Acting PM and NZ First Leader Winston Peters has a crack at Fonterra's management for getting the company into a sticky debt situation that prompted it to sell Tip Top to an overseas buyer

Acting PM and NZ First Leader Winston Peters has a crack at Fonterra's management for getting the company into a sticky debt situation that prompted it to sell Tip Top to an overseas buyer
Winston Peters

Winston Peters says Fonterra selling Tip Top to a UK-headquartered company, Froneri, for $380 million marks a “sad day” for New Zealand.

Speaking at a post-Cabinet press conference as Acting Prime Minister, Peters didn’t refrain from having a crack at Fonterra’s managers for contributing to New Zealand losing the company to offshore owners.

“You may well say that the circumstances of Fonterra’s management, where some people got paid multi-million dollars of salaries, has led to now an added-value company going in to offshore ownership," he said. 

“It’s a sad day boiled out by circumstances, which may not be in the total control of Fonterra’s current management."

New Zealand First’s primary industries spokesperson, Mark Patterson, in a statement released around the same time said the sale exposed “the state of Fonterra’s underlying debt position following its acquisition of troubled Chinese food manufacturer Beingmate”.

He said Fonterra was “now unable to provide the investment and focused ownership required for the brand’s continued success”.

Fonterra's strategy has been to sell some of its assets to reduce its debt by $800 million in the year to July. At the half-year mark the company had net debt of $7.35 billion, up from $7.06 billion a year ago.

When it in March announced its half-year results, said it was "well on track" to meeting this target, with other assets on the block including its 18.8% holding in China's Beingmate and the 50% interest in DFE Farmer, which is a joint venture established in 2006 between Fonterra and FrieslandCampina.

Fonterra is aiming to reduce its "gearing ratio", which it defines as the level of debt versus debt plus equity - to 40%-45% from the 52.5% it had blown out to at the half-year.

“There has to be, surely, some reflection when you see that event [the sale of Tip Top] happening alongside Westland,” Peters said.

Asked to confirm whether his comments represented that of New Zealand First or the government at large, he said they were the “view of every rational, sane person who looks at the kind of economy we are”.   

Patterson elaborated in the statement: “The sale of Tip Top follows the foreign acquisition of other significant New Zealand companies capturing value-added opportunities, such as Silver Fern Farms. With Westland Milk also under offer from a foreign multinational, this is an alarming trend that New Zealand First will continue to oppose…

“Founded in New Zealand more than 80 years ago, Tip Top is one of New Zealand’s most recognisable and trusted brands.

“If we are to build a value-added future for our economy, keeping the ownership of brands like Tip Top in Kiwi hands is critical.

“Tip Top was acquired by Australian company Peters & Browne’s Foods in 1997, bought back by Fonterra in 2001, only to now return to foreign hands less than two decades later.

“Tip Top produces some 40 million litres of ice cream per year, helping capture value from New Zealand milk for New Zealanders. Now, those returns will disappear overseas.”

We welcome your help to improve our coverage of this issue. Any examples or experiences to relate? Any links to other news, data or research to shed more light on this? Any insight or views on what might happen next or what should happen next? Any errors to correct?

We welcome your comments below. If you are not already registered, please register to comment.

Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.

17 Comments

Comment Filter

Highlight new comments in the last hr(s).
12
up

Look this is a generalisation I know, but you have to wonder if the nine years of the Key government did any of us ordinary tax paying citizens much good. That government appeared to consider anything outside of the corporate box as being of little importance. . There has been plenty of media comment about the “cronyism” that privileged the like of Fonterra and Fletchers. Look at both of them now! Overblown self idolising board and executive producing results, born out of virtual monopolies, startlingly bad, inept in fact. A lot of spoons have been made off with, one would suggest.

I don’t think it’s just the Key government. The governments of the time had big hands in creating what both fonterra and fletchers are now. Take away the government intervention and the country would be healthier for it in my opinion.

Yes agreed that’s why I tempered my comment as a generalisation. But you can go right back to Muldoon, Trotter, Davis,Cushing &the like of the so called Round Table. It’s unhealthy for government to have a big stake any one business. Believe the shameful and scandalous outcomes of the Fletcher EQ repair work in Canterbury, found their root cause in that relationship.

Agreed, this situation goes to prove that qualifications and experience often mean absolutely nothing when it comes to making good business decisions. These people at the top of these organisations are universally very well "qualified", have great experience and "knowledge", and almost without fail they have screwed the pooch royally. All the while getting very very good rewards, knighthoods and the like. Those who challenge them in the companies are forced out and are often damaged professionally for the rest of their lives. It is my experience that one of the greatest sins someone can commit in an organisation is being proven right when challenging the status quo, conventional wisdom and established management. Politics seems to be the way business is run these days, and at great cost.

Don’t remember the identity but the quote was something like “ in a dictatorship it is very dangerous to be right.” Believe that sums up your view of the corporate world at times. Been there myself actually.

Yes been there a few times myself. Funny though when I ran teams, I relished it when my team challenged my perspective because i always learnt something new. I got questions about why my teams performed so well, but those who asked didn't really understand that i wasn't their leader, just their guide with final responsibility for the outputs. I really enjoyed bringing the talents of my people to the fore and encouraging them to thrive. I don't understand why more don't understand the benefits of this.

Murray86 - having worn a suit I think I can contribute to your ponderings. Only those who work in a corporate who GENUINELY don't care about their own career path can relax enough to not be threatened by their staff having opinions. When a prat of a general manager once asked me why I wasn't scared of him - my reply - that the worst he could do was fire me and that wasn't such a big deal - he lost his ability to intimidate and that pissed him off. Equally the old corporate cliche "you are promoted to your level of incompetence" is very true in NZ and consequently you have a lot of insecurity at management level. Managers wanting to appease those above while standing on those below.

Alas Murray, the team player is fast going into extinction. Understand your philosophy & workplace culture completely! It used to be with apologies to Reagan “it’s amazing what you can achieve if you don’t mind who gets the credit.” Nowadays read it like. It’s amazing what you can achieve if you can get the credit for what somebody else has done.”

to be fare all political parties pander to Fonterra, hence most of our free trade agreements are built around the ability of Fonterra to sell its wares sometimes to the determent of other producers in NZ.
as for fletchers they have always have the shoulder of politicians from council to government just ask those in CHC how the hell they got that work.
and then there was the sky city convention centre which they did for the government was that for future work?
also they got permission from ACC to build houses less than 1 KM from the end of a future international runway, whilst the rest of the area within 4km is zoned industrial and the airport has to fund those existing homes within 5km heat pumps and double glazing
thats a future court case for the council once the full runway is built and people complain about the high noise levels.
how they got that through is beyond me and common sense

Key was all about key and his banking mates. A legacy after 9 years of zilch.

I still can't believe they got Goldman Sachs to sell our power companies.

And selling thousands of state houses and replacing them with landlord subsidies (accom supplement) significantly exacerbated our housing crisis.

I'd love to lay into the Key government over these things. But reality this is all a result of those at the top over many years who somehow seem to have moved on with very little criticism coming their way.

Why blame the government? Its the private sector and its failings that are at play here. Oh but wait I forgot the old neoliberal strapline...in the goodtimes praise the market for it can do no wrong....in the badtimes, even though we've brought it on ourselves by inept decision making....blame it on the government and spit on your workers!

I wait with bated breath for the day you make a comment that is not about “neoliberalism.” Failing that, I’d even be happy with a lower level of straw manning.

Winston, it's a sadder day when you break your election promises.

Yeah, the one about reducing the MPs back to 90 or so, would resonate well with me.

Now perhaps turn your attention to immigration Winston?