Dairygold SGM to discuss operations
In a second vote they will be asked to amend the co-op rules to facilitate the restructuring.
This could be the first step in an initial public offering (IPO) of shares in the consumer, 4Homes and property interests of the cooperative.
But Dairygold’s farmer shareholders have made it clear they want no dilution of their interests in the group at this juncture.
Plans to develop the consumer, property and 4Homes businesses are underway, but it is understood much behind the scenes work is required before the businesses make a stock market debut.
Chief executive Jerry Henchy has not ruled out the possibility of an IPO, but such a move is thought to be further down the line.
No move will be made towards an IPO for at least two to three years in view of the immediate challenges facing the group, it has emerged.
Goodbody Capital Markets have been brought on board to advise on the financial options open to the group, fuelling speculation a stock market debut was on the cards.
But their involvement is not a precursor to an impending IPO, a spokesman for the group said.
Dairygold has access to up to €500 million in bank borrowings at relatively low interest rates.
That’s enough to allow it to grow its businesses for the next few years without having recourse to stock markets for funding.
In the letter to shareholders calling the SGM, chairman, John Walsh, said the proposed reorganisation is the result of extensive research carried out on behalf of the group by agri-research specialists Thomas Healy & Associates.
Flotation of the consumer division was mooted as a distinct possibility by Mr Henchy, after he announced the first set of results for the group as chief executive.
Reliable sources suggest the IPO looks less certain at this stage than a year ago.
If the group is to go public its preferred option could be on the grey market, the format successfully followed by NTR Plc.
That has allowed the Roche family and close associates to keep tight control of the ownership of the group while facilitating a more realistic share price.
It shot up earlier this year when Philip Lynch of One51, formerly IAWS Co-op, took a 26% stake in the business.
Despite that onslaught the Roche dynasty still retain a tight grip on the bulk of the assets, which is what Dairygold shareholders have also indicated is their preferred option and not a full stock market flotation.
That does not rule out an IPO under certain circumstances. If a major company that fitted Dairygold’s strategy were to come on the market the group, given certain conditions, might use an IPO.
But any dramatic change in ownership would require the full backing of farmer shareholders.
