Dairy Equity Ltd Raises $92 Million in IPO

PRESS RELEASE
TUESDAY, 12 SEPTEMBER 2006

Dairy Equity Ltd Raises $92 Million in IPO

Dairy Equity Limited today announced that its IPO closed on Friday, 8 September 2006, subscribed to $92.2m being the original allocation of $80m plus $12.2m of oversubscriptions.

Dairy Equity Director and Executive Chairman of Lead Manager, ABN AMRO Craigs, Neil Craig, said “while less than the earlier indicated demand of $100m, raising $92.2m into what is essentially a ‘cash box’ is an outstanding achievement and an endorsement of the public’s interest in Fonterra shares. The initial Register is an excellent mix of private individuals and institutions with the largest holding being AllianceBernstein with a cornerstone 12% of the Offer.

Mr Craig said an unprecedented level of media commentary with mixed messages, had an impact on investor sentiment during the Offer period and in order to ensure a stronger secondary market on the NZX, Dairy Equity directors concluded it would be in shareholders’ best interests to reduce the level of oversubscriptions by $7.8m.

Allotment of shares was made today and the shares will list on the NZX on Thursday, 14 September.

Mr Craig said the level of farmer enquiry Dairy Equity has received has been in line with pre-offer expectations and now that the Offer has closed, the Company can formally begin the process of arranging agreements with farmers for the purchase of the beneficial interest in Fonterra shares (SWAPs).

Mr Craig said that SWAPs are a significant development for the New Zealand dairy industry and give dairy farmers the ability to purchase or operate farms with substantially less capital. He said that there were obvious groups for whom SWAPs would have application such as corporate farmers with a lot of capital tied up in Fonterra, and individual farmers either looking to expand their business or free up capital for retirement or other purposes.

ENDS

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