Murray Goulburn teeters on the brink as vultures start to circle

September 29, 2017

Murray Goulburn dairy factory, Rochester. Photo by Luke Hemer.

THE future of Murray Goulburn has been the subject of widespread industry speculation in recent weeks as the co-op confirms interest from other parties in the troubled business.

New Zealand giant Fonterra is the latest interested party confirming it has thrown its hat into the ring and put forward a proposal that is non-binding and indicative.

In a letter to suppliers last week, MG stated it had received a number of confidential, non-binding indicative proposals, ranging from the sale of certain assets to whole-of-company transactions.

“No offer has been received for the units in MG Unit Trust for $1.20 per unit, as speculated in the media,” a MG spokesman said.

“We continue to work with our financial adviser Deutsche Bank to engage with a number of parties to assess their proposals, including valuation.

“At this point, it is too early to make any comment about valuation or implementation.

Rochester supplier Max Hann is hanging in with the co-op although he is not confident of the outcome.

“There has been a lot of talk in the media and you can’t believe everything you read but as a supplier I was extremely disappointed to hear management took bonuses this year. When your business is really hurting that is a seriously bad look,” Max said.

Max has been supplying MG for more than 25 years and his shareholding is significant.

“Financially I would be far better off to move but I can afford to wait it out a bit longer and see what happens,” Max said.

“I have a reasonable number of units and they are more of a concern to me than the milk price at the moment so I am prepared to wait a bit longer to see what happens.”

Max said he wasn’t putting his head in the sand but he has been involved in the industry long enough to know things can turn around – and turn quickly.

“I have had the opportunity to supply other processors and my accountant and financial advisor think I am mad for not going.”

Max said as the president of the Rochester Football Club he was also concerned about what impact the closing of the factory would have on families and the township – but acknowledged that is business.

Cohuna dairy farmer Di Bowles describes herself as a cautious supplier.

“Regardless of what happens; MG still has two billion litres of milk, which is still quite a significant amount. Looking to the future the board has to make all their decisions in the best interest of their suppliers and I have seen a change in their thinking and I think they are now starting to do that,” Di said.

“Some suppliers expect change to happen immediately but it is going to take some time and I firmly believe that as a ‘wet supplier’ we are sitting in the box seat.”

Di believes it will be a hard gig to get a buyer over the line because 90 per cent of the voting population must agree.

“Historically only 53 per cent of wet suppliers vote, although for the recent election of directors I think that figure was up around 60 per cent.”

A ‘wet supplier’ is a current supplier who actually has the tanker drive onto their farm and physically pick up milk.

Unitholders and former suppliers – both ceased and retired – are entitled to a share dividend but have no voting rights.

“Personally I would like to see some sort of an equity partner and a shut the gate policy included and I would retire before I ever supplied Fonterra,” she said.

Di said the past 18 months have created a divide amongst the farming community and it is sad.

“It shouldn’t matter what tanker drives through your farm gate and people shouldn’t be judged by where their milk goes to, it’s a personal business decision.”

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