Synlait Reports Losses Amid Bright Dairy Loan Extension and Asset Sales

New Zealand-based dairy processor Synlait has announced a net loss after tax of $12 million for the period from January 1 to April 31, 2023. This announcement follows a challenging financial period, as the company works through operational and financial difficulties that it describes as being outside its direct control. The bulk of the financial loss was concentrated in January.

In a strategic move to address its financial challenges, Synlait has secured an extension of a crucial $130 million shareholder loan from its major stakeholder, Shanghai-based Bright Dairy. The loan, which is fixed for two years and will not be extended further, is effective from June 30, 2024. This extension is part of a broader refinancing strategy that had previously increased Bright Dairy's equity stake in Synlait to 65%.

The company's current focus is on structural operational improvements and a comprehensive balance sheet restructuring. These efforts follow the successful sale of its North Island assets, which contributed a preliminary accounting gain to the recently reported financial results.

Synlait's recent four-month loss shares some overlap with previously reported interim losses, which amounted to $80 million for the six months ending in January. At that time, the company pointed to adverse product optionality and costly processing delays as major factors in its financial performance.

To further stabilize its financial standing, Synlait is actively engaging with existing and potential lenders to refinance its senior syndicated bank facilities, set to mature on June 30. The formal support from Bright Dairy is deemed essential for these negotiations, and Synlait remains confident in securing the necessary banking support and approvals before the deadline.