Fonterra Gives Unique Opportunity for Public to Participate in Their Performance

Fonterra today outlined details of a unique opportunity for the public to participate in the Co-operative’s performance with the release of an Offer Document for the Fonterra Shareholders’ Fund.

26 Oct 2012 --- Chairman Sir Henry van der Heyden said that for the first time in Fonterra’s history, and with Farmer Shareholders’ support, members of the public will be able to gain exposure to New Zealand’s largest company and the world’s largest dairy processor by buying Units in the Fonterra Shareholders’ Fund.

Fonterra unveiled details of two key components to support Trading Among Farmers:

- The Supply Offer booklet inviting Fonterra Farmer Shareholders to sell the economic rights of a portion of their shares to the Fonterra Shareholders’ Fund.

- The Offer Document (a registered prospectus and investment statement dated 26 October 2012) inviting the public to gain exposure to the Co-operative’s performance by purchasing Units in the Fonterra Shareholders’ Fund.


Sir Henry said the Fonterra Shareholders’ Fund would support liquidity in the Fonterra Shareholders’ Market, allowing Farmer Shareholders to trade Fonterra Shares among themselves with a more flexible structure, rather than buying and redeeming them from the Co-operative.

“This will provide permanent capital for Fonterra and reduce redemption risk, while preserving 100% farmer control and ownership of the Co-operative,” said Sir Henry.

“It is a historic day for the Co-operative. The Fund provides a unique opportunity for the public to gain exposure to the financial performance of Fonterra and the global dairy industry.


“Farmer Shareholders and Unit Holders will invest in the performance of Fonterra through separate structures. What they both have in common is the chance to be part of the continuing performance of our Co-operative – a New Zealand success story,” said Sir Henry.

Chief Executive Theo Spierings said that Fonterra’s performance shows it is a leader in the international dairy market, and a unique investment opportunity.

“In New Zealand in the 2011/2012 dairy season, we collected approximately 17 billion litres of milk – and more than 2 billion litres overseas.

“NZ Milk Products is the backbone of Fonterra, collecting milk, manufacturing dairy products, and exporting to customers around the world. Our sales networks reach customers in more than 100 countries. Products range from everyday dairy nutrition powders, to advanced dairy nutrition products, and our customers include five of the world’s biggest infant formula manufacturers and many of world’s largest food companies.

“Fonterra builds on earnings from New Zealand and internationally-sourced milk through integrated regional businesses which focus on branded consumer dairy products, and out-of-home foodservices. Our regional businesses achieved sales of around $6 billion across a diverse range of geographies and product formats in the last financial year.

“Fonterra is well placed to meet rising global demand for dairy, with 72% of our NZ Milk Products’ sales volumes and 46% of our regional business revenues coming from emerging market regions in the last financial year.”

Fund Chairman John Shewan said the Fonterra Shareholders’ Fund was a unit trust that would acquire the Economic Rights of Fonterra Shares and issue Units to investors.

“Farmers and other investors can purchase Units in the Fund which will give them exposure to the Economic Rights of a Co-operative Share – dividends and capital gains or losses on those Shares,” said Mr Shewan.

The indicative price range for Units in the Fund is $4.60 - $5.50. The Final Price payable per Unit is expected to be announced on or about 27 November 2012 following the completion of a bookbuild process, under which selected institutional investors and NZX Firms are invited to lodge bids indicating the number of Units they wish to apply for at a range of prices. The Final Price could be within or above the indicative price range.

The Co-operative has forecast a dividend for the 2013 financial year of 32 cents per share. The indicative price range implies a 2013 financial year gross distribution yield of 5.8% to 7%.1

“It is important to note that this is an opportunity to invest in Units issued by the Fonterra Shareholders’ Fund, and is not an opportunity to acquire Fonterra Shares. However, the return on a Unit is essentially dependent on the performance of Fonterra,” said Mr Shewan.