FMP presses on with Glanbia plan
It also predicted the move would realign the objective of the business with the needs of its farmer members.
Glanbia co-op board insists, however, that the action would not be in the best interests of the members.
FMP, an IFA subsidiary, which represents over 30% of the group’s combined manufacturing and liquid milk pool, stated that a Glanbia letter sent to co-op members was unbalanced and misleading.
It claimed the letter does not properly reflect FMP’s position on the proposed conversion of the plc into a farmer-owned co-op.
A spokesman for Glanbia said last night that it fully stands over the letter it had issued.
FMP’s response avoids the fundamental reality that the proposition it had made involves 350 million of debt and all the consequences that means, he said.
The developments came ahead of an FMP meeting for farmers in Dungarvan, Co Waterford, last night - which is the first of three scheduled over the coming days. FMP chairman Eamonn Bray said the key objective of converting the plc into a farmer owned co-op is to maximise farmers share of value added from the market place back to the producer.
“While an initial objective in FMP’s proposal is to pay down debt, the overriding aim of restoring 100% farmer ownership and control is to return a milk price in line with the best in Europe.”
Mr Bray said farmers can see there is an inherent conflict of interest between the plc, which must reward outside investors, and a pure co-op, which can always put the interests of farmer members first.
He said FMP and its advisers also made it clear at the formal presentation to the board of Glanbia Co-op that both capital expenditure and investment in research and development in the proposal were in line with existing company forecasts.
Glanbia chairman Tom Corcoran earlier stated in a letter to members that the co-op board had fully considered all aspects of the FMP suggestion and concluded it would not be in the best interests of the members.
Under the submission, the buy-out would be funded through new borrowings, which, taken at the current share price, could be an amount in the region of €340 million.
He explained that these borrowings would have to be paid for by:
Freezing innovation in new products and market development, and restricting progress in developing value added products.
Minimising capital expenditure to maintenance capital expenditure requirements and ceasing all dividend payments - €7.4 million (54.8%) of the current plc dividend goes to Glanbia co-op.
Freezing all corporate development activity such as acquisitions or disposals and using all free cash generated to repay new debt incurred.
Making debt repayment more important than anything else, including milk price.
