Archive | Dairy Equity

Dairy Equity capital return approved

Published 10 April 2008

Dairy Equity Ltd shareholders voted today to approve the immediate return of capital via a repurchase & cancellation of shares. This requires High Court approval, expected in a few days.Subject to court approval, the approvals today will result in:

 

The return of 25c/share payable on 28 April and a simultaneous halving of the number of shares on issue on 24 AprilA further return of capital, expected to be 6.7c/share and made in mid-August, resulting from the sale of about 25% of its Fonterra fair value shares to farmer counter-parties at prices at or better than the current $6.79/share book value.

In addition, the board announced an interim fully imputed dividend of 1.5c/share on the number of shares on issue after the 50% capital reduction, to be paid at the same time as the capital return.Chairman Peter Jensen said after those transactions Dairy Equity would have about $16.5 million of fair value shares at market value (or 49c/share) on the reduced number of shares on issue.

 

Earlier stories:

26 March 2008: Dairy Equity gets court approval for capital return arrangement

12 December 2007: Dairy Equities shareholders vote to realise assets

 

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Attribution: Company statement, story written by Bob Dey for this website.

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Dairy Equity gets court approval for capital return arrangement

Published 26 March 2008

Dairy Equity Ltd has received preliminary High Court approval for an arrangement that will allow it to return up to $28.9 million (31.7c/share) to shareholders over the next 5 months.A special shareholder meeting to approve the proposed capital return has been set for Thursday 10 April at 11am at the Auckland Club. The company resolved at its annual meeting on 11 December to investigate the steps necessary to realise the company’s investments and return the net proceeds to shareholders.The board has since sought expressions of interest for the purchase of its assets – its SWAP book, its intellectual property & its NZSX listing.

 

Chairman Peter Jensen said: “While Dairy Equity received interest in both its listing & its SWAP book as a whole, this interest was not on terms acceptable to the board. The company has, however, made arrangements with farmer SWAP counterparties for the end-of-season resale/redemption of 25% of its SWAP book at prices equal to or better than the carrying book value of $6.79/share.“The directors believe the best way to maximise shareholder value for the remaining Dairy Equity assets is to maintain the company’s NZSX listing while continuing to explore sale opportunities. By remaining listed, shareholders also retain the ability to sell their shares on-market.”Mr Jensen said the company proposed to return capital in 2 instalments – an initial $22.88 million payment in April using currently available cash, followed by $6.1 million in August. The second payment would be conditional on confirmation that it be treated as a capital return for tax purposes. It will be made substantially from the proceeds from SWAP sales redemptions. The first payment represents 25c/share and the second 6.7c/share, leaving residual net tangible assets of around 18c/share.

 

Earlier story:

12 December 2007: Dairy Equities shareholders vote to realise assets

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Attribution: Company statement, story written by Bob Dey for The Bob Dey Property Report.

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Dairy Equities shareholders vote to realise assets

Published 11 December 2007

Dairy Equity Ltd’s board will investigate options to sell all or part of the business, or realise its assets and return the proceeds to shareholders.

 

Shareholders voted in favour of the directors’ resolution to cancel the 50c call and investigate the steps necessary to realise its investments at the annual meeting today.

 

Dairy Equities chairman Peter Jensen said the company had been profitable since its inception and the sale process should realise close to shareholders’ original investment.The company was listed in September, quickly achieving its $92 million target subscription. “However,” Mr Jensen said, “the second part of the equation, that of converting our subscribed cash into the beneficial rights to Fonterra fair value shares, proved much more difficult. “Farmers are traditionally rather conservative, this was a totally new product & concept and, in the first instance, it was not enthusiastically received or supported (mostly due to lack of understanding of the opportunity) by those the farmers turned to for advice – that is, their lawyers, accountants, farm consultants, neighbours & the dairy co-operative. The market circumstances in terms of the VAC component of milk and the commodity milk price outlook also conspired against our being successful.“The result was a very small uptake of the offer, in spite of a major promotion by the manager to the extent that, by the time we ceased purchasing fair value shares in early August, only $21 million had been spent on fair value shares.”

 

Mr Jensen said 2 subsequent Fonterra announcements had serious impacts – it said it was to undertake a major review of its capital structure, announced a dramatically higher milk price for the 2007-08 season and, at the same time, forecast a much reduced VAC (dividend) from 59c/share to 20c/share.

 

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Attribution: Company statement, story written by Bob Dey for this website.

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