Glanbia co-op issues 5-year bond to fund new ‘free’ loans to farmers

Glanbia co-op has announced that it is issuing a new five-year bond, linked to Glanbia shares, on the Irish Stock Exchange.

The move comes as Glanbia announces further supports to farmers, in the form of a €55m advance payment scheme, which gives interest free cashflow support to farmers.

This morning, the Co-operative Society Limited (the largest shareholder of Glanbia PLC) announced that it intends to raise €100m by issuing a five-year exchangeable bond against the PLC shares it owns.

The total number of Ordinary Shares in issue by the plc will not change as a result of this bond, it said in an statement.

According to the dairy processor, the Society intends to use the majority of the proceeds from the bonds for the creation of a dynamic market volatility fund for its milk and grain supplying members.

This fund, it says, will enable participating members to draw down funds on an interest free basis when the market price for milk and grain falls below specific levels. The Society will recover the funds drawn down when milk and grain prices exceed a higher price trigger. The remaining proceeds will be for general business purposes, it says.

The Minister for Agriculture, Food and the Marine, Michael Creed and the Chairman of Glanbia Co-op, Henry Corbally will launched the new €55m Advance Payment Scheme, which is designed to offer interest free cashflow support to member suppliers in periods when milk and grain prices are weak.

According to Glanbia, participation in this voluntary scheme will allow members to draw down cashflow support from the Glanbia Advance Payment (GAP) Scheme when the market prices for milk and grain fall below specific levels or ‘price triggers’ set annually by the Board of the Co-op.

The interest free repayments to the GAP Scheme will be triggered when markets recover above specific levels.

The GAP Scheme is the latest in a suite of innovative mechanisms developed by Glanbia to help its member suppliers cope with income volatility.

Other mechanisms in place include Fixed Milk Price Schemes, the €100m MilkFlex Loan and the 2016 Member Support Package of €37m.