Japan's beleaguered Snow Brand Milk Products has unveiled the specifics of a milk joint venture with several partners, including agricultural associations.
In June the parties reached a basic agreement on the deal as a core part of the Snow Brand group's massive restructuring after a series of food-related scandals.
The new entity, Nippon MilkCommunity, will be established on 1 January at a capital of Y15 billion (€130m). The joint venture aims to generate first year sales of Y245 billion, while employing 2,110 workers.
Based on the earlier agreement, the National Federation of Agricultural Cooperative Associations (Zen-noh) will acquire a 40 per cent stake in the venture and Snow Brand Milk will take 30 per cent. Another dairy farmer cooperative, the National Federation of Dairy Cooperative Associations (Zenrakuren) will hold a 20 per cent stake, with the remaining 10 per cent to be owned by Norinchukin Bank, a major creditor of Snow Brand Milk.
As a result, Snow Brand Milk's total assets will decline by about Y62.6 billion. The company's sales will also decrease by about Y33 billion on a group basis and about Y30 billion on a parent basis for the current fiscal year ending March 2003.
However, the company has already factored that into its earnings forecasts announced on 23 May, it said.
Snow Brand Milk also said 912 workers applied for its voluntary retirement programme offered in mid-August, less than the original June target of 1,000 workers. The applicants will leave the company on 30 September.
Snow Brand Milk now expects a smaller special loss than the earlier announced Y4.2 billion loss due to restructuring steps, it said.
As part of its efforts to secure restructuring funds, the company also announced it sold a 3 per cent stake in its food wholesale affiliate Yukijirushi Access to Nihon Shurui Hanbai, a Japanese food and drink marketer.
Snow Brand Milk will book a special profit of about Y1.08 billion on the stake sale for the fiscal half ending September, which it has already factored into its earnings forecasts.
Snow Brand Milk's stake in Yukijirushi Access dropped from 36.72 per cent to 33.72 per cent as a result, although it is still the largest shareholder, while Nihon Shurui Hanbai's stake in the affiliate rose from 2 per cent to 5 per cent.
Less than two years after Japan's worst food poisoning case involving contaminated milk products, Snow Brand Milk's food unit Snow Brand Food admitted it sold foreign beef as domestic produce to claim government subsidies in the wake of an outbreak of mad cow disease.
Consumers have since avoided "Snow Brand" products, and earlier this year the company decided to pull the plug on Snow Brand Food.