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First Milk Announces Capital Structure Changes

21 March 2016

UK - First Milk has been putting in place steps to ensure a sustainable long term future, with the latest phase of this work a reshaping of the cooperative's capital structure.

Chairman Clive Sharpe said on Friday: "First Milk has made significant progress over the last nine months.

"We have reduced employee numbers, cut overhead costs, addressed quality issues and established a new governance structure. We have also refinanced the business with our existing lenders and disposed of our Glenfield business and our shareholding in Westbury Dairies.

“A final element of our plan is addressing our capital structure.

"Hence today we have communicated to members and ex-members our intention to convert farmers’ loan capital into equity. In due course we will be confirming the type of equity to be issued; tax considerations for members, former members and how returns on equity might be paid in the future.”

NFU chief dairy adviser Sian Davies said: “We understand that First Milk has faced a number of challenging decisions over the last few months, but farmers will be concerned if today’s announcement results in a negative financial impact on their businesses at what is already a very difficult time for the industry.

“For many former First Milk members who have already had their repayments delayed, this will be seen as a backwards step and another obstacle to the release of their historical investment in the business. It is critical that First Milk keeps talking to its members about its overall strategy and turnaround plan.

“We will be looking carefully at this announcement and seeking further clarification from First Milk as to the potential implications for our members. As ever, the NFU’s Callfirst service will be available to NFU members seeking initial advice on this issue.”

TheCattleSite News Desk

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