News Milk
FrieslandCampina cleans up member bond market
FrieslandCampina's management is setting aside an amount of €54 million to freely buy up the newly created surplus of member bonds. In doing so, the company is cleaning up the internal market prior to the entry into force of a new regime on 1 January 2022.
From that date, members will have to freely eliminate the imbalance in the internal market for member bonds. This is called the 'cooperative solution'. If there is a surplus of more than €30 million in member bonds, the members will initially buy up €25 million. The costs are divided equally among the milk volumes supplied by all members. In the event of a subsequent purchase within the same financial year, members participate for the part of the milk volume for which no deferred payment is open. in total, a maximum of three purchases for €25 million can be made in a period of two consecutive years.
Aging causes oversupply of bonds
FrieslandCampina has had a free internal market for member bonds ever since the merged company was created. In recent years, due to an aging population, the supply of released bonds has increasingly outstripped demand. Initially this was not much of a problem. FrieslandCampina has a credit facility of €50 million with Rabobank. However, the limit of this was increasingly in sight. A solution was therefore needed and to keep the trade afloat.
Schumacher against buyout
Initially, CEO Hein Schumacher spoke out against the company itself buying up excess bonds. It happened for the first time in February 2020. Then the company withdrew €30 million worth of bonds from the market. So this time it's the second and last time. Without this move, a cooperative solution might have been needed immediately next year.
From now on it is up to the members themselves to eliminate any reservoirs of member bonds free of charge. The smooth operation of the trade in free member bonds is also monitored by the Foundation for Supervision of Member Bonds free FrieslandCampina, which includes 2 FrieslandCampina managers and Sandra Addink (photo) as member board members.
Klaas van der Horst
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