Friday, March 29, 2024

Fonterra delays compliance date

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More than 2000 Fonterra farmers have been offered a four-month extension to comply with their 2019-20 shareholding requirements. The compliance date has been pushed out to April 20 from December 1 in past seasons.
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The reasons include the significant financial pressure on farmers’ balance sheets as a result of Fonterra’s lower share value, about $4.20, co-operative affairs managing director Mike Cronin said.

Another reason is the impact on farmers of the more stringent lending criteria adopted by banks.

Not stated by Cronin is the now slim chance of Fonterra paying a dividend for the 2019 financial year, after last week’s substantial downgrade of earnings.

Farmers in their fourth, fifth and sixth years of a six-year share-up contract have also been offered a one-year extension.

Cronin said the later date will have minimal impact on share trading because the number of shares farmers have to buy has not changed.

However, the upward pressure on share prices before compliance date seen in past years will be postponed.

“Approximately 2100 farmers will be required to purchase shares to meet their 2019-20 requirements and will therefore benefit from greater cashflow on farm,” Cronin said.

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