Synlait Shareholders to Vote on $218 Million Capital Injection as Financial Deadline Looms

The proposed cash infusion, backed by Synlait’s two largest shareholders, aims to stabilize the company’s immediate financial woes. However, the deal excludes other shareholders, resulting in the dilution of their stakes.

If approved, the capital restructuring would increase Bright Dairy’s ownership to 65%, while A2 Milk would maintain its near 20% share. Synlait's chair, George Adams, underscored the urgency, explaining that the company’s bank financing is set to expire at the end of the month. Without the cash injection, Adams warned that independent directors may have no choice but to consider receivership, stating, "We’re pretty much at the end of the road."

Despite the dilution, Adams assured smaller shareholders that their shares would increase in value if the deal goes through. The market value of the company, which was around $27 million before the announcement, could rise to $42 million post-approval. He emphasized that, while shareholders would own a smaller percentage of the company, their shares would be worth more in monetary terms.

Synlait founder and CEO, John Penno, attempted to disrupt the meeting by filing a complaint with regulators over a breach of NZX and takeover rules, but the claim was dismissed. As a minority shareholder, Penno’s opposition adds complexity to the already tense vote.

Adams admitted that securing shareholder approval is not guaranteed. “I wish it was a slam dunk. It genuinely isn’t,” he remarked, highlighting the ongoing efforts to secure enough support to finalize the deal before the company reaches the financial brink.