Units in the Fonterra Shareholders’ Fund on the NZX and ASX are in a trading halt as the company considers a capital restructure.
The dairy co-operative said it was preparing to make an announcement prior to the markets’ opening on Thursday in relation to seeking shareholder feedback on “potential options to change its capital structure”.
However, the trading halt would remain until Friday to give shareholders and unitholders time to consider the materials.
Fonterra remained “in a strong financial position and the consultation process will not affect the co-operative’s ability to operate,” the company said.
Milk prices have been strong for some time, helping the company achieve a healthy annual net profit last year of $659 million, a $1.3 billion improvement on the previous year.
Chief executive Miles Hurrell said at the time that 2020 had been a good year for the business with profit up, and debt down.
“We increased our profit after tax by more than $1b, reduced our debt by more than $1b and this has put us in a position to start paying dividends again,” Hurrell said
But in April Fonterra appeared to ramp up its efforts to reduce debt, selling its dairy farms in China for $552 million, as it pulled back from global expansion.
Under Hurrell’s leadership, the cooperative – which is owned by its 10,000 farmer shareholders – has refocused on its core New Zealand milk business, selling overseas assets and underperforming plants, and reducing costs and debt to improve earnings.
more to come