Fonterra says its capital restructuring proposal is still alive despite the axing in May of the first of two votes on changes to the company's structure while it extends consultation with shareholders.
In a letter posted to shareholders on Friday, chairman Henry van der Heyden said the dairy giant needed further consultation with shareholders, so would not proceed with May's preliminary vote to split Fonterra into two entities, with part of one company eventually listing on the New Zealand Stock Exchange.
In an interview, Mr van der Heyden said a large number of the company's 11,000 shareholders were uncommitted and had concerns about how the changes would impact on the milk payout.
‘‘It would have been irresponsible to push those farmers too hard,'' he said. He did not accept the axing of the May vote was a setback or a vote of no confidence in him or the board, saying: ‘‘It is part of the co-operative''.
The proposal was still viable and he believed it would get the required 75% support of shareholders. ‘‘I'm sure we will get to a position where we will get farmers' support, but at this stage it is too early to say.''
Former dairy company director Harry Bayliss said shareholders had told Fonterra they did not support the new structure, fearing they could lose control and that the direction the board was taking was not in the best interests of the company.
‘‘I understand the [Fonterra] Shareholders Council has given a clear view to the board that shareholders are not of the view to support the proposal.''
Mr Bayliss, a Taranaki dairy farmer, said shareholders believed if the board focused on the performance of the company, the existing structure would succeed.
Fonterra's Shareholders Council chairman Blue Read said abandoning the May vote was consistent with feedback his organisation had received from shareholders.
‘‘There is widespread acceptance among farmers that Fonterra needs to adapt to keep pace in the changing global dairy industry.
‘‘At the same time, we are a cooperative first and foremost and the fundamental aspects that underpin our business must remain intact.''
Shareholders will now have one vote, in 2010, with 75% support needed for the new capital structure to be implemented, but exactly what they will vote on depended on the result of consultation between now and then.
Mr van der Heyden said the board was open to any new ideas that addressed the issues of redemption risk, capital for growth and, to a lesser extent, shareholder choice.
Fonterra plans to split Fonterra in two: a farmer cooperative owned and controlled only by farmer shareholders and a second company to hold all assets, liabilities and operations of the current co-operative.
Ultimately, shares in the second company would be listed on the New Zealand Stock Exchange, but initially the cooperative would own 65% and farmers another 15% through private share purchases.
Eventually, and once certain criteria had been met, the level of farmer shareholding could be reduced to a minimum of 35%.
Mr van der Heyden said a separate discussion on a new milk price mechanism had become caught up in the capital structure debate.
Shareholders will vote on a new milk price structure at November's annual meeting. Mr Read said the council has seen preliminary details of a new model, which he said was encouraging.
The board will meet shareholders at a series of meetings on the capital structure from March 6 to 12, where they will discuss how the co-operative share would be transacted under the proposal.
Agriculture Minister Jim Anderton said the structure was for Fonterra shareholders to decide, but the Government was willing to work with the company to respond to proposals shareholders agreed with.