Fonterra Releases Key Details On Planned May Supply Offer

27 March 2013

Fonterra Releases Key Details On Supply Offer Planned For May

Fonterra Co-operative Group Limited today confirmed that a Supply Offer enabling farmer shareholders to sell the economic rights of some of their shares will open in May.

Farmer shareholders will have the opportunity to offer to sell the economic rights of up to 25 per cent of their minimum required shares (‘Wet Shares’) to the Fonterra Shareholders’ Fund.

“The Supply Offer provides additional flexibility for farmer shareholders by enabling them to release some of the value of their shareholding – and improve cash flow,” said Chairman John Wilson.

The Supply Offer will not increase the current size of the Fonterra Shareholders’ Fund. Fonterra will purchase the units that arise as a result of this Supply Offer and subsequently redeem them for Fonterra shares, which means that the Offer will not affect the total number of units on issue.

“Fonterra raised around $475 million in equity when it seeded the Fonterra Shareholders’ Fund to ensure it reached $525 million when it was launched in November last year. We always intended that this amount would be made available to farmer shareholders.

“The Supply Offer is a key way of achieving this.”

Farmer shareholders and unit holders will also receive additional shares and units through a bonus issue next month.

“For our farmer shareholders, the Supply Offer and the bonus issue are complementary,” said Mr Wilson.

“Farmers can choose to use the extra shares to back current or future production increases. Alternatively, they might decide to hold them as an investment or sell them,” said Mr Wilson.

Key Points about the Supply Offer
• Fonterra farmer shareholders will have the opportunity to sell to the Fund the economic rights of up to 25 per cent of their Wet Shares (shares a farmer shareholder is required to hold to meet the Share Standard for a season).
• Farmer Shareholders will continue to be able to offer any Dry Shares (shares held in excess of the Share Standard) at any time through the Fonterra Shareholders’ Market or the Fonterra Shareholders’ Fund. However the Supply Offer is only open to Wet Shares.
• The price that Fonterra will pay for units it purchases under the Supply Offer will be an average of the prices of units each day (weighted by volume) over a ten day period in May.
• Farmer shareholders will receive vouchers for the economic rights of Wet Shares that are sold through the Supply Offer. Subject to limits, vouchers count in the same way as shares in applying the Fonterra Share Standard and for voting purposes.
• A booklet explaining the Supply Offer, together with an application form, will be sent to all farmer shareholders in late April. Applications can be made on-line or by mail.
• Since the Supply Offer involves Fonterra purchasing units, farmer shareholders and unit holders will receive a letter setting out disclosures required under the Companies Act 1993. This will be included with interim results material to be posted in early April.

About Fonterra
Fonterra is a global leader in dairy nutrition – the preferred supplier of dairy ingredients to many of the world’s leading food companies. Fonterra is also a market leader with our own consumer dairy brands in Australia/New Zealand, Asia/Africa, Middle East and Latin America.

The farmer-owned New Zealand co-operative is the largest processor of milk in the world, producing more than two million tonnes of dairy ingredients, value added dairy ingredients, specialty ingredients and consumer products every year. Drawing on generations of dairy expertise, Fonterra is one of the largest investors in dairy based research and innovation in the world. Our more than 16,000 staff work across the dairy spectrum from advising farmers on sustainable farming and milk production, to ensuring we live up to exacting quality standards and delivering every day on our customer promise in more than 100 markets around the world.

ENDS

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