The future of Koroit's Murray Goulburn factory is under a cloud

THE future of Murray Goulburn (MG) is under a cloud after the company posted a $370.8 million loss.

Craig Dettling

Craig Dettling

Third parties have expressed an interest in MG’s assets, including whole company takeover bids.

However, suppliers and employees will have to wait until MG’s annual general meeting to find out whether it is considering selling the Koroit factory.

Chief executive Ari Mervis said a strategic review was still being undertaken.

“We haven’t made any decisions, or come to any conclusions, regarding any of our factories,” he said.

“I can’t say anything about any specific manufacturing facility. I hope to be in a position at our October AGM  to be clearer about the (review’s) outcomes.”

A MG spokesman said Koroit “remains a core part of MG’s processing footprint”.

No job losses have been announced but it fell short of denying there would be cuts.

“We continue to monitor milk supply relative to our manufacturing assets, to ensure utilisation and efficiency are optimised,” he said.

Mr Mervis said the proposals included whole of company transactions. "It's interesting there has been such a broad array of interest in the company," he said. “The board has requested Deutsche Bank to seek more detailed proposals from these and other relevant parties so as to enable MG to assess the merits of any such proposals. MG will consider any such proposals having regard to the overall interests of MG’s business and its suppliers, shareholders, and unit holders.”

A takeover would be tricky to execute. Murray Goulburn's units trade on stock market but its ownership remains with farmer suppliers. To succeed, 90 per cent of farmer shareholders would need to accept a deal.

A takeover would be bad for suppliers, Woolsthorpe farmer Brian McLaren said.

“If it was more than 51 per cent, I’d be concerned,” Mr McLaren said.

“If they’re going to ruin our co-operative model, the days of having control over your milk price – to a certain extent – are over.”

Naringal’s Hayden Ballinger said he was a strong believer in a co-operative.

“If we lose a strong co-operative we could go the way of the United Kingdom, which saw the price for everyone weaken because there was no co-op to underpin value.”