HOW IT COULD WORK: Below is how we think the features of a Dual Share structure could work, but as with the Reduced Share Standard structure and other options, these mechanics could be changed. » The supply share would have a nominal value of $1. The Co-op would issue and redeem supply shares to you based on your kgMS supplied. This would be similar to the arrangements before TAF, but at $1 per supply share, rather than a share price being set each year by a valuer. » The share standard would be one supply share for each kgMS supplied based on a rolling three-season average, but there could also be a buffer of +/- 5% to allow for fluctuations between seasons. » The supply share would be: – Issued for cash (although this could be payable over a share- up period or out of your milk payments); and – Redeemed with an equivalent
» The Share-Up Over Time contracts and MyMilk contracts would be phased out and replaced with a standard period for all farmers to pay for the supply shares they would be issued in their first season (of say five seasons). The Co-operative would redeem all supply shares once the farmer has stopped supplying (by exchanging them for investment shares or other instruments as described above). Exiting farmers would have a longer period to sell their investment shares, such as five seasons.
» This means that new members joining the Co-op would only need to buy $1 nominal value supply shares to match their supply, and if you are already a fully-shared farmer owner you would be able to sell down your investment shares if you wanted. » Farmer owners would be able to hold the lower of up to four times their supply in investment shares, or investment shares in excess of supply representing 5% of the investment shares on a look-through basis. » Dividends would be discretionary and paid on both supply shares and investment shares. The dividend on supply shares would be capped at a fixed level that is reflective of the risk on those supply shares. Any surplus dividend would be paid on the investment shares only. » Supply shares and investment shares held by a farmer owner would both carry potential votes: – 1 vote per 1,000 kgMS supplied in the previous season to the extent backed by supply shares; and – An additional 1 vote per 1,000
NO FUND – see pg. 8 CAPPED FUND – see pg. 8
value of investment shares, or another instrument such as a capital note, or, after an initial five-year period, for cash.
kgMS supplied in the previous season, to the extent backed by investment shares. This means that if you hold one investment share for every supply share you will get 2x votes, but if you hold two, three or four investment shares for every supply share you would not get any additional votes.
» The investment share would be optional and traded on the FSM (or a similar farmer-only market), with either No Fund, or a Capped Fund where each unit represents the economic benefit in an investment share.
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