NZ's Synlait Milk warns of insolvency
The company needs to raise $133 mln from top investors
20 August 2024
2 minute read
By: New Zealand-based dairy producer Synlait Milk on Tuesday warned it might slide into insolvency if it fails to raise NZ$217.8 million ($133.34 million) from its top two investors, reported Reuters.
The firm, which seeks to refinance its existing bank facilities, is over-leveraged and its recent earnings have been weak.
Synlait plans to issue shares worth NZ$185 million to China's Bright Dairy and shares worth NZ$32.8 million to peer a2 Milk.
Bright Dairy is Synlait's largest shareholder with a 39% stake while a2 Milk holds a near 20% stake in the company.
Synlait will hold a special shareholders meeting on Sept. 18 for investors to vote on the equity raising proposals.
"If the resolutions are not passed, it's likely Synlait would need to cease trading and initiate a formal insolvency process," said Synlait chair George Adams.
If it does not stop trading, banks might launch a formal insolvency process, Synlait said.
All tranches of existing bank facilities are due to mature on Oct. 1 and the company must repay all those outstanding amounts by then or refinance its facilities, it said.
Last month, Synlait received investors' nod to go ahead with a NZ$130 million loan from Bright Dairy.
Bright Dairy and a2 Milk will not be able to vote on resolutions relating to their own placements but have expressed their intent to back each other's placements.
($1 = 1.6335 New Zealand dollars)
