Dairygold seeks funding from members

Dairygold has opened a new loan note offer for members and staff, in which it can invest money for three or five years and receive interest.

It is the latest in the co-op’s ongoing series of mechanisms to raise funding for expansion.

The minimum investment per option is €1,000. Money invested for three years will accrue interest at 3.0% plus the three-month EURIBOR rate. The rate for five years is 3.5%, plus the three-month EURIBOR.

EURIBOR rates fluctuate and at present are negative, as the European Central Bank tries to stimulate economic growth. This week, the three-month rate is -0.435%.

Dairygold said that for the first time, it was offering its employees the opportunity to invest in the loan note offer

The opening of the scheme coincides with the start of repayments from the co-op’s revolving fund for deductions from the 2013 milk price. These repayments are due next month.

Milk suppliers are now invited to instead invest the funds in the new loan note offer.

In a letter to members, Dairygold said that for the first time, it was offering its employees the opportunity to invest in the loan note offer.

It said that the co-op would need modest capital investment over the coming years for expansion and that it would use a prudent combination of voluntary member funding and bank debt, so as not to be over reliant on bank debt.

Meanwhile, the co-op is considering introducing a new five-year revolving fund to help milk suppliers meet the minimum shareholding equivalent to 4c/l of milk supply.

The proposal is such a fund would be voluntary. The existing scheme made deductions when milk price rose above 30c/l.