Ann: PROSPECT: FSF: UNIQUE OPPORTUNITY TO PARTICI

• Release Date: 30/11/12 10:55
• Summary: PROSPECT: FSF: UNIQUE OPPORTUNITY TO PARTICIPATE IN FONTERRA PERFORMANCE
• Price Sensitive: No
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FSF
30/11/2012 08:55
PROSPECT

REL: 0855 HRS Fonterra Shareholders' Fund (NS)

PROSPECT: FSF: UNIQUE OPPORTUNITY TO PARTICIPATE IN FONTERRA PERFORMANCE

UNIQUE OPPORTUNITY FOR PUBLIC TO PARTICIPATE IN FONTERRA PERFORMANCE
Fonterra today outlined details of a unique opportunity for the public to
participate in the Co-operative's performance with the release of an Offer
Document for the Fonterra Shareholders' Fund.

Chairman Sir Henry van der Heyden said that for the first time in Fonterra's
history, and with Farmer Shareholders' support, members of the public will be
able to gain exposure to New Zealand's largest company and the world's
largest dairy processor by buying Units in the Fonterra Shareholders' Fund.

Fonterra today unveiled details of two key components to support Trading
Among Farmers:
o The Supply Offer booklet inviting Fonterra Farmer Shareholders to sell the
economic rights of a portion of their shares to the Fonterra Shareholders'
Fund.
o The Offer Document (a registered prospectus and investment statement dated
26 October 2012) inviting the public to gain exposure to the Co-operative's
performance by purchasing Units in the Fonterra Shareholders' Fund.

Sir Henry said the Fonterra Shareholders' Fund would support liquidity in the
Fonterra Shareholders' Market, allowing Farmer Shareholders to trade Fonterra
Shares among themselves with a more flexible structure, rather than buying
and redeeming them from the Co-operative.

"This will provide permanent capital for Fonterra and reduce redemption risk,
while preserving 100% farmer control and ownership of the Co-operative," said
Sir Henry.

"It is a historic day for the Co-operative. The Fund provides a unique
opportunity for the public to gain exposure to the financial performance of
Fonterra and the global dairy industry.
"Farmer Shareholders and Unit Holders will invest in the performance of
Fonterra through separate structures. What they both have in common is the
chance to be part of the continuing performance of our Co-operative - a New
Zealand success story," said Sir Henry.

Chief Executive Theo Spierings said that Fonterra's performance shows it is a
leader in the international dairy market, and a unique investment
opportunity.

"In New Zealand in the 2011/2012 dairy season, we collected approximately 17
billion litres of milk - and more than 2 billion litres overseas.

"NZ Milk Products is the backbone of Fonterra, collecting milk, manufacturing
dairy products, and exporting to customers around the world. Our sales
networks reach customers in more than 100 countries. Products range from
everyday dairy nutrition powders, to advanced dairy nutrition products, and
our customers include five of the world's biggest infant formula
manufacturers and many of world's largest food companies.

"Fonterra builds on earnings from New Zealand and internationally-sourced
milk through integrated regional businesses which focus on branded consumer
dairy products, and out-of-home foodservices. Our regional businesses
achieved sales of around $6 billion across a diverse range of geographies and
product formats in the last financial year.

"Fonterra is well placed to meet rising global demand for dairy, with 72% of
our NZ Milk Products' sales volumes and 46% of our regional business revenues
coming from emerging market regions in the last financial year."
Fund Chairman John Shewan said the Fonterra Shareholders' Fund was a unit
trust that would acquire the Economic Rights of Fonterra Shares and issue
Units to investors.
"Farmers and other investors can purchase Units in the Fund which will give
them exposure to the Economic Rights of a Co-operative Share - dividends and
capital gains or losses on those Shares," said Mr Shewan.

The indicative price range for Units in the Fund is $4.60 - $5.50. The Final
Price payable per Unit is expected to be announced on or about 27 November
2012 following the completion of a bookbuild process, under which selected
institutional investors and NZX Firms are invited to lodge bids indicating
the number of Units they wish to apply for at a range of prices. The Final
Price could be within or above the indicative price range.

The Co-operative has forecast a dividend for the 2013 financial year of 32
cents per share. The indicative price range implies a 2013 financial year
gross distribution yield of 5.8% to 7%.
"It is important to note that this is an opportunity to invest in Units
issued by the Fonterra Shareholders' Fund, and is not an opportunity to
acquire Fonterra Shares. However, the return on a Unit is essentially
dependent on the performance of Fonterra," said Mr Shewan.

The Offer Document for the Fund includes details on Fonterra's business,
historical financial information and forecast earnings for the 2013 financial
year. As set out in the Offer Document, the Co-operative is forecasting the
following financial results for the 2013 financial year:

FY 2012
Actual
(NZD million) FY 2013
Prospective
(NZD million)
Normalised EBIT 1,028 1,079
Profit Before Tax 677 726
Profit for the period 624 690
Dividend per share 32 cents 32 cents

The prospective financial information of Fonterra referred to above should be
read in conjunction with the assumptions, sensitivity analysis and the risk
factors described in the Offer Document.

The financial information referred to above has been prepared by the
Directors of Fonterra. The manager of the Fonterra Shareholders' Fund and its
board of directors have not been involved in the preparation or finalisation
of any of Fonterra's financial information.

---------------------------

Key facts about the Fund Offer
o The Offer to subscribe for Units in the Fund is scheduled to open on 5
November 2012, after the Financial Markets Authority has reviewed the Offer
Document, which is a combined prospectus and investment statement.
o The Offer Document can be viewed at www.fonterraoffer.com.
o The Offer Document contains five years of historical summary financial
statements for Fonterra. In addition, the Offer Document contains forecasts
of Fonterra's financial performance and position for the financial year
ending 31 July 2013.
o Applications have been made to list the Fund with NZX and ASX, and to quote
Units on both the NZX Main Board and ASX.

Structure of the Fund Offer
o The Offer comprises $500 million of Units (with the ability to accept
oversubscriptions of up to a further $25 million).
o Although there is no general public offer, investors are encouraged to
contact a NZX Firm to determine whether they can participate in the Offer to
buy Units in the Fund through the Broker Firm Offer.
o The Broker Firm Offer is available only to New Zealand resident clients of
NZX Firms who have received an allocation from that NZX Firm.
o The Friends of Fonterra Offer recognises the contribution that employees,
sharemilkers, current and retired Shareholders have made to Fonterra's
performance since its formation. Minimum application amounts under this offer
are set at $2000. Maximum application amounts under the Friends of Fonterra
Offer are set at $50,000, except in respect of Fonterra's New Zealand and
Australian employees, whose maximum application amount is $25,000. This offer
is extended to:
- Fonterra Farmer Shareholders, as at 26 October 2012.
- Fonterra-supplying sharemilkers, as at 26 October 2012.
- Former Fonterra Farmer Shareholders who have retired from the industry
after 26 October 2007 and have not supplied a competitor of Fonterra since
last supplying Fonterra.
- Permanent employees in Australia and New Zealand.
o Up to $25 million of Units have been allocated for subscription under the
Australian Supplier Offer to shareholders of the Bonlac Supply Company
Limited and suppliers of milk to Fonterra Milk Australia Pty Ltd (both of
which are Australian registered companies).
o The Institutional Offer consists of an invitation to bid for Units made to
selected Institutional Investors in New Zealand, Australia and certain other
jurisdictions.

Key points about the Farmer Shareholder Supply Offer:
o The Farmer Shareholder Supply Offer will open on 2 November 2012. Fonterra
Farmer Shareholders will have the opportunity to sell to the Fund the
economic rights of up to 25% of Wet Shares (being, Shares a Farmer
Shareholder is required to hold to meet the "Share Standard" for a season)
and any Dry Shares (being, Shares held in excess of those required by a
Farmer Shareholder to meet the "Share Standard" for a season).
o Not all Farmer Shareholders will need the flexibility offered by the Fund
right now. If economic rights offered by Farmer Shareholders are less than
the minimum Fund size of $500 million, Fonterra will issue shares to make up
the shortfall. Fonterra doesn't intend to permanently retain the resulting
equity.

Key Dates
DATE ACTION
26 October Offer Document registered and Farmer Shareholder Supply Offer
announced
2 November Farmer Shareholder Supply Offer opens (Supply bookbuild)
5 November Broker Firm Offer and Stakeholder Offer (Friends of Fonterra and
Australia Supply Offer) expected to open
21 November Stakeholder Offer closes
21 November Broker Firm Offer closes
26 November to 27 November Institutional Offer and bookbuild
27 November Pricing and allocations announced
30 November Expected allotment and commencement of trading of Units expected
to start on the NZX Main Board and ASX (on a deferred settlement basis for
ASX)

These dates are indicative only and may be amended. Any such amendment will
be announced through NZX.
End CA:00230463 For:FSF    Type:PROSPECT   Time:2012-11-30 08:55:15