USE PAPER CODE

21 August 2019

Jack Kennedy on 21 Aug 2019

Ornua board members seek legal advice

Ahead of the Ornua board meeting next week, we asked the Co-op chair what stage they were at in assessing the most recent restructuring proposals, writes Jack Kennedy

Jack Kennedy

21 August 2019

John Jordan, Ornua CEO.

Michael Hanley, group CEO; Alan McCay, vice-chair; Colin Kelso, vice-chair; and Alo Duffy, chair of Lakeland Dairies.

Sharon Finnegan, branch manager, AIB Nenagh; Denise Ryan, Arrabawn milk supplier of the year; Edward Carr, chair, Arrabawn; Ailbe Ryan, Arrabawn milk supplier of the year; Conor Ryan, chief executive, Arrabawn; and Imelda Byrne, business customer advisor, AIB Nenagh, at the presentation of Arrabawn's Milk Supplier of the Year Award. \ Odhran Ducie

Dairygold chief executive Jim Woulfe (left) and newly elected chair John O’Gorman pictured in Cork. \ Daragh Mc Sweeney/Provision

Glanbia group chair Martin Keane. \ Odile Evans

TJ Sullivan, chair of Carbery Group in Cork.

Aurivo co-op chair Pat Duffy. \ Paula Leddy

Dairygold farmers appear to be the most informed group about recent proposals to restructure Ornua, while Glanbia remains tight-lipped on the topic. This week, we asked farmers and the key co-op chairs what stage these important discussions were at. Their answers are in the table below.

Dairygold farmers appear to be the most informed group about recent proposals to restructure Ornua, while Glanbia remains tight-lipped on the topic.

This week, we asked farmers and the key co-op chairs what stage these important discussions were at. Their answers are in the table below.

Glanbia’s Martin Keane declined to answer any of the questions asked. Each of the other key Ornua co-op members are at various stages of understanding and getting advice on the matter.

Radical proposals to move Ornua away from a co-op structure and change the personnel who sit on the board are set for further discussion next week.

New strategy

The moves come as the Ornua management team look to press ahead with a new strategy for the business following the appointment of John Jordan as chief executive. In 2018, Kevin Lane stepped down as chief executive after nine years at the helm. Two months ago, Aurivo CEO Aaron Forde stepped back as chair, and, shortly after that, independent director Denis Cregan was appointed chair.

Irish investment

The very first Irish investment in processing by Ornua in a butter manufacturing site in Michelstown and competition on export markets by some of its members has triggered discontent at board level.

Some sources suggest the current governance is completely dysfunctional as there are board members moving in and out of the board room, depending on the topic under consideration. Written intervention by Denis Cregan to board members earlier this year failed to yield any change.

Last month, a proposal was presented to convert Ornua Co-op to a plc and change the governance structure so that the chief executives of the co-ops don’t sit on the Ornua board.

This proposal is set for further discussion at the next Ornua board meeting, which will take place on Tuesday.

Co-op's views

John O’Gorman, Dairygold

“Dairygold is not precious on the finer detail of the proposal and maybe a version of this can be adopted. The board hasn’t sought independent advice but, as an organisation, we sought advice on how structure and governance might change. ”

Alo Duffy, Lakeland

“We are due to meet towards the end of August to discuss the proposal as outlined. Our board has been informed of the proposal but we haven’t had a chance yet to discuss as a board and/or seek advice on the matter.”

Edward Carr, Arrabawn

“Yes, we have discussed this briefly at board level. We have sent the information we have to an outside financial consultant to review and report back to the board. As a board, we await this information before we can take the next step.”

TJ Sullivan, Carbery

“Look, this is one proposal from a member of Ornua. Obviously, all members need space and time to look at the various parts to it. Yes, we have discussed this as a board and received advice from various sources on the matter.”

Pat Duffy, Aurivo

“We had a very good discussion on the proposal as presented. Many around our table had some very valid questions, but, that is all part of reviewing a proposal. We didn’t have answers to all the questions and we have some work still to do on the matter, but we made progress.”