For Immediate Release
14 September 2006
Dairy Equity Makes Positive Entry to the NZSX
Dairy Equity Limited (DEL) debuted on NZSX today and late morning was trading at $0.52 per share on light volumes.
The Company raised $92m in its initial public offering which closed last Friday and will use the offer proceeds to
invest in purchasing the beneficial ownership of Fonterra Fair Value Shares from dairy farmers through agreements known
as SWAPs.
At a listing ceremony in Tauranga this morning, DEL Chairman, Peter Jensen, said that he considered that, from a
farmer’s point of view, SWAPs were a significant adjunct to Fonterra’s co-operative structure and that from an
investor’s viewpoint, the Company’s timing in coming to market could not be better.
“Farmers will soon be coming out of their busiest time of the year and will be starting to make plans for the following
season. To the extent that these plans require capital, SWAPs provide them with an attractive new alternative.”
“At the same time, changes that Fonterra is making to separate the payments it makes for raw milk and the profits it
makes from adding value to raw milk, make it both easier for farmers to see the returns they are getting from their
respective investments in farming and Fonterra and make SWAPs simpler.”
“Fonterra Fair Value Shares have performed well since 2001 when Fonterra was formed, and we believe they will continue
to perform well. Certainly Fonterra acknowledge the potential for increases in value added returns - essentially the
company’s dividend – and they are under pressure from farmers to realise these gains.”
Mr Jensen said that the decision to enter into a SWAP agreement would be a big one for farmers, akin to buying or
selling property, and accordingly, DEL expected an orderly uptake of SWAPs, increasing towards the end of the farming
season in May when most farms and farm businesses change hands.
ENDS