Investors have taken a strong negative reaction to Fonterra's proposals to reform its capital structure.
Photo: RNZ / Cole Eastham-Farrelly
The price of units in the Fonterra Shareholders' Fund, which are based on economic returns from Fonterra shares, have plunged as much as 13 percent before trimming their losses to settle about 7 percent lower.
Fonterra's own shares traded on its internal market also fell more than 13 percent.
The preferred option of the co-operative's board is to make it cheaper and easier for farmers to join, but it has also proposed capping or scrapping the Shareholders' Fund.
The head of research at investment house Jarden Securities, Arie Dekker, said Fonterra shareholders needed to think closely about scrapping the fund, which was the only avenue for non-farmer investors to have an exposure to Fonterra's business.
"It is one of the largest sectors of the economy and Fonterra is clearly one the largest corporates."
Dekker said the fund had benefits for farmers, by giving them a way to discover the value of their shares without giving up ownership of the co-operative.
He said it would be a shame for retail investors to lose out on investing in one of the country's largest companies.
Dekker said Fonterra should be looking to sell more overseas assets to recoup capital.
It has sold much of its China investments, joint ventures in Latin America and Europe, but retains interests in Australia and Chile.