KEY POINTS:
Fonterra is tentatively moving forward again on plans for a capital restructuring.
The shareholders' council has written to farmers calling for submissions on the issue - which was dealt a major blow in March when the board's preferred option of a partial float was shelved.
In November, Fonterra unveiled its preferred capital structure to deal with issues of capital for growth, redemption risk and investor choice.
The restructure would have created an asset-holding company to be listed on the stock exchange, with two votes needed to complete the journey.
However, the first vote to create the two-entity structure was cancelled in February with the board saying it was highly unlikely to get 75 per cent support.
In a letter to farmers, shareholders' council chairman Blue Read has called on them to keep progressing the issue. But there was no point in the board wasting time on a capital restructuring plan that will not get support from farmers, he wrote.
"The council and the board have agreed that farmer acceptability will be included as criteria for evaluating potential capital structure options prior to substantive work being undertaken," he said.
The council would provide the "litmus test" for all options. It might be that one "big bang" approach to solve all the issues was not possible and a series of incremental changes should be considered, he suggested.
In February, chairman Henry van der Heyden said: "The board has spent two years looking at a large number of options and we remain firm in our view that the preferred option is the best solution to address redemption risk, shareholder choice and capital for growth but we appreciate that you have to share and be committed to that view if we are to go anywhere."
By March van der Heyden conceded that all options were back on the table.
But speaking at the Large Herds Conference in New Plymouth he warned that alternatives to the sidelined partial float plan were unlikely to give farmers a better deal.
Other options previously discarded by Fonterra include splitting off and listing its international and consumer businesses, making non-voting shares available to the public and raising money by issuing debt-like securities.
There had been sighs of relief when the board's preferred option was put on the backburner, he told the conference.
"But we need to understand that it is not likely that we will come up with any other solution that maximises value," he said.
Shareholders wanted more detail about growth plans and wanted to know how much extra capital Fonterra required, how it would be used and what returns could be expected, Read said in his letter.
Fonterra farmers have until June 30 to make their submissions to the council.
SLOW PROGRESS
* The Fonterra board's preferred option for capital restructure was to create a new company with all assets listed on the stockmarket.
* But plans went on hold in February after negative feedback on outside investors led to a vote in May being cancelled.
* The board and shareholders' council have now agreed that any preferred option must pass a "litmus test" of farmer acceptability.
