Dairygold shareholders agree to restructuring

Shareholders in Dairygold yesterday voted to approve a restructuring move which allows the co-op's management to group all its non-core businesses into a new, wholly owned subsidiary.

Some 1,445 shareholders attended a Special General Meeting in Mallow yesterday and voted by 98 per cent to 2 per cent to support the restructuring of the co-op so that all its non-core business will be grouped into one holding, Dairygold Ltd, rather than 62 as is currently the case.

Chief executive Jerry Henchy said that the vote for restructuring was vital as it allows the co-op's board and management to separate its non-core businesses, Consumers Foods, 4Home and Alchemy Properties, from its core milk business so it can exploit the sector's full potential. "Potentially we would see the non-core part of our business as offering huge opportunities for growth and development over a period of time resulting in a dividend stream back to their owners but that will require significant investment," said Mr Henchy.

"We have also heard from our owners that they don't want huge borrowings taken into the co-op - they don't want that huge risk bolted on to the hip of milk processing so people don't want those two things together.

"The vote today is of enormous significance as it allows us to create the platform that will allow us come back with proposals for that separation, which will in turn allow that type of investment without creating huge risk for milk," he said. One possibility that has been mooted is the flotation of the non-core businesses.

Mr Henchy said that before any decision was made the board and management had to take into account the views expressed by shareholders in recent consultations. Management had attended eight regional meetings over the past two weeks where they had met with over 2,000 shareholders.

"People have really given us a huge mandate today and it would be terrible if we were to [ let] them down given that type of support," said Mr Henchy

Dairygold chairman John Walsh said yesterday's vote was an encouraging display of shareholders' support for Dairygold's planned development, but he but pointed out that it must be confirmed at a Confirmatory Special General Meeting to be held in Mallow on January 27th.

"It is important to point out that it has not changed the co-op's ownership in any way but it has established the correct structural framework for the group to be in a position to consider the strategic options that will allow Dairygold to develop its significant asset base."

"Members have stressed that they want us to do this while fully ringfencing the core farming businesses of milk processing and agri-trading from any unacceptable risks associated with growing the non-farming businesses.

"We will now concentrate our efforts on developing the most appropriate strategies to achieve these objectives without diluting the current members' ownership of those assets," said Mr Walsh.