Fonterra To Offer NZ$200 Million Of Capital Notes

Thursday 25 October 2001 For Immediate Release

Fonterra To Offer NZ$200 Million Of Capital Notes

Fonterra Co-operative Group Ltd is to issue up to NZ$200 million of capital notes, Chief Financial Officer Graham Stuart said today.

The capital notes will have an initial minimum interest rate of 7 percent and come with an A+ credit rating from Standard & Poor’s.

“The capital notes are a fixed-rate investment, offering an ongoing income stream at a significant margin over wholesale money market rates. They provide an opportunity for non-dairy farmers to invest with New Zealand’s largest company. We intend to encourage a liquid secondary market for the notes and want them to be held by investors throughout New Zealand,” Mr Stuart said.

As a co-operative, ownership in Fonterra is restricted to New Zealand dairy farmers who supply it with milk. When suppliers reduce the quantity of milk they supply to the company – or cease supplying it altogether – Fonterra intends to surrender shares for capital notes. This will allow Fonterra to achieve optimal management of its capital resources on an ongoing basis.

The offer of capital notes will open on 5 November 2001 with NZ$5,000 being the minimum value of capital notes an individual investor can apply for. Investment statements will be available from brokers from that date. It is expected that investors will have until 28 November to apply for the notes. The notes will have no fixed maturity date.

Fonterra Co-operative Group Ltd has shareholders’ equity of NZ$5 billion, partially funding more than NZ$12 billion in assets, which generate revenues of in excess of NZ$14 billion per annum. With nearly 20,000 staff, who manufacture and market dairy products to customers in 120 countries around the world, Fonterra generates more than 20 percent of New Zealand’s export earnings and more than 7 percent of its GDP.

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