Kerry Co-op to table conversion option for shareholders

Kerry Co-operative is working on an offer for members to redeem their shares, it has been confirmed.

The option was approved at a meeting earlier this week – however, concerns have been raised in relation to the details of the offer, with fears of substantial tax bills from any conversions.

Speaking to AgriLand, a source close to the co-op board confirmed that an offer is being worked on but is not yet tabled, adding that no details are being disclosed as of yet.

There’s no offer on the table yet; we have to prepare a letter of offer. But it’s not there yet.

“There will be an offer for people to redeem their shares in Kerry Co-op but the fine detail isn’t there yet so I don’t want to comment on it,” the source added.

Meanwhile, the co-operative is to get a valuation of Kerry Agribusiness, with the board continuing to weigh up its option to buy the business from Kerry Group.

“We have served notice to get a valuation but we don’t know what the valuation is. So the process will be: Kerry Group provide the valuation; then the board have to decide if that’s worth it or not.

“It’ll be three months down the road before we get that.”

Concerns

Members of Kerry Co-operative Shareholders Alliance have expressed concerns with the mooted buy-out option being prepared by the board, with fears that the deal could be subject to 55% income tax for any member seeking to cash out.

“This 55% tax that they’re offering, that’s the same as a no-deal Brexit; it’s unthinkable – no one in their right mind would want it,” one member of the alliance told AgriLand.

The only winners out of such a deal would be “stockbrokers who invested in co-op shares for pension funds”, the member claimed.

The shareholder group is pushing instead for a full spin-out which would be subject to 33% Capital Gains Tax (CGT).

The group believes that, with many shareholder dairy farmers having invested in milk quotas in previous decades, the loss of such quotas could be offset against CGT for share conversion.

“If you have any kind of capital loss to offset against them, whether it be bank shares or expensive property you’ve bought which has fallen in value since – and obviously the quotas as well. So a lot of people would end up paying less than the 33% tax.

“The average dairy farmer has €230,000 to gain if Kerry Co-op was to be liquidated,” the shareholder told AgriLand.

A 33% tax bill would amount to approximately €76,000, not counting any milk quota or other loss that could be offset against the sum.

Should an offer be tabled with the feared 55% tax, €230,000 worth of shares being sold would produce a tax bill of €126,500, the member warned.

With no figures yet offered by the co-op board, interested parties will have to wait until the next meeting of the board in a month’s time.

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