Friday 12th December 2008
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Fonterra, as a cooperative owned by its farmers, requires its owners to hold shares in proportion to their milk production. The estimated Fair Value Share price for the 2009/2010 was set at $4.47, down from this season's price of $5.57, it said in a statement today.
The share price is set annually, based on an estimated range provided by valuer Duff & Phelps. The firm assessed the valuation range at $4.14 to $4.80 and the set price is the mid-point of the range, chairman Henry van der Heyden said.
The valuation reflected "the sharp decline in share values around the world and the related global credit crunch, which has restricted access to and increased the cost of capital," van der Heyden said. The weaker New Zealand dollar was a mitigating factor, he said.
The valuation also assumes a full write-off of Fonterra's stake in disgraced Chinese milk company San Lu.
Fonterra last month cut its forecast payment to farmers after a 24% slide in global prices for dairy products and the write-off of San Lu.
The revised forecast is for $6 a kilogram of milk solids for the 2008/2009 season, down 60 cents from the previous estimate in September.
Dairy prices have joined a broad downturn in commodities on speculation the slowing global economy needs less raw materials, fuel and food.
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