Members seem to be satisfied with the outcome of the Kerry Co-op annual general meeting (AGM), according to Donal Counihan, chairman of the Kerry Co-op Concerned Milk Suppliers and Shareholders Alliance.
The board of Kerry Co-op decided after the AGM that its redemption scheme is going ahead “even though one of the necessary rule changes was defeated”, the alliance said.
Yesterday, Wednesday, June 19, the board of Kerry Co-operative Creameries Limited announced that members voted in favour of the necessary rule change to progress with the introduction of the Share Redemption Scheme.
The statement from the board said: “Applications for the scheme have exceeded all expectations, with 1,475 applications being received by the co-op. All applications will now be processed in full.”
According to the statement from the board, the passing of the first resolution at yesterday’s Special General Meeting (SGM) – by 62.81% – “paves the way and gives the green light for the introduction of the scheme”.
Commenting on the announcement, chairman of Kerry Co-op, Mundy Hayes, said: “We are pleased to have received the go-ahead to proceed with the scheme which gives all members the opportunity to redeem their shares for cash.
The board recognises the evolution of the co-op and the differing ambitions of shareholders. This is a voluntary scheme that we believe is the best option currently available to members to address the ongoing liquidity issue raised by members in recent years.
“The board is making no recommendation to members in relation to participation in the Share Redemption Scheme itself.”
Hayes added: “The scheme is the first step that the board has taken to allow shareholders to unlock the true value of their shares. We are endeavouring to introduce further initiatives that will be of benefit to our members.”
Alliance chairman Counihan said: “The board of Kerry Co-op always had the power to bring in a share redemption scheme; that rule was there, it didn’t need any other rule changes.
If the board and its legal team are happy that the terms of the scheme are not breached by the second rule change getting shot down then the scheme will probably go ahead.
He argued that as Rule 68 (a) wasn’t accepted by the meeting, the directors – or a future board – can improve the scheme to achieve section 701 relief.
“If the board gave full value to those leaving and gave them the option of taking their Kerry Group plc shares instead of cash there would be a better uptake.”
“We were disappointed that there was no breakthrough on a Capital Gains Tax scheme. We would like to see the co-op board put the same effort into a scheme that would be used by the majority of the members as they put into their share redemption scheme.
Also, the board and their advisors need to understand the implications of the co-op stake in the plc falling below 5%. This would expose those who haven’t redeemed their shares to massive taxation.
“The other key point from the meeting was that members want to see a plan for the co-op.
“More people are starting to ask what the co-op is for and does it need to have a tight grip on our shares in order to represent dairy farmers.”
Claiming that the board has “no mandate to go investing money or starting new businesses”, Counihan said co-op members “want to free up their shares for their families’ use, not to be locked away into a new company”.
He concluded that people were more united at the end of the meeting then at the start.
“It was worrying that a lot of milk suppliers were cashing in shares; that isn’t sustainable. The dairy farmer needs to be at the centre of a new strategy for Kerry Co-op.”