The company is also forecasting its 2021 financial year results to be lower than this year due to lower infant formula sales.
In a statement on the New Zealand Stock Exchange today, the company says the capital raising will also provide more financial headroom as it navigates COVID-19, which is having an unpredictable impact on the stability of its current and future earnings.
It will also use the capital raised to invest at its new Pokeno manufacturing site.
In its statement, Synlait says the equity raising is supported by Synlait’s cornerstone shareholders Bright Dairy Holding Limited and The a2 Milk Company.
Under the placement, Bright Dairy Holding Limited will be allocated its pro-rata portion of the equity raising to ensure that its 39.01% holding in Synlait does not decrease as a result.
Synlait also provided a 2021 guidance update, saying it now expects consumer-packaged infant formula volumes to be lower than last year. A key customer is resetting its own inventory levels leading to softer demand.