Fonterra poised for "greatness"

Dairy exporter Fonterra has the potential to become the world's "greatest" food company if it makes the right moves with regard to its capital structure, says Fonterra Ingredients managing director Andrei Mikhalevsky. "I believe Fonterra is at a pivotal point in its history. It can turn into a small co-operative selling NZ product or become the greatest food company in the world reports The NZ Herald. This is within our reach in the next couple of years," said the Chicago-based American. "All the stars are aligning for Fonterra right now in ingredients. We have the strategic advantage if we choose to grab it."But the challenge for NZ's biggest company is sourcing the hundreds of millions of dollars needed for infrastructure to advance its ingredients strategy. The $19.5 billion revenue business is a co-operative owned by farmers through redeemable shares. To achieve its global growth ambitions and stabilise its balance sheet against share redemption shocks like drought, Fonterra needs permanent capital and more of it. But its farmers, fearing loss of control, last year rejected a capital restructure proposal from directors which involved creating an investment company with public shares outside the co-operative. A tightly-held new capital reform package is likely to be unveiled to Fonterra's 7000-odd shareholders in the next two months. Mikhalevsky indicated he would soon ask the Fonterra board for about $150 million to step up his drive into paediatric and medical nutrition, primarily using New Zealand milk.