The new chairman of the ailing Warrnambool Cheese & Butter Factory, Frank Davis, says the group may have to settle for a fee-for-service arrangement or a lower equity stake than the original 50 per cent in its cheese joint venture with National Foods.
Frank Davis has assumed the chairmanship at WCB after long-serving David Karpin resigned yesterday.
According to The Australian Financial Review, WCB was forced to pull a proposed $50 million capital raising last month after a heavy profit downgrade in the wake of the loss of milk supply, as farmers switched to rival companies in disgust at a proposed farmgate milk price cut.
WCB had wanted to raise capital in part to fund a 50 per cent stake in a joint venture called the Australian Cheese Company, of which the remaining 50 per cent would have been owned by National Foods.
Mr Davis said yesterday that all options were now on the table for a revised agreement, with possibilities including a fee-for-service arrangement in which National Foods would pay WCB for making the cheese under brands including Coon, Cracker Barrel and Mil Lel. Other options included WCB taking a lower equity stake in the venture.
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