July 18, 2021

(Reuters) -Fonterra Co-operative Group Ltd said on Monday it was drawing up a revised proposal to an overhaul of its capital structure that the dairy company proposed in May after completing the first phase of talks with its farmer shareholders.

Shares of the world’s top dairy exporter have fallen around a fifth since it laid out a range of options to overhaul its capital structure and allow farmers easier entry to the cooperative as it seeks to firm up its financial future.

Since then, the New Zealand company said it has had 90 meetings with farmers, with 5,000 of them directly engaging with the company. It has more than 10,000 farmer shareholders.

Among changes being considered by the board include adjusting the minimum shareholding requirements for farmers to 33% of milk supply, or one share per 3 kg of milk solids (kgMS), rather than the 25%, or the one per 4 kgMS, initially proposed.

Fonterra will also consider keeping the maximum number of shares at four times milk supply to support liquidity, allowing share milkers and contract milkers to hold shares if the cooperative moves to a farmer-only market, as well as extending the entry period to six years from five years.

The company said it would provide more information on its long-term strategy, including the type of activities in which it will invest and the returns it will target, in August and September.

The size of the listed Fonterra Shareholders Fund, which is open to non-farmer investors, had been capped until November to give the farmers time to discuss options.

(Reporting by Nikhil Kurian Nainan in Bengaluru; Editing by Peter Cooney)