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Bonlac Supply Company Shareholders Vote For Fonterra Proposal

Farmer shareholders of Victorian-based Bonlac Supply Company Limited today voted to restructure Bonlac Foods Limited. Support for the restructuring proposal was strong with 93 per cent of votes in favour of the proposal.

The restructuring will see Fonterra Co-operative Group Limited increase its shareholding in Bonlac Foods from 25 per cent to 50 per cent with Bonlac Supply Company, a cooperative of Victorian and Tasmanian Dairy Farmers, owning the other 50 per cent.

Following today's vote, the transaction is expected to be completed on Tuesday, September 9. From that day, Fonterra will manage Bonlac Foods under the terms of a management agreement. It will also commit to buy all of Bonlac Foods' production and assume responsibility for sales and marketing.

Henry van der Heyden, Chairman of Fonterra Co-operative Group, said that the restructuring plan seeks to restore the viability of Bonlac Foods and achieve long-term benefits for everyone involved.

"Our immediate priorities will be to reduce costs and to grow milk supply. Bonlac Foods has estimated that the restructuring will generate annual savings of A$35-38 million (NZ$39-43m)," he said.

Mr van der Heyden said that the restructuring plan provided shareholder value to both parties. Bonlac Foods would be able to significantly rationalise its overheads and improve its financial performance, improving the ability of Bonlac Foods to pay returns to shareholders from operations. He said Fonterra would benefit by being able to better meet global customer demands.

In accordance with the management agreement between Bonlac Foods and Fonterra, Bruce Donnison was appointed General Manager of Bonlac Foods. Mr Donnison has 17 years experience in the New Zealand dairy industry and in recent years has been responsible for Fonterra's operations at Edendale where 10 million litres of milk are processed each day.

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