Bryan and I are scheduled to do a video interview with Fonterra's General Manager of Treasury Stephan Deschamps at Fonterra's head office in Auckland at 11.30 this morning. Fonterra is planning to start selling up to NZ$300 million worth of 6 year unsecured senior bonds offering 7.75% next Monday. We thought it would be useful to ask Fonterra some questions from the point of view of a potential bond investor. What would you like to know? Here's what we plan to ask. What does unsecured and senior mean in terms of protection for bond investors? Would Fonterra cut its payout to farmers to ensure it kept making its interest payments? What will be the money raised by the bond issue be used for? Is it being used to support the payout? Why couldn't this money be raised on international or domestic wholesale markets? What risk is there that Fonterra's credit rating could be downgraded? What risk is there that cooperative shareholders and farmers rush to sell their shares and deplete Fonterra's coffers? What is the outlook for Fonterra if their is a long and deep global recession? Are you too big to be allowed to fail? What are your debt levels now and where are they headed? How might Fonterra change its capital structure and what might that mean for bond holders? Who is first, second, third etc in line in the event of receivership and liquidation?
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