By LIAM DANN
Fonterra yesterday won a vote to double its stake in Australian dairy cooperative Bonlac to 50 per cent.
An overwhelming 93 per cent of Bonlac's farmer shareholders yesterday voted in favour of a deal which will see Fonterra restructure the struggling dairy company. In exchange for an extra
25 per cent of Bonlac, Fonterra will enter into new sales and marketing arrangements under which it will buy all Bonlac's production.
Melbourne-based Bonlac is Australia's fourth-biggest dairy company and has a range of brands, including Bodalla and Perfect Italiano cheese.
Fonterra will forgo its right to receive future special dividends from Bonlac and will provide management services to allow Bonlac to rationalise its corporate overheads. It will also assume responsibility for the sale of Bonlac's products in the domestic market, with Bonlac's domestic ingredients business to be transferred to Fonterra.
Fonterra will also convert to preference shares the $14.8 million debt it is owed by Bonlac in special dividends for the 2002 and 2003 financial years.
Fonterra chairman Henry van der Heyden said the restructuring would restore the viability of Bonlac Foods and achieve long-term benefits for everyone involved.
The other 50 per cent of Bonlac remains owned by the cooperative of Victorian and Tasmanian farmers.
"Our immediate priorities will be to reduce costs and to grow milk supply," said van der Heyden.
Bonlac Foods has estimated that the restructuring will result in annual savings of $39 million to $43 million.
Bonlac chief executive Peter Myers will step down and Fonterra's Bruce Donnison will take over as general manager. Some of Bonlac's other managers are also expected to step down in the next few days.
Fonterra was offering no further comment until the transaction was completed on Tuesday.
A full restructuring plan is due to be announced on Wednesday.
It is expected Fonterra will provide Bonlac with all labour and payroll services, management of information systems, all secretarial, in-house legal, tax, finance, treasury and foreign exchange functions.
Bonlac will then be left to focus on milk collection and processing.
The move should make Bonlac more competitive against its rivals.
