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Fonterra seeks trading halt pending outcome of arbitration with Danone

Fonterra seeks trading halt pending outcome of arbitration with Danone”

The French food giant sued Fonterra, seeking damages of up to 630 million euros, over the whey protein contamination in 2013.

WELLINGTON, New Zealand-French food giant Danone SA (BN.FR) has been awarded 183 million New Zealand dollars (US$125 million) from the world's largest dairy exporter, Fonterra Co-Operative Group Ltd. (FSF.NZ), after an arbitration process in Singapore. "Fonterra expects to provide a market announcement on these implications shortly", it said.

The co-operative was reviewing the tribunal's findings closely, but recognised that there was likely to be limited options for challenging the decision of an worldwide arbitration.Earlier today it requested an immediate trading halt to be applied to their securities on the ASX, the NZX and the Fonterra Shareholders Market to give it time to consider the impending decision. At the time, Fonterra said it expected any court action would show it wasn't liable under the contract.

The botulism scare stemmed from Fonterra quarantining several batches of whey protein concentrate after there were concerns they could have been contaminated with clostridium bacteria. It later turned out to be a false alarm.

The French company look legal action in the New Zealand courts and at the Singapore International Arbitration Centre, which administers United Nations trade rules.

In response, Fonterra has cut its forecast dividend to 35 to 45 cents a share for the 2017/18 financial year, down from 45 to 55 cents.

"Danone welcomes this arbitration decision as a guarantee that the lessons from the crisis will not be forgotten", it said in a statement. Fonterra was "reviewing the tribunal's findings closely, but recognised that there was likely to be limited options for challenging the decision of an global arbitration".

"Danone considers that this arbitration underscores the merit of its legal actions against Fonterra, including to champion the highest standards of food safety across the industry".

"While there was never any risk to the public, we have learned from this experience", he said.

The company said it was disappointed with the ruling, arguing it had limited liability under its supply agreement with Danone.

Fonterra is a co-operative owned by more than 10,500 farmers and enjoys a near monopoly on New Zealand milk.

"Do What's Right is one of our four values and in continuing to put safety ahead of all else we will build on the trust people throughout the world have in us".



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