Hostile reception at Bonlac in 2001

In the end, it was a done deal. The odds were short – even before a crowd of more than 500 dairy farmers, accountants, lawyers and media scrum began pouring into the Moonee Valley race track celebrity room on Monday – that shareholders would vote Bonlac into a Kiwi merger.

They scrambled in out of the rain, some with dirt still under their fingernails from the morning's milking. These were meeting-weary. For 12 months, almost to the day that former chairman Bill Hill promised to reduce debt, they had attended meetings trying to forge a future for the dairy co-operative.

Beset with debts of $550 million and a potential $140 million hedging loss, the shareholders in Bonlac Foods believed there was only one way out. The faces were not grim, just accepting, as they turned to the spotlight to hear chairman Noel Campbell put two motions.

The first asked shareholders to approve the New Zealand Dairy Board's purchase of a 25 per cent chunk of their co-operative. The second was a formality, approving the adoption of a new constitution.

The mood was matter of fact. So, when professional shareholding heckler Stephen Mayne, there on a proxy vote, stood to ask questions about directors' payouts and success fees to Bonlac's merger adviser Macquarie Bank, the lack of support was deafening.

In recent years, Mr Mayne has faced the heavy hitters – Murdoch, Packer, Lowy and more – at company meetings. But always the heat had come from the front dais.

Never, said Mr Mayne later, had he faced such hostility from shareholders.

``I came here for the debate,'' he said.

But there was little.

``Let him speak,'' a quiet voice called from the back as Mr Mayne kept questioning amid hissings and groans. There was concern that people who had presided over the company during troubled times had been more than amply rewarded, said Mr Mayne, who referred to former chief executive Phil Scanlan's $3.8 million severance payout in January last year.

``How much was Macquarie Bank being paid in success fees for the successful Bonlac-NZDB alliance?'' he asked.

The specific answer never came. The debate was over.

Murray Goulburn had withdrawn the only other offer on the table. And Bonlac's bankers were threatening to walk away on April 30. As far as farmers such as Kelvin Trotman were concerned, there was one lifeline left for the indebted co-operative – and the New Zealand Dairy Board was it.

Mr Trotman, of Won Wron, sent his first vat of milk to British United Dairies at Toora in the 1960s. Since then, various companies and co-operatives had taken his milk. There was the Drouin Co-operative and another company before Bonlac. Mr Trotman was rolling with the tide.

``We have accepted this was our last gasp,'' he said.

What else could they do? farmers asked. Let Bonlac fold? Lose their livelihoods?

Questions about directors' fees and the past might have struck fertile ground years before, but they were too late.

``We all know the positives (of the alliance) outweigh the negatives,'' said chairman Campbell. ``I think we've done it right.''

The dairy farmers overwhelmingly agreed.

``Hey,'' said Mr Trotman, with a shrug of his shoulders, ``I've supplied private companies. I've supplied co-operatives. It doesn't matter who we supply as long as the milk price is good.''

That is what remains to be seen.

Copyright © 2024 The Mayne Report. All rights reserved

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