The 1,475 shareholders in Kerry Co-op who applied for the newly created share redemption scheme are in line for a €88m payout next month. Speaking to the Irish Farmers Journal this week, executive secretary of Kerry Co-op Thomas Hunter McGowan said cheques would be issued to these shareholders by the 22nd July.

Hunter McGowan said the average payout to the 1,475 shareholders who applied for the scheme would be around €60,000, meaning almost €88m will be issued in cheques next month. However, there is a huge range within this average €60,000 payout.

At the lower end, some shareholders have cashed in just one or two shares (valued at €600 to €1,200), while at the higher end there are shareholders who have redeemed several thousand Kerry Co-op shares and are set to be issued cheques for millions of euro. Some shareholders have redeemed as many as 4,000 Kerry Co-op shares, meaning they would be set for a payout of €2.5m (before income tax).

We will be ready to issue cheques to shareholders who applied for the share redemption scheme by 22 July

The value of a Kerry Co-op share roughly equates to just under six shares in Kerry Group plc. Based on Kerry Group plc’s share price at €105 this week, a single Kerry co-op share is currently valued at almost €620. This means the average shareholder is seeking to redeem just under 100 Kerry Co-op shares.

“We will be ready to issue cheques to shareholders who applied for the share redemption scheme by 22 July,” Hunter McGowan told the Irish Farmers Journal.

“Some shareholders have redeemed shares but have not cashed in all of their shareholdings. These shareholders will be issued a certificate with the balance of their remaining shares by the 10th August,” he added.

To fund this €88m payout to the 1,475 shareholders who applied for the scheme, Kerry Co-op sold 835,000 of its 24m shares in Kerry Group plc last Friday. As a result, the co-op’s shareholding in Kerry Group plc has dropped slightly from 13.7% to 13.2% following this redemption of shares.

Hunter McGowan said the next window for the share redemption scheme in Kerry Co-op is planned for later this year in November

This is the first time that Kerry Co-op has reduced its shareholding in Kerry Group plc by selling its shares to institutional or retail investors. Up to now, the co-op has spun out its shares directly to members who could sell or retain the shares as they so wished. Typically, most co-op members have retained the shares and it is estimated that farmers still control more than 50% of all the shares in Kerry Group plc, albeit in private hands.

Hunter McGowan said the next window for the share redemption scheme in Kerry Co-op is planned for later this year in November. It is likely that very few shareholders who redeemed shares this month will be applying again in November as it will be in the same tax year and could push some people into the higher rate of income tax.

However, Hunter McGowan was keen to stress that the share redemption scheme would continue into the future as a voluntary scheme and shareholders in Kerry Co-op could continue to avail of the scheme as many times as they wished. Equally, he said that no shareholder is locked into the scheme once they applied and could choose to hold their remaining shares in Kerry Co-op as long as they saw fit.

Shareholders Alliance calls for capital scheme for Kerry shares

Following the defeat of the second resolution at last week’s SGM of Kerry Co-op, the Shareholders Alliance group has called on the board of Kerry Co-op to explore options around creating a new scheme that would result in a capital gains tax (CGT) event for shareholders.

“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,” said Donal Counihan, chairman of the Shareholder Alliance.

Kerry Co-op executive secretary Thomas Hunter McGowan told the Irish Farmers Journal this week that the board would now explore options around developing a CGT scheme that would run in parallel with the share redemption scheme. However, Hunter McGowan said any CGT scheme would not be in place by the end of this year.