwary .”
“Farmers who want to supply another processor or reduce production or sell their farm are likely to be ‘paid’ out by
Global Co in capital notes.”
“But, like other monopoly money, capital notes have little intrinsic value—they have no principal payment date, the
interest rate can be changed by Global Co and interest doesn’t even always have to be paid – Global Co can dish out more
monopoly money instead of paying interest in cash.”
“Global Co can create as much monopoly money as it likes.”
“In bad times, capital notes will be the next worst thing to the surrendered shares.”
“And the value of Global Co’s capital notes will be set in the financial market.”
“Every farmer knows how markets react when things are over supplied or out of favour. Their value will drop.”
“But there’s no upside—the interest rate will see to that.”
“And, what’s more, dairy farmers will have to pay a broker to sell them!”
“In the real world, a company simply couldn’t decide to repay shares with a loan. Shareholders wouldn’t put up with such
a goofy, flaky arrangement.”
“If a shareholder wants out, they expect to be allowed out.”
“But under Global Co, when a supplier wants out, they’re likely to become forced lenders to Global Co – still on the
hook for Global Co’s cash problems.”
“For Global Co, the risk of suppliers leaving in droves, causing a ‘run’ on Global Co’s reserves, can be easily overcome
using much more efficient and conventional arrangements – for example, allowing farmers to sell their shares to other
supplying farmers.” [This was part of the 1999 Mega Co-op proposal].
“Global Co has such a weird capital structure. They even take 18 pages to summarise it!”
“And Global Co has even got its ‘peak notes’ wrong” (see our media release earlier today). It hardly gives you much
confidence that the rest of Global Co is right”, said Mark Masters.
“Of course, we’ll find out more about the capital notes – and much more about Global Co – if and when Global Co puts out
a proper prospectus for its ‘monopoly money’.”
“Sadly, we won’t get real information until well after our vote. Pity our leaders haven’t informed us more fully and
more openly before we vote.”
“But then I wonder if our directors really understand it? Certainly, not many people I’ve spoken to do. Not even
supposed financial gurus in Wellington”, concluded Mark Masters.
ENDS
Inquiries to www.dairynz.org
Tony Baldwin
Tel (04) 386 4755 or (025) 386 4755