Media Updates, page-14239

From The Australian

Synlait's debt woes, outlook to weighVALERINA CHANGARATHILNZ dairy giant Synlait, which is also listed on the ASX, is facing several material uncertainties with regard to its debt payments amid a deteriorating financial outlook after it posted a half-year after-tax loss of $NZ96.2m.The group reported operating cash outflows of $NZ98.1m and a working capital deficit of $NZ204.9m, with loans and borrowings due for repayment and/or refinancing in the next 12 months of $NZ514.1m. It blamed a slow recovery in business performance, the protracted Dairyworks sale process and its significant levels of debt due for repayment in the short term for its current situation where its current liabilities now exceed assets by $NZ204.9m. "The group is unable to repay these debts on demand without additional support from shareholders or from other sources of capital," it warned investors on Tuesday. "Without successful execution of an equity raise in combination with other deleveraging options by July 31, the group will be in breach of its banking covenants…" The group said any breaches could affect its ability to "remain a going concern".On Thursday last week, Synlait renegotiated terms with its banking syndicate and obtained an extension to July 15 for a $NZ130m loan prepayment that due on the day. It comes after half-year revenue lifted 3 per cent to $NZ793.5m. But earnings before interest, taxes, depreciation, and amortization was $NZ19.9m.The group has put its North Island plants on the sale block and is also seeking support from its 39 per cent shareholder, China's Bright Dairy, on various measures. Bright Dairy has expressed initial support for any capital raise and asset sales. It comes as Synlait continues to try to resolve an ongoing dispute with A2 Milk, a shareholder and key customer, over the latter's cancellation of exclusivity arrangements over certain products, announced in September last year.New measures also include a restructuring of the executive leadership team, a cost-out program and focus on operational and sales performance. Full year earnings are now likely to be "significantly down" on FY23 within the range of $NZ45m to $NZ60m in the wake of softer demand and margins and higher costs. Shares on ASX last at 68c.