Too much being read into NZX decision - Fonterra chairman

Henry van der Heyden. Photo / Paul Estcourt

Fonterra chairman Henry van der Heyden says too much is being read into his decision, announced on Friday, to step down from the board of sharemarket operator NZX.

NZX chairman Andrew Harmos said in a statement that van der Heyden's decision to step down was to remove any perceptions of potential conflict of interest.

Asked on Radio New Zealand today if he was going to deny speculation that Fonterra was looking at listing on the stock exchange, van der Heyden said: "Yes I am, actually".

But he was not prepared to comment on the options being considered for cooperative Fonterra's capital structure, because it needed to talk to its farmer-shareholders.

Capital structure was always on the agenda as far as a cooperative was concerned, a cooperative needed to evolve, van der Heyden said.

Fonterra's initial bid two years ago to change its capital structure blew up in its face when farmers protested their directors' preferred option of a "bold and brave" float of the shares of an operational subsidiary.

The board was last year forced to concede that it would have been rolled in a planned May vote on splitting the company into a milk-supply cooperative and a wholly owned corporate holding all the assets and operations.

Today, van der Heyden said two things had changed since the previous capital structure proposal.

The world was in recession, and Fonterra had learned from the last process and this time the company would not go out talking to its farmers unless it had the support of the farmers' watchdog, the Shareholders Council.

While Fonterra was talking to the Shareholders Council, that was not so much around listing. It was dealing with issues Fonterra needed to deal with around its capital structure, van der Heyden said.

"I'll make it very, very clear. I'm 100 per cent supportive of the cooperative. And the cooperative to me always has been that farmers stay 100 per cent in control of their future and their destiny."

Cooperative business consultant Alan Robb said van der Heyden was leaving open the possibility of bringing in outside capital.

That might not involve listing on the stock exchange, but could involve financial investment coming into a part of Fonterra, although perhaps not directly into Fonterra group.

It could perhaps come in through overseas activities so it would be a partly owned subsidiary, where investors would come in and the shares were not listed on the exchange.

That was a dangerous direction, Robb said.

Investors sought maximum return on financial capital, while a cooperative worked a different way, with the objective to maximise payment to suppliers, which involved a limit on the amount paid on financial capital.

Fonterra would be extremely foolish to propose listing on the sharemarket. Opposition to such a move was clear before and the company would be most unwise to pursue it, he said.

- NZPA