Source:1 NEWS, NZN
Fonterra has requested a temporary trading halt ahead of an arbitration tribunal decision on a 2013 stoush with company Danone over a recall of baby formula.
Source: 1 NEWS
The French food giant sued Fonterra seeking damages of up to 630 million euros ($NZ1 billion) over the food scare, and the New Zealand dairy company says it's been told it will get the tribunal decision in a Singapore arbitration today.
The trading halt will be applied to the ASX, the NZX and the Fonterra Shareholders Market, and would give Fonterra time to consider the outcome of the arbitration decision.
Fonterra Shareholders' Fund units last traded at $6.36.
Danone launched arbitration proceedings in Singapore and a legal suit in the New Zealand High Court, estimating the cost of recalling the whey protein concentrate to be about 350m euros. At the time, Fonterra said it expected any court action would show the Kiwi firm didn't have any liability in the contract, and it recognised a contingent liability of just $14m over the recall.
In 2014, New Zealand's Court of Appeal upheld an earlier decision that the Singapore arbitration proceedings should be the first avenue, as provided for in the contract, but refused to permanently stay the legal suit.
In 2013, Fonterra quarantined several batches of whey protein concentrate amid fears it was contaminated with a potentially dangerous form of the clostridium bacteria. The whey protein was ultimately cleared as a false alarm. Fonterra cut deals with seven of the eight customers affected.
Danone's New Zealand subsidiary Danone Nutricia ended its supply contract with Fonterra after the botulism scare.
An arbitration lets parties submit disputes to an independent person to conclude with a binding decision.
Fonterra CEO Theo Spierings said the Co-operative will make an announcement on the decision once the decision has been received.
"Fonterra remains in a strong financial position and any damages award will not affect our ability to operate. We will share further details with the market, our farmers and staff as soon as practical," he said.