The New Zealand-based world's biggest dairy exporter, Fonterra Ltd is planning to sell stakes worth NZ$1 billion to its farmer stakeholders in a bid to strengthen its balance sheet. Plans to divest some non-core assets are also on anvil by the co-operative, contributing 7 percent of New Zealand's gross domestic product.

Henry van der Heyden, Chairman of Fonterra Ltd said: "The options we are discussing with farmers would strengthen the capital structure and make Fonterra more adaptable and competitive in the international marketplace."

He said that proposals are drawn in three parts, for next five years, to meet and manage its financial needs. Heyden expects to get the requisite support from Fonterra's approximately 10,800 shareholders, to carry forward its plans, offering some lucrative deals to the farmers. The firm will allow farmers to buy shares from Fonterra which, Heyden hopes, "will be very acceptable to farmers".

The company will take up the matter of divesting non-core assets at its November meet, after deliberating on the valuation proposal. Heyden further said: "Fonterra can't afford to have hundreds of millions of dollars washing in and out of the balance sheet every time milk production fluctuates, for whatever reason."