Falling share price prompts Fonterra to intervene

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A freefall in Fonterra’s stock price prompted the cooperative to increase liquidity in Fonterra’s stock market – its stock trading platform.

The cooperative’s share price fell to $2.29/share. It was trading at $3.15 just three months ago.

Fonterra Chairman Peter McBride wrote to shareholders today to acknowledge farmers’ concern over the fall in the share price.

“Since we began consulting on our capital structure review, Fonterra’s shareholder market liquidity has been low, and we know that the decline in our share price over the past few weeks and the impact that this a on your balance sheets are concerning,” he said. told the farmers.

The Fonterra Shareholder Market is a private market where only Fonterra shareholder farmers, Fonterra and a specially appointed market maker are permitted to trade in Fonterra shares. FSM is part of Trading Among Farmers (TAF).

McBride notes that one of the factors impacting recent stock liquidity and prices may be the fact that stock compliance obligations have been suspended within the last year.

“I would like to remind you that even if the share compliance obligations are suspended, you can, if you wish, still buy or sell shares within the limits of your current minimum and maximum shareholding requirements, i.e. 1 to 2 times your average milk supply over three seasons. .”

He says the board also considered additional options to support liquidity in the FSM.

“As outlined in last year’s capital structure consultation and voting materials, we will put in place additional provisions to support liquidity in the WSF as we transition to the new flexible shareholding structure, including including through agreements with one or more market makers.

“While these agreements are still being worked out, Fonterra will temporarily provide additional financial support to the current registered volume provider to more actively support liquidity in the FSM.”


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