Bank backing Fonterra share swap scheme
NEW ZEALAND - Dairy Equity's slow-starting Fonterra shares swap scheme has been given a boost by a referral deal with the National Bank, the largest rural sector lender.
13 March 2007
1 minute read
Geoff Taylor
Under the deal, the bank would earn revenue if farmers it referred to Dairy Equity ended up doing business with the listed company, the managing director of Dairy Equity's management company, Geoff Taylor, said yesterday.
Farmers can get cash from Dairy Equity for beneficial rights to their Fonterra shares.
In a market update before Christmas, Dairy Equity said it had secured rights to just $4 million worth of Fonterra shares, while $41 million was held in cash deposits. That illustrates the much slower than hoped for farmer uptake of the product.
Taylor said Dairy Equity's initial target market of larger farmers was "flat" as they were awaiting the outcome of Fonterra's capital structure review. But he hoped the link with National would help Dairy Equity marketing to smaller farmers in the run-up to the end of the season in May, a time when they may be looking at financial options for next season.
Taylor acknowledged he and National's general manager of rural banking, Charlie Graham, already had business ties through a jointly owned dairy farm and the Dairy Investment Fund, which has stakes in Open Country Cheese and Kaimai Cheese.
Graham wasn't available for comment yesterday but National's head office in Wellington indicated it was comfortable with the Graham-Taylor link. Dairy Equity shares were steady at 44c.
