The bonus issue means you will receive extra shares (and units if you have also invested in the Fund) which you can use to back current or future production increases. Alternatively, you might decide to hold them as an investment or to sell them.
Based on current production levels, the bonus issue means around 95 per cent of our farmer shareholders will not need to buy additional shares next season to match their increased production.
The details of the bonus issue are:
•All farmer shareholders (and unit holders) will receive one share (or unit) for every 40 held on 12 April (referred to as the ‘record date’).
•This means that a farmer shareholder with 100,000 shares on 12 April will receive an additional 2,500 shares (likewise for units and a unit holder).
•All farmer shareholders and unit holders will, therefore, receive 2.5 per cent more shares/units, and Fonterra will have 2.5 per cent more shares on issue after the bonus issue.
•The bonus issue will not affect Fonterra’s total earnings or dividends paid.
•Since everyone receives more shares in the same proportion, no person will be better or worse off although earnings per share, and dividend per share will reduce proportionately.
•Additional shares or units are “free” and have no tax implications.
•No action by farmers or unit holders is required to receive the additional shares or units.
•The shares (or units) that result from the bonus issue will be received by shareholders (or unit holders) on 24 April.
•The share standard is unchanged – farmers can keep their bonus shares (e.g. to back production) or sell them.
After the interim result announcement at the end of March, we will offer farmers another opportunity to offer the economic rights of some of their wet shares to the Fund, similar to the Supply Offer held last November.