The AGM presented three items of business including the election of a new director for the western region - Duncan Morris who will be replacing retiring director, Don Howard, the appointment of a new auditor, Pricewaterhouse Coopers and a briefing on the processor’s capital structure review.
Murray Goulburn’s capital structure review has been conducted over the past nine months. The review was inclusive of an number of funding alternatives including: increase in bank debt, off balance sheet funding, retention of profits, raising additional equity from farmer shareholders, and/or raising equity from external investors.
The board advised shareholders that following further development, the dairy cooperative intends to recommend a partial float where Murray Goulburn maintains 100 percent farmer control, but also allows external investment in Murray Goulburn.
The board stated that the establishment of an ASX-listed unit trust would be similar to one that was implemented by New Zealand dairy co-operative, Fonterra.
“In addition to enhancing our capital structure through access to mainstream capital markets, a Trading Among Farmers type platform, similar to that recently implemented by Fonterra, will also provide a clear and observable market value for MG dairy farmer-held shares. This will mean that equity in MG can be practically applied to strengthen individual farm balance sheets and in doing so increase investment in individual farm businesses. This also means there will be potential for value creation in line with public market values, and from realisations of existing individual shareholdings,” said Helou.
Murray Goulburn’s chairman, Phil Tracy assured shareholders that there would be no change to the co-operative structure.
“The co-operative structure is at the heart of our success and we want to reassure all supplier shareholders that we are not proposing any change to it. What we likely to recommend is a funding model that maintains 100% farmer control, but allows external investors to invest into MG. Such a model would put MG in a strong position to pursue the growth opportunities we have available to meet our objective of lifting farmgate returns,” said Tracy.
“Over the past nine months we have carefully reviewed and considered a wide range options and we now believe that the model being considered is a logical and prudent next step. We believe this is a conservative approach to raising capital and this structure would be expected to have a significant and direct positive impact for the co-op and its supplier/shareholders.”
Murray Goulburn will be consulting directly with suppliers/shareholders on the proposed capital structure from late November through to January next year, and an Extraordinary General Meeting is scheduled to take place in May next year where shareholders will vote on the model.
