Murray capital raising could target $500m

Company expected to detail plan at annual meeting.

Australia's largest dairy company Murray Goulburn's is expected to launch a significant capital raising on the open market that The Australian Financial Review reported could seek to raise as much as $500 million from investors.

The move would mark the first time the company has sought to raise capital outside its co-operative shareholder base and would be used to fund growth plans.

The capital raising would be expected to follow the model used by dairy exporting giant Fonterra in November 2012 when it launched a $NZ500 million ($A443 million) “trading among farmers” scheme.

The equity raising could take up to six months to execute, the AFR reported, which means it would not be executed in time to be used to fund Murray Goulburn's $504 million bid for Warrnambool Cheese & Butter.

The plan is expected to be confirmed to shareholders at Murray Goulburn's annual meeting on Friday.

It was previously reported that the capital raising would see investors offered tradeable units in a “shareholder fund” that is then floated on the Australian stock exchange. This would ensure that only dairy farmers who supply milk will remain full shareholders in Murray Goulburn.

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