IN A landmark move for a co-op, dairy giant Murray Goulburn Co-operative Co. Limited (MG) will access outside capital to advance its growth.
Shareholders of Australia’s biggest dairy foods manufacturer voted overwhelmingly – 92 per cent in favour – at an Extraordinary General Meeting (EGM) last Friday to pursue a new capital structure, which involves the establishment of a non-voting unit trust on the Australian Securities Exchange (ASX). For the first time, non-dairy farmers will be able to participate, via the unit trust, in the co-op – and ultimately share in its future success.
The chair of Murray Goulburn, Foster accountant Philip Tracy, said the historic vote brought MG a critical step closer to achieving its goal of raising $500 million to fund capital investments enabling the delivery of sustainably higher farmgate returns.
“The strength of today’s vote demonstrates that MG’s suppliers are not only overwhelmingly in favour of the new capital structure, but also see the growth that lies ahead for dairy foods. They see the opportunity that Asia presents and support MG’s growth and value creation strategy,” said Mr Tracy.
“From the outset, the Board believed it was critically important to involve MG supplier shareholders in the capital structure development process, and after 18 months of consultation and discussion, including five rounds of supplier meetings, what we saw today was a co-op in unison and alignment. I am enormously proud of the process undertaken to develop the capital structure and I thank all supplier/shareholders for their involvement and commitment.
“With the EGM now behind us, we will move forward with the various offers to eligible suppliers and external investors to invest in MG’s future, with the aim of completing the fundraising process and listing the MG Unit Trust on the Australian Securities Exchange in July.”
First off the starting blocks is a Supplier Share Offer. This opened on Monday and will close on May 22. Farmers who are under-shared have the opportunity to buy additional shares (at $1 to $1.24 per share) subject to certain conditions.
“It’s basically a support mechanism for young farmers and recently joined members of the co-op, and under-shared farmers are encouraged to participate,” said Mr Tracy.
After that, around early June, a priority offer will be made to the ‘Friends of Murray Goulburn,’ including employees, current and former suppliers and the people who live in dairy farming areas, including South Gippsland. They will effectively be guaranteed participation in the share float with units at the market price at the Initial Public Offering (IPO).
MG managing director Gary Helou welcomed what he called “a strong vote of confidence in MG’s growth and value creation to transform the business and improve farmgate returns”.
“The approval of the capital structure gives us the opportunity to raise $500 million in new capital which we will invest to further our strategic shift towards premium value-add dairy foods and in the process reduce MG’s exposure to the volatility of the dairy commodity price cycle,” he said.
Mr Helou added: “Global demand for dairy foods continues to grow, particularly in Asia. All global dairy companies are racing to capture a share of these growth opportunities, and in this context MG does not have a moment to waste. We will invest the new capital we ultimately raise in world’s leading manufacturing capability and market reach, to ensure we are well placed to meet and serve the growing needs of dairy customers and consumers in Australia and internationally for premium, quality, Australian-made dairy foods.”