Dairy Equity announcement - 13 June 2008
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Dairy Equity Limited (DEL) | 9:56 am, Friday 13 June 2008 | DEL | 0.200 |
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TO: NEW ZEALAND EXCHANGE LIMITED
DAIRY EQUITY ON TRACK TO RETURN CAPITAL DESPITE DROP IN FAIR VALUE SHARE
PRICE
In a market update today, Dairy Equity Limited (DEL) advised that its plans
to return $6.1m of capital to shareholders in August have been unaffected by
the 18% reduction in Fonterra's Fair Value Share (FVS) price to $5.57/share.
The Company also said that it believes that it will achieve a better result
for the remaining Fonterra Fair Value Shares that it beneficially owns, by
delaying a pending sales initiative until there is some guidance from
Fonterra on the level of Value Added Component payments Fonterra expects to
pay in the 2008/09 season. It expects that Fonterra will provide this
guidance in the coming weeks.
DEL acting Chairman, Phil Lough, says "the drop in Fonterra's Fair Value
Share price from $6.79/share to $5.57/share, will have done little to help
confidence in Fonterra given that the price drop was so significant and that
it came without warning and was against previous advice to the market."
"The Fair Value Share price drop was especially surprising in that it came
just six months after Fonterra announced an interim share price for 2008/09
of $7.01/share."
"Many farmers, including those who repurchased SWAP shares from DEL, made
decisions to buy/sell/redeem shares based on this price guidance from
Fonterra and are now significantly out of pocket."
Phil Lough said "it is because DEL's farmer counterparties settled the
repurchase of the beneficial ownership of their Fair Value Shares at
previously agreed prices, that it is in a position to proceed with the
proposed return of capital in August."
By mid July DEL will have sold/redeemed 28% of all the Fair Value Shares it
beneficially acquired from Fonterra suppliers and will have a further
2,252,875 FVS's to sell. At the new season share price of $5.57/share these
remaining Fair value Shares are worth $12.55 million. DEL currently has net
tangible assets of approximately 44 cents per share.
Ends
For further information
Phil Lough
Acting Chairman
Dairy Equity Limited
Tel: (027) 442 5447
