Ann: GENERAL: FSF: INTEREST IN FRIENDS OF FONTERR

• Release Date: 30/11/12 10:59
• Summary: GENERAL: FSF: INTEREST IN FRIENDS OF FONTERRA AND SUPPLY OFFER
• Price Sensitive: No
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FSF
30/11/2012 08:59
GENERAL

REL: 0859 HRS Fonterra Shareholders' Fund (NS)

GENERAL: FSF: INTEREST IN FRIENDS OF FONTERRA AND SUPPLY OFFER

FONTERRA ANNOUNCES LEVELS OF INTEREST IN FRIENDS OF FONTERRA AND SUPPLY OFFER

Fonterra Co-operative Group Limited today confirmed strong interest from
farmers and staff in buying Units in the Fonterra Shareholders' Fund but said
many farmer shareholders seemed to be taking a "wait and see" approach before
selling Economic Rights of Shares into the Fund.

The Co-operative said more than 2,500 people had applied to buy Units under
its Friends of Fonterra Offer . This is made up of:
o Nearly 900 farmer shareholders
o Nearly 200 sharemilkers
o About 70 retired farmers
o More than 1,300 staff

A further 260 Australian dairy farmer suppliers had also applied for Units in
the Fund.

Each person has applied for differing amounts of Units and the number of
Units each applicant will ultimately receive will be confirmed after the
bookbuild process is completed and the final price is announced next week.

Fonterra Chief Executive Theo Spierings said the result showed strong support
for Units among farmers and staff.

"Trading Among Farmers is all about strengthening the Co-operative and
providing it with permanent capital for the future - it's great to see these
levels of support from our Fonterra family.

"We see it as a vote of confidence in the Co-operative from some of the
people who know it best.

"It is another indication of the strong support we are getting from our
farmers and staff for our Strategy Refresh which sets our future direction
for growth."

On the Supply side, about 260 farmer shareholders had offered to sell
Economic Rights of around 5.5 million Fonterra Shares into the Fonterra
Shareholders' Fund.

"It is clear that we have seen limited interest from farmers at this time,"
said Mr Spierings.

"We're hearing from our farmer shareholders that a number of them are likely
to wait and see how the Units trade before deciding to sell Economic Rights
of some of their Shares into the Fund - but many are showing confidence in
Fonterra by applying to buy Units.

"That's one of the key features of the Fund - to provide flexible options for
farmer shareholders. They can use it for investment purposes - or they can
free up some cash by selling Economic Rights of Shares," said Mr Spierings.

Chief Financial Officer Jonathan Mason said: "We know interest rates are low
at the moment and this may mean that not all farmers are looking for
alternative sources of cash.

"Circumstances may change in the future and that's why we are looking to
provide further opportunities for farmers to sell Economic Rights. As
indicated in the Fund Prospectus, the next opportunity could be after
Fonterra's interim results for 2013 have been announced, which is likely to
be in March."

As also indicated in the Fund Prospectus, Fonterra will issue enough Shares
to achieve the $500 million minimum Fund size required under the Dairy
Industry Restructuring Act (DIRA) and any oversubscriptions of up to a
further $25 million. The number of Shares to be issued will depend on the
final price of Fund Units, which will be determined following the bookbuild
process taking place next week.

Mr Mason confirmed the issue of Shares by Fonterra would, at the most, affect
the Co-operative's Earnings per Share by about one cent.

Shares issued by the Co-operative will be held by the Fonterra Farmer
Custodian who will hold the Economic Rights for the Fund. Fonterra does not
intend to permanently retain the resulting equity.
End CA:00230465 For:FSF    Type:GENERAL    Time:2012-11-30 08:59:36