The 1,475 shareholders in Kerry Co-op who applied for the newly created share redemption scheme are in line for a €90m payout next month.

Average payout around €60,000

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 22 July.

Hunter McGowan said the average payout to the 1,475 shareholders who applied for the scheme would be around €60,000, meaning around €90m will be issued in cheques next month.

However, there is a huge range within this average €60,000 payout.

Tomas Hunter McGowan, corporate secretary Kerry Co-op, based in Tralee, Co Kerry. \ Valerie O’Sullivan

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).

The value of a Kerry Co-op share roughly equates to 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.

Certificate for balance

“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 10 August,” he added.

To fund this €90m payout to the 1,475 shareholders who applied for the scheme, Kerry Co-op will now sell circa 850,000 of its shares in Kerry Group plc.

Kerry Co-op currently holds a 13.7% stake, or just over 24m shares, in Kerry Group plc.

The co-op’s shareholding in Kerry Group plc will drop 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.

It’s likely 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.

Voluntary scheme

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 who was 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.

Last week, shareholders in Kerry Co-op voted at a special general meeting (SGM) to allow the co-op to sell down its shareholding in Kerry Group plc below 10%. Shareholders narrowly voted against a second resolution by just 17 votes which sought to ring-fence 96.5% of Kerry Group plc shares held by the co-op to be used solely for the current share redemption scheme.