Federated Farmers sees the additional $271 million, which Fonterra's farmer-shareholders have pumped into the cooperative, becoming investment "udders" for more than $500m of acquisitions.Fonterra said yesterday that it had raised $270.7 million
Federated Farmers sees the additional $271 million, which Fonterra's farmer-shareholders have pumped into the cooperative, becoming investment "udders" for more than $500m of acquisitions.
Fonterra said yesterday that it had raised $270.7 million from its farmer-shareholders after they were given the opportunity to adjust their shareholdings up or down, to anywhere between 100 and 120 percent of their current or expected production, at a price of $4.52 per share.
Federated Farmers dairy chairman Lachlan McKenzie said today that in "less than stellar economic times" a third of Fonterra's shareholders had "shared up".
"The $271 million raised will become udders containing over half a billion dollars when bank facilities are leveraged off it. That's a sizeable amount from which to look at acquisitions that will add value to the cooperative's financial performance," he said.
"The federation now wants to see the cooperative develop a retentions policy that will build on this war chest. While there's been much uninformed comment on Fonterra's debt, the cooperative's debt-to-debt plus equity ratio trajectory is tracking back to board guidelines of 45-55 percent.
"This ratio means debt is not the issue but having equity to seize opportunities is."
Mr McKenzie said the federation estimated that at least 50 percent of farmers did not have the ability to buy shares, with banks tightening up lending and dry conditions affecting farm budgets.
While it was understandable that many farmers were acting conservatively, the amount Fonterra raised -- in a sharemarket context -- would have been second only to the $450 million dual float of retailer Kathmandu on the NZX and ASX last year.
