Communication to Fonterra farmers

14 May 2021

Communication to Fonterra farmers

The attached communication was provided to Fonterra Co-operative Group Limited farmers by the
Chairman, Peter McBride, on 14 May 2021.


-ENDS-

For further information contact:

Fonterra Communications
24-hour media line
Phone: +64 21 507 072

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CHAIRMAN’S EMAIL
14 May 2021

Subject: Capital Structure consultation
Email:

Dear [name]
It’s been just over a week since we announced the start of our Capital Structure consultation
and I’d like to thank the more than 900 farmers that have attended a meeting already.
We started this week with 400 farmers at the MyConnect conference in Auckland where
Directors Leonie Guiney, Brent Goldsack and I participated in a panel discussion and Q&A
on Capital Structure. I heard from a number of farmers that the session was valuable in
helping them understand the options better. You can watch the video of our session on Farm
Source.
Conversations at the regional meetings have already brought out a number of good ideas
from farmers that the Board will be considering over the coming months – in particular, ideas
for how we can better honour the loyalty of our farmers who are considering retirement and
succession.
The meetings have also highlighted a few areas of the current preferred option that need
more clarification.
• The preferred option includes a proposal to reduce the share standard from the current
1:1 to 1:4 (one share for every four kgMS supplied). This would give all farmers equal
opportunity to have capital flexibility, making it easier for new farmers to join the Co-op
and assisting with succession at the other end of the farming lifecycle. The current
proposal does not include a share split, so the total number of shares would not change.
• Farmers who choose to reduce their shareholding down to the minimum 1:4 share
standard would need to sell those shares in a farmer-owner market, at a price
determined by farmers in the market. They would not be selling them directly back to the
Co-op.
• During the current temporary cap, farmers are free to buy and sell shares in the Fonterra
Shareholders Market, and investors, which may include us farmers, are free to continue
buying and selling units on the NZX and ASX.
I want to reiterate that this is the Board’s current thinking, but we are open minded about
adjusting that direction based on the feedback from you on any of the options.

The regional director meetings continue next week. I encourage you to come along and have
your say. You can find the consultation meeting nearest you in the events calendar on Farm
Source.
Ngā mihi,
Peter