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Fonterra Shareholders Fund
Fund size expected to be $1 bn, with a minimum of $500m.
Units in the fund will may be held by non-farmers and farmers, but the fund may not exceed 25% of Fonterra. Units will have all exactly the same economic rights as Fonterra Shares, but not voting rights.
Farmers will be allowed to swap their shares for units and vice versa, making the units fungible with shares but only for Farmers.
Fonterra has $15b in revenues currently, gross profit of around $1.5b, ebit around $500m, it's a stable growth buisness so valuation around $10b, expected yield is circa 7%,
The no voting thing may see it discounted slightly and maybe farmers will buy more units beacuse of the discount and transfer them back to shares? However if it works, it will probably disappear. The capital they are raising also seems to be earmarked for growth via acquistions, so maybe a little more risk than people would expect.
~ * ~ De Peones a Reinas ~ * ~
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I'll be leaving this one to others. As long as full control rests with the voting shares of dairy farmers, the milk payout price will always be the #1 priority. A bit like the position of non-voting ordinary shareholders in News Ltd, I reckon.
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Member
Originally Posted by David B
I'm comforted that farmers will be the ones to only have voting rights. Given the generally poor quality of New Zealand business acumen, the last thing you would need is for every Tom, Dick or Doris shareholder voting to flog the company off just because some multinational came along and offered a buck more for the stock.
Well said.
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I am not too concerned re not having voting rights as my small SH will have no influence. The concern as noted above is the return on the shares is determined in part by the price paid for milk so farmers will have an incentive to maximize milk price rather than 'profits'.
Will be interesting to see how this issue is addressed. My guess is Directors will target a return, say 7% mentioned above, and adjust milk price to hit that target.
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EWT student
Few capitalists within.
A socialised company.
V.
Tomorrow's trades will prove me wise or otherwise
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Not for me, as stated elsewhere, farmers are in control and as long as they are getting their milkfat price, they will be happy to use your moneyas loan funds and pay you the four or five percent thet you deserve. Telecom is running at around 12.5% return according to the business news and I am happy to live, in part, off their superior return. China is happy to buy all at present but they are developing a huge dairy industry of their own at the same time as their inflation is getting out of hand.
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Better still. Send the Greens to Australia and start shovelling for minerals here. By all accounts,we have more than enough. Latest health flash - men who eat the equivalent of three slices of cheese in dairy fat have a greatly reduced sperm count against those who dont. Disc. I was raised on dairy fat, straight from the cow and I only drink full cream milk and eat real butter and I stopped counting my sperm years ago when macular degeneration made them difficult to see.
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Sparky I wasnt aware that you were aware of the upcoming IPO..supposed to have been hush hush. However since you have let the cow out of the bag so to speak probably best to release the press announcement early.
Reuters news flash..0600 27th oct 2012
Previous Greens politician Nandor Tanscos start-up Company (MerdeMAll) has developed a dairy based cigarette and is expecting high consumer and Govt. interest. The newly formulated cigarette is based on a secret combination of full fat cream and the fibrous byproduct of a cows digestive tract. The resultant product has been tested extensively by consumers in blind test situations and has been praised for its "earthy "" aroma and sweet taste. Fonterra is expecting this to add at least 3.5% to its annual sales.
Originally Posted by SparkyTheClown
Craic, I am better informed for that post, thank you. :-)
Yes, if we could export the Greens that would be preferable. Don't think the Aussies would want them. Maybe the Swedes or Finns might be impressed to take them under a generous refugee policy.
Back to the real world. Protein is in demand, and so are milk/dairy products, even if the effects of milk fats are harmful to some. Fonterra is in a magnificent position to supply such proteins. C'mon, it's not like dairy is tobacco.
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Buy a 100 so you can read the glossy reports.
Even a very small holding does wonders for ensuring you keep very well informed about a particular company.
My father had about 100 shares in every company on the NZX by the time he kicked the bucket.
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Don't think this one's for me - the 'dividend' will be less certain than interest payments but the units are going to price for a yield less than bonds. Why buy these over bonds? They're not shares in the business so where the growth coming from? Higher commodity prices will flow to farmers in the form of milk payments right? So the upside, I suppose, is in growing the consumer branded business, or the specialised product side of the business? Fonterra management have not shown they can do this on a scale that's going to shift the needle for investors. Don't think this one's for me. But I'm just a farmer.
Felix, qui potest rerum cognoscere causas
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