Fonterra cuts shareholder's price by 20 percent
New Zealand dairy giant Fonterra on Friday (Dec 12) slashed the value of its shareholder's shares by 20 percent due to "unprecedented turmoil in world equity and financial markets".
Fonterra chairman Henry van der Heyden noted the impact of the difficult global economic outlook on the cooperative.
Van der Heyden said key factors were the sharp decline in share values around the world and the related global credit crunch.
The new share price for the 2009 to 2010 season starting June 1 will be NZD$4.47, a drop of NZD$1.10 on the current season.
He said they were not immune to the same pressures faced by listed companies as Fonterra's shares are not traded on the stock exchange.
He also said the adopted price is the mid-point of a range from NZD$4.14 to NZD$4.80 on the basis of recommendations provided by an independent valuer of the board.
This is the second consecutive devaluation of farmers' shareholdings in the co-operative, having already been reduced by NZD$1.22 this season on the 2007 to 2008 share price of NZD$6.79.
He said the new price also reflects the planned write of Fonterra's NZD$139 million investment in Chinese milk processor Sanlu following the scandal of milk powder contaminated by toxic melamine.
Fonterra warned its farmers last month that because of plummeting commodity prices on world markets they would get about NZD$700 million less for their milk in the current season than the board had previously forecast.