You don't make a statement like that and then turn around and fork out capital a month later.Define 'pending' though in reference to business ? 5 days .... 21 days ? Pending is sometimes referenced as a short term descriptive in relation to business so 6 weeks from now might not qualify in DB's mind ? lol
We know SM1 need to reduce their debt by $130 million by 31 March - how they do this remains to be seen given their Dairyworks sale process seems stalled at best at this stage ? DB wouldn't be able to make any comments to financing negotiations going on in the background regardless of what stage these might be at so I am taking this comment with a grain of salt given what is publicly known about SM1's finance arrangements.
Another free article on Synlait was just published this morning outlining the situation in detail and I have posted the relevant parts below but this comment reiterates that something will have to give soon - interesting 6 weeks ahead IMO
"The only thing close to a certainty is that something big now has to happen. The Synlait of the future is going to be very different to the current Synlait."https://www.interest.co.nz/rural-ne...g-trouble-losses-mounting-and-no-easy-answers20th Feb 24, 9:44am
Keith Woodford says Synlait is in big trouble with losses mounting up and no easy answersIf Synlait cannot successfully sell assets, then the only other options are to either raise more share capital or to be bought-out totally by a new owner. This gets tricky given two existing major shareholders.
The biggest financial stakeholder is Bright Dairy from Shanghai with 39 percent shareholding. Bright has been a shareholder since 2010, when Synlait was still a private company.
Bright cannot increase its shareholding unless it offers to purchase all shares. Would it be willing to buyout the company itself, or alternatively sell its shares in a buyout? Bright’s public response until now has been that it is happy with its current shareholding and intends to stay as a long-term shareholder. That could change either way.If Bright really wanted to, it could find funds to purchase 100 percent of Synlait. However, there is a big fly in the ointment, with that being a2Milk.
a2Milk is the second biggest Synlait shareholder with a 19.9 percent shareholding, theoretically headquartered in New Zealand but with all senior executives based in Australia, China and the USA. Most of the share trading occurs in Australia despite it being a New Zealand company. Like Bright, a2Milk can only increase its percentage of shares by offering to buy all shares.
a2Milk is also the most important purchaser of Synlait’s products. It is debt free and has more than $750.000 million sitting in the bank. This would be more than sufficient to purchase Synlait.
Both Bright and a2Milk have shareholdings which effectively prevent other corporates from pursuing an outright purchase unless at least one of them agrees to sell. Also, there are particularly strong reasons why a2Milk cannot afford to let go of Synlait.
Without Synlait, which holds the licence for manufacture of Chinese-labelled ‘a2 Platinum’, a2Milk is in big trouble. It would mean a2Milk would need to obtain an equivalent licence for its majority-owned Mataura Milk in Southland. Obtaining that licence could be a long process, and there is also a long herd-conversion process before Mataura will have the necessary volume of A2 milk.
Things have got more complicated over the last year with a very strained relationship between a2Milk and Synlait. Not only is a2Milk now seeking damages from Synlait for non-performance. It also wants to use non-performance as a reason for breaking commitments relating to exclusive sourcing of supply.
The two companies are in arbitration but it is far from clear how that will end up. I could say a lot more about the disagreements but all I want to say here is that it is a nasty situation.
The cleanest outcome would be if a2Milk were to make an outright bid to purchase Synlait. Bright could then decide to sell or retain its shares.
If Bright decided to retain the shares, then a2milk would need to buy at least 76 percent of other shareholdings to obtain control. Perhaps a2Milk is biding its time, as the screws are tightened on Synlait. And then, what would Bright decide to do? Perhaps a counter offer to ratchet up the price?
The only thing close to a certainty is that something big now has to happen. The Synlait of the future is going to be very different to the current Synlait.
(20min delay)