Dairygold is turning to shareholders rather than the banks to borrow some of the cash it needs to fund a €120 million programme of investment. The dairy and food co-op said yesterday that it intends to borrow €15 million through a series of loan notes issued to members over the next three years.

The Cork-based co-op said it is raising the cash from members in order to maintain a sustainable level of bank debt. Its net borrowings were €62.7m at the end of 2011.

Chief executive Jim Woulfe said that the organisation needs funding from members as it would not be prudent, “even if it were possible” to fund investment on the scale that is planned by borrowing exclusively from banks.

This will be the first time that an Irish co-op has sought to borrow money from members in this way.

Dairygold intends repaying the loan notes on March 31st in the year in which the fifth anniversary of the date of issue falls. That is, notes issued in 2013 will be repaid on March 31st of 2018.

The notes will have an interest rate of 4 per cent plus the three-month European interbank rate, which is currently 0.191 per cent.

* This article was amended on December 3rd, 2012, to correct an error.