Australia’s largest dairy processor, Murray Goulburn, has outlined its proposal for how it hopes to generate $500 million in capital over the coming three to five years.
In a discussion paper sent to suppliers and shareholders, the co-operative proposes listing Murray Goulburn on the Australian Securities Exchange (ASX).

Capital will be raised through the structure by issuing shares in a unit trust. However, unit holders will not obtain voting rights over Murray Goulburn’s operations.

These voting rights will instead be maintained by active suppliers who hold voting shares in Murray Goulburn.

The proposed structure is designed to raise the capital needed for what Murray Goulburn sees as necessary rejuvenation of its manufacturing and supply chain infrastructure.

The discussion paper states that undertaking a $500 million investment purely from bank debt funding would push the co-operative ‘very close to reaching its prudent and permitted peak borrowing levels’.

The structure is designed to make Murray Goulburn less reliant on debt funding, and encourage reinvestment in the dairy industry.

It is hoped the structure will also encourage new suppliers to join Murray Goulburn, aiding its efforts to attract higher volumes of milk and ultimately, help to deliver a ‘sustainably higher farm gate milk price’.

The paper was issued ahead of several rounds of consultation with suppliers, and any recommendations will not be passed prior to a vote in January/February 2015.

If approved and passed by suppliers, the structure would be implemented in March/April 2015.

The unit price of shares will not be determined until after the final capital structure has been approved by shareholders, regulators and the Murray Goulburn Board.

ABC Rural contacted Murray Goulburn, which said it would not comment on the Capital Structure Proposal for several months until consultation was completed.

Source: ABC Rural