Australian dairy firm Bonlac is to outline a proposal regarding the future of the company at a series of shareholder meetings which started on Sunday.
Under the proposal New Zealand dairy cooperative Fonterra would increase its current 25% stake in Bonlac Foods to 50%. Bonlac would own the other 50%.
As part of the proposed changes, Bonlac Foods would focus on milk collection and processing. Both cooperatives would contribute to the partnership according to their core strengths. Bonlac would manage supplier relations. Fonterra would buy all product manufactured by Bonlac Foods and market that product through its global sales and marketing networks.
The companies said Fonterra would forgo its existing right to special dividend payments from Bonlac Foods and contribute management services including administration, finance, human resources, operational and manufacturing expertise to Bonlac Foods to further reduce costs. It would also provide its support in negotiations designed to restructure Bonlac Foods’ debt portfolio to provide a more efficient funding mix.
Bonlac Foods’ intention to refocus on its core milk collection and processing activities would see its domestic ingredients business transferred to Fonterra as part of the total proposal.
Chairman of Bonlac, Noel Campbell said, “We will be presenting this proposal to our Supplier Shareholders in Tasmania and Victoria over the coming week and at this stage anticipate asking them to vote on it at the end of July.
“To ensure that we have strong support from our suppliers for the proposal we have agreed with Fonterra that we will not proceed unless we have around 75% of those suppliers voting in favour of the proposal.”
