Some Fonterra shareholders are in revolt over the big dairy company's capital restructure plan and its impact on their share values, calling for votes of no-confidence in the chairman and board.
They have also revealed plans to complain to the Financial Markets Authority and file a class action damages claim against directors.
Large Fonterra shareholder Hopkins Farming Group says the process around the capital restructure proposal has resulted in nearly $3 billion of shareholder value being wiped out as at June 21, with Fonterra's market capitalisation plunging from $7.5b to $4.5b - a loss of 40 per cent.
Hopkins chairman Tom Wilson said liquidity in Fonterra shares had completely collapsed, leaving "all shareholders now commercially trapped in Fonterra against their will".
He said the total of the share value loss was from a combination of the impacts on both the NZX-listed Fonterra Shareholders Fund and the farmers-only trading market.
Farmer-shareholders had lost at least $2.8b off their individual balance sheets, which had adversely affected their standing with banks, likely impacting debt lending capacity by $1b-$4b, he said.
Fonterra chairman Peter McBride, holding farmer-shareholder consultation meetings in the lead up to a possible vote on a capital restructure in November, said the company was aware the temporary cap on the size of the listed Fonterra Shareholders' Fund would be "impacting farmers in different ways and some more than others".
"The decision to suspend compliance trading during the consultation period means that what we're seeing occur in the market now, under the temporary cap, is not necessarily indicative of how the market could function if we decide on changes to our capital structure permanently.
"We acknowledge the uncertainty which exists through this consultation period and want to reiterate that the consultation is still very much underway. No decisions to change our capital structure have been made and we will continue listening to the feedback of our owners to work towards an outcome in the best interests of the cooperative."
McBride said the board had initiated this capital structure review in the best interests of the cooperative, with a focus on creating a long-term, financially sustainable intergenerational co-operative.
Wilson said he intended to file a complaint with the Financial Markets Authority next week.
The FMA would also be asked to review "substantial" share trading activity in the six months leading to Fonterra's May 7 announcement of its proposed capital restructure.
Meanwhile, Wilson said Fonterra had yet to respond to the Hopkins group's request made two weeks ago for a special general meeting. This would consider a vote of no-confidence in new chairman Peter McBride and if passed a request for his resignation, and a vote of no-confidence in the directors. If passed all directors on the board over two years would be asked to resign.
McBride said the company was not aware of "Tom Wilson's request" but had contacted him directly about his concerns.
The Hopkins group is calling for Fonterra directors to immediately cancel the capital structure plan and delay the process for two years.
It wants New Zealand's biggest business to continue to focus on improving its operational performance, therefore increasing the profit and strengthening the balance sheet further, and "reinstating farmer and shareholder trust and confidence in Fonterra".
It is also calling for change in the capital structure and to potentially exit non-farmer shareholders (in the Fonterra Shareholders Fund) at fair commercial value at some point in the future, "recognising they have put up their capital and deserve commercial respect for that".
Wilson said Fonterra's share values had collapsed when the board "started playing with listed shares" as part of the capital restructure proposal.
"Investors pulled out and all demand was gone. Those left in there are stuck in there."
Part of the board's preferred option for a capital restructure of the world's fifth-biggest dairy company by revenue is to relax its share standard - the amount of share money a farmer must have to stump up each year in order to buy shares to supply milk and join the co-operative.
To address Fonterra's need to capture a sustainable milk supply in a flatlining and likely shrinking national milk production landscape, its leaders propose relaxing the share standard from one share purchase for every 1kg of milk solids supplied, to one share for every 4kg.
The other part of the proposal is to wind up or cap the listed Fonterra Shareholders' Fund, which enables Fonterra farmers to convert their non-milk-supply shares into dividend-carrying, non-voting units, and the public to buy units in Fonterra shares.
Overarching everything in the capital restructure debate is the ambition to retain farmer ownership and control of Fonterra, a cooperative with around 10,000 farmer shareholders.
The tricky balancing act is if the fund size is capped at the same time as the share purchase requirement is relaxed, farmers will be left with a restricted share market, the only measure of economic value in share investment in Fonterra through their farmer-only share trading market.
The value of those shares will be driven by Fonterra's financial performance, which for 10 years has been disappointing on the back of $8b of farmers' capital investment, according to sharemarket analysts.
Wilson, a veteran businessman and former KPMG partner, said a group of Manawatū shareholders including the Hopkins group, were getting together to file a class action damages claim against Fonterra directors for reckless and negligent trading and share market manipulation.
Wilson said at least three large farming entities apart from Hopkins group were involved, and requests had come in from Waikato shareholders to be involved.
The claim would be a long and commercially taxing undertaking, and was a long way off being filed, he said.