fbpx
Print this page
Tuesday, 31 July 2018 12:40

Westland Milk co-op reviewing capital structure

Written by 
Westland chairman Pete Morrison. Westland chairman Pete Morrison.

New Zealand’s second largest dairy co-op is reviewing its capital structure with a view of funding future growth.

The review will look at a “full range of options” including introducing a cornerstone shareholder or merger or divestment of the co-op.

Westland chairman Pete Morrison says the co-op has begun implementing a new strategy focussed on more segregated higher value added products.  This should lead to an exciting future, he says.

“This strategy has the potential to add significant value to our business.  We’ve had strong interest from new suppliers and we take great heart from that as well as the loyalty shown by existing shareholders.  We are excited about the full range of opportunities in front of the co-operative, as well as new emerging possible opportunities.

“Shareholders have clearly indicated support for a plan that would create higher returns and shareholder value, which would likely require significant new capital.  

“If the cooperative is to realise all the opportunities in front of us we need access to new and increased capital.  We haverelatively high debt levels and limited financial flexibility and therefore it is now timely to look ahead and consider the options that can provide a sustained, higher payout and improve the company’s financial flexibility.  Obtaining new capital would make a significant difference to the co-operative” he says. 

The strategic review is an important step to strengthen Westland’s position for the future. The board has appointed Macquarie Capital and DG Advisory to consider potential capital and ownership options that will create a more sustainable capital structure and support a higher potential payout.

The strategic review process will focus on investigating a full range of options that could include:

  • continuing the current co-operative model, recognising our capital constraints;
  • introducing a cornerstone investor to provide new capital to fund growth; and
  • a merger or divestment of the co-operative. 

All options would be explored and we expect the process to run for several months, Morrison says.

“The board will keep shareholders updated on the process with the first update expected before Christmas this year.”

Shareholders will vote on any proposal that the board decides to bring back to shareholders, with two key principles underpinning any Board’s recommendations:

  1. Creating a competitive and sustainable payout; and
  2. Driving the value of the co-operative’s shares

“Our payout has been lower than our competitors for several years and the Board is determined to address the situation for shareholders,” Morrison says.

More like this

Westland Milk reports positive season

"I'm more positive now than I was two or three months ago." That's the view of Richard Wyeth, chief executive of Hokitika-based Westland Milk Products (WMP).

Featured

Sheep drench resistance costly

Analysis by Dunedin-based Techion New Zealand shows the cost of undetected drench resistance in sheep has exploded to an estimated $98 million a year.

Dairy sheep and goat turmoil

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand for their products.

Hurry up and slow down!

OPINION: We have good friends from way back who had lived in one of our major cities for many years.

National

Govt urged to reduce ETS units

The Climate Change Commission wants the new Government to reduce NZ Emissions Trading Scheme (ETS) auction volumes as son as…

Dairy sheep, goat woes mount

Dairy sheep and goat farmers are being told to reduce milk supply as processors face a slump in global demand…

Machinery & Products

All-terrain fert spreading mode

Effluent specialists the Samson Group have developed a new double unloading system to help optimise uphill and downhill organic fertiliser…

Can-Am showcases range

Based on industry data collected by the Motor Industry Association, Can-Am is the number one side-by-side manufacturer in New Zealand.