30 May 1997

MM issues a share chance

DOCUMENTS are being sent out to Milk Marque members inviting them to convert certificates of entitlement into preference shares.

These certificates were issued to all dairy producers at vesting day in 1994, representing their share of Milk Marques £39m start-up costs. An average supplier, selling 1200 litres a day, would hold a certificate worth £1300.

Producers who did not join the co-operative had their certificates of entitlement paid off last month at a cost of £15m, drawn from cash savings. As part of a major financial restructuring, the remaining 18,000 members are being asked to indicate whether they now wish to convert their certificates into shares on a £-for-£ basis.

The advantage for Milk Marque is that converting to shares will help stabilise the balance sheet. Rather than having to pay off people who leave or retire, in future their assets will stay with the co-op in the form of shares. "This will help us to finance future growth," says chief executive David Yeomans. But he stresses that Milk Marque intends to remain a co-operative and has no plans to float on the Stock Exchange.

Members will, however, have the chance to trade their shares, with Lloyds Bank operating a market mechanism twice a year.

Interest will be paid at a rate of 2% above base, giving a current dividend of 8.25%.

The final decision on whether to proceed down this route will depend on a vote at the annual general meeting in August. But as a sweetener, Milk Marque is also offering to pay out £15m from its reserves in the form of further preference shares if enough people vote in favour of conversion. &#42