Applications have opened for cash strapped Fonterra shareholders to apply for an interest free loan to help deal with the tough financial climate.
Last month, Fonterra slashed its forecast milk price for 2015 16 from $5.25 to $3.85 and announced shareholders would be able to apply for a 50c loan for every kilogram of milk solids they produced and were shared up for.
That payment, interest free for two years, would be paid back when the farm gate milk price or advance rate went above $6. The co operative estimated a potential $430million would be applied for.
The loan structure and use of capital has attracted some criticism, including the effect on unit holders.
Yesterday, Fonterra chairman John Wilson said there had been a lot of interest from farmers and a large number of applications were expected.
The loan, for milk solids produced from June 1 to December 31 this year, would be interest free until the end of May 2017, after which Fonterra might charge interest.
Farmers could repay all or part of the loan at any time and no security was required over their shares or any other assets.
The loan would be repayable directly from milk payments, and automatic repayments would occur when total advance rate payments exceeded $6. Applications close on September 25.