Rowena Duncum: The Country producer on Synlait asking shareholders for multi-million dollar lifeline

Struggling dairy manufacturer Synlait has asked shareholders to vote in favour of a $130 million lifeline from Chinese shareholder Bright Dairy.

The company said a2′s vote would be influential in deciding if the critical shareholder loan needed to pay off bank debt due July 15 went ahead.

The Country's Rowena Duncum says the situation's looking dire for Synlait.

LISTEN ABOVE

See omnystudio.com/listener for privacy information.

Episode Transcript

Speaker 1 (00:09):
You're listening to a podcast from News Talk sed B.
Follow this and our wide range of podcasts now on iHeartRadio.

Speaker 2 (00:16):
Now. Struggling dairy company Sinlay has asked the shareholders to
vote in favor of a one hundred and thirty million
dollar loan from its biggest shareholder, which is Chinese Bright Dairy.
Sinlay says without the loan, it will need to cease
trading or it will need to initiate insolvency procedure proceedings
in Rouwenda Duncan from the Country is filling in for
Jamie mackay with us. Now, hey Roe, hey hev sounds
like a really serious situation. What alternatives do they have?

Speaker 3 (00:39):
Yeah, well, not many. So it's been brewing for a
week while. So back in April, Sinlay announced there that
I had made a ninety six million dollar first half loss.
Now this was compared to an eight point four million
dollar profit twelve months ago. So that was for the
six months that ended in January. So that was when
they won that extension because the one hundred and thirty

(01:00):
million dollar debt repayment was due at that time, so
they extended it through until the fifteenth of July. Now
between now and then, they announced their upcoming forecast for
the current season and they matched it to Fonterra, so
basically sitting on an eight dollar payout. Remember King's Birthday. Monday,
they made an announcement on the Australian Stock Exchange because

(01:22):
obviously the New Zealand market was closed for the public holiday,
and that's when they explained that their financial woes had worsened.
More than half of their suppliers had indicated they wanted
to leave Sinlace. Of course that was when they said, right,
I want to stop supplying my milk. They have to
wait two years, so there's like a two year holding
period before they can do that. And then, of course

(01:44):
Bright Dairy is one of its largest shareholders. There's an
associated company from Bright Dairy who have put forward this
one hundred and thirty million dollar lifeline. So this debt
has to be paid on the fifteenth of July, so
shareholders will now vote for it at a special general
meeting which has been shareduled four days before the loans
due on July eleven. Look, they've had their dairy works

(02:08):
up for sale, they haven't had any buyers of that.
Their share prices mount seventy one percent in the last
twelve months. This is probably as dire as it's going
to get. Heather Obviously, they've had changes at the top
as well, with a new chair coming on board this year.
It's just it's a real challenging time for them. And yeah,
I know a lot of sin Lay suppliers are very

(02:28):
worried about what laves are heed.

Speaker 2 (02:30):
Yeah too, right, ro thank you for filling us and
really appreciate Rowena Duncan, who is from the country. Sounds
like it comes down to a two and whether a
two goes ahead is a very influential shareholder. Whether it
goes ahead with it is the question.

Speaker 1 (02:41):
For more from News Talks that'd be listen live on
air or online and keep our shows with you wherever
you go with our podcasts on Iartradio.