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First Milk to convert member investments to equity

The move is likely to affect payments to farmers who leave the co-operative. It forms part of the company’s ongoing restructure


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First Milk will convert investments its members have made over the years to shares in the business as it continues its significant restructuring.

 

The co-operative, which has undergone major changes in recent months, announced as part of its turnaround plan that members’ loan capital would be transferred to equity in the business.

 

This would mean the money owed to members by First Milk would change from a monetary value to a certain number of shares, which is likely to impact on the way payments are made to farmers who leave the co-operative.

 

A First Milk spokesman said the move would mean shares in the business could be traded between members.

 

Chairman Clive Sharpe said: "A final element of our turnaround plan is addressing our capital structure.

 

"Hence today we have communicated to members and ex-members our intention to convert farmers’ loan capital into equity. In due course we will be confirming the type of equity to be issued."

 

First Milk’s management still needed to make decisions including tax considerations for members, former members and how returns on equity might be paid in the future.

 

Farmer members invest in First Milk through a deduction from returns on the milk they supply.

 

Mr Sharpe added the move would mean when First Milk began the new financial year in April it could concentrate on addressing milk prices and rebuilding the long-term value of First Milk.

 

He said: "First Milk has made significant progress over the last nine months. We have reduced employee numbers, cut overhead costs, addressed quality issues and established a new governance structure.

 

"We have also refinanced the business with our existing lenders and disposed of our Glenfield business and our shareholding in Westbury Dairies."


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