By PHILIPPA STEVENSON agricultural editor
The Dairy Board's quarter stake in Bonlac Foods will cost it $A80 million ($102.4 million) in cash if the Australian dairy firm's shareholders accept the deal.
The board, which would also take a half share in a domestic marketing company expected to be one of Australia's strongest
players, has valued debt-burdened Bonlac at $A825 million, or $A3.86 a share.
Bonlac said the full cost of the NZ stake would be $A260 million, with a transfer of the board's Australian business into Bonlac making up the value.
Bonlac said it would come out of the deal with a debt level of less than $A300 million - down from $A515 million in June - after the cash injection, the transfer of some debt to the joint venture domestic company and the $A60 million it earned this month from selling its Spring Valley and Wave beverage brands to Cadbury Schweppes.
The transtasman alliance is also expected to produce savings of $30 million.
Bonlac's farmer shareholders will vote in February.
Dairy Board chairman Graham Fraser said he believed that they would understand the value of such an alliance in the Australian market and internationally.
In October, Standard and Poor's cut Bonlac's long-term credit rating one notch to BBB-minus - its lowest investment grade rating - citing delays in the merger and the firm's high debt level.
It said it would not revise the rating until the vote was known.
