Second vote on TAF

Fonterra chairman Henry van der Heyden says it has agreed to give shareholders "a final vote and unify the cooperative."

He says the board is in a challenging position because while the majority of shareholders is urging directors to get on with TAF, there was a small group of shareholders who had concerns and were particularly vocal in the New Zealand media.

"Firstly, this is in danger of splitting the shareholder base and is not in the best interest of Fonterra's future," he says.

"Secondly, instead of having the discussion among farmers and resolving the matter in the family, the debate is now spilling into the international media and damaging Fonterra's reputation and our global partnerships."

Van der Heyden and chief executive officer, Theo Spierings were in Asia last week and most people they met asked if the debate was impacting on the cooperative's stability and reliability as a partner.

"We have to put a stop to this and use the special meeting to unify the shareholder base so that we can get on with implementing the new refreshed business strategy," says van der Heyden.

"At the moment all we are doing is destroying value and compromising potential business opportunities."

Spierings has welcomed the move.

"Our Group Strategy Refresh gives us a very clear direction for the future and we are excited by the opportunities out there in the world for the co-op.

"I know that Trading Among Farmers is ultimately a matter for our farmer shareholders but Fonterra management needs a stable permanent capital base to deliver the strategy."

The special meeting will be a satellite link over eight venues, so all shareholders could attend in person.

Van der Heyden says the minority group was under the misapprehension that the board was implementing a package that was different from what they originally voted on. In 2010 nearly 80% of farmers voted and 90% voted in support of the proposal.

"Right now everything points to the fact that the final package will be the same as that originally outlined to shareholders in the several brochures distributed before farmers voted in 2010," he says.

Anything that had been developed in more detail, like the custodian, had already been discussed with shareholders and their input had influenced the board's final decision.

"In short, we believe that having a final vote will help to unify our cooperative," he says.

"We will be asking all shareholders to exercise their vote, respect the majority decision of the vote and then move on. Anything else has the potential to be severely damaging to Fonterra's future."

By June 25 due diligence on TAF will be complete, the board will have addressed the four preconditions and the Shareholders Council will have had the opportunity to consider the fifth precondition. Legislation is likely to be through the House.

"Therefore the board will be in a position to give unqualified assurances on 100% control and ownership," van der Heyden says.

"We will be able to answer everyone's questions with absolute confidence and the meeting will serve to remind all shareholders of the detail of the Trading Among Farmers package.

"It will also be an opportunity for the board and independent advisors to outline what they found in due diligence and for the board and council to outline the process observed on the five preconditions."

But van der Heyden adds that if due diligence or the board or council's discussions uncovered anything that was significantly different from what was originally outlined in 2010 or that required further constitutional change, the board will also use this meeting to put any additional resolutions.

"But if 100% control and ownership is certain and all the preconditions are met, the final vote is likely to support the 2010 decision and TAF will be implemented as planned in November this year," he says.