Synlait on Recapitalisation Plan to Retain Farmer Suppliers
Source: DairyNews.today
Synlait, the Canterbury-based milk processor, is banking on its proposed recapitalisation plan to stabilize its operations and retain its farmer suppliers amid ongoing financial struggles. The company has announced a plan to raise nearly $218 million through the issuance of new shares to its two largest shareholders.
Under the proposed deal, Bright Dairy, a Chinese firm currently holding a 39% stake in Synlait, would see its ownership increase to nearly two-thirds of the company. The a2 Milk Company (a2MC), Synlait's second-largest shareholder, would maintain its 19.83% stake. The funds generated from this equity raise are earmarked for reducing the company's debt burden, a critical step in restoring financial health.
The recapitalisation plan requires approval from shareholders, with a special meeting scheduled for September 18 at Synlait’s Dunsandel factory. Synlait’s chair, George Adams, has been actively engaging with the company’s approximately 300 farmer suppliers, many of whom have expressed dissatisfaction due to Synlait's failure to meet market advance rates and the broader concerns about its financial stability.
Adams noted that while farmers appreciate doing business with Synlait, their confidence has been shaken by the company's recent struggles. However, he remains optimistic that the recapitalisation plan will restore Synlait’s balance sheet and reassure the supplier base. He highlighted that Synlait is already meeting market advance rates for the current season, which he hopes will persuade farmers to reconsider their decision to issue cessation notices.
Adams underscored the critical nature of the equity raise, stating, "We followed a rigorous process, including independent expert advice, to explore all options under the current circumstances. The successful passage of this resolution is essential for Synlait’s continued operation."
He warned that failure to secure approval for the recapitalisation could result in Synlait ceasing operations and entering a formal insolvency process. Adams expressed gratitude to Bright Dairy and the a2 Milk Company for their unwavering support, which he believes demonstrates their strong commitment to Synlait’s future.
The recapitalisation plan requires approval from shareholders, with a special meeting scheduled for September 18 at Synlait’s Dunsandel factory. Synlait’s chair, George Adams, has been actively engaging with the company’s approximately 300 farmer suppliers, many of whom have expressed dissatisfaction due to Synlait's failure to meet market advance rates and the broader concerns about its financial stability.
Adams noted that while farmers appreciate doing business with Synlait, their confidence has been shaken by the company's recent struggles. However, he remains optimistic that the recapitalisation plan will restore Synlait’s balance sheet and reassure the supplier base. He highlighted that Synlait is already meeting market advance rates for the current season, which he hopes will persuade farmers to reconsider their decision to issue cessation notices.
Adams underscored the critical nature of the equity raise, stating, "We followed a rigorous process, including independent expert advice, to explore all options under the current circumstances. The successful passage of this resolution is essential for Synlait’s continued operation."
He warned that failure to secure approval for the recapitalisation could result in Synlait ceasing operations and entering a formal insolvency process. Adams expressed gratitude to Bright Dairy and the a2 Milk Company for their unwavering support, which he believes demonstrates their strong commitment to Synlait’s future.
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