Synlait CEO Resignation Highlights Deeper Challenges Facing Dairy Processor
A revolving door of chief executives at milk processor Synlait is a warning sign, says Lincon University senior lecturer in agribusiness Nic Lees.
The Canterbury milk processor, which needs the meeting to approve issuance of new shares worth $217.8 million to two major shareholders- Bright Dairy and a2 Milk Company (a2MC), says it disagrees with the complaint filed by John Penno.
Penno claims that under the NZX Listing Rules and Takeovers Code, Bright Dairy and a2MC should not be able to vote on resolutions relating to the recapitalisation, leaving only shareholders other than Bright and a2MC being able to vote on the two resolutions.
Synlait disagrees with the complaint and considers that the NZX Listing Rules and Takeovers Code have been complied with. Synlait intends to engage with the regulators to have the complaint dismissed before the special shareholders’ meeting.
The special shareholders’ meeting is a critical step for the future of the company, Synlait told the NZ Stock Exchange.
“If the resolutions are not approved and the recapitalisation is not implemented, Synlait would likely need to cease trading and initiate a formal insolvency process unless it were to become clear that further support would be forthcoming from Synlait’s existing banks. Synlait notes that such support from the banks will be hard to secure in such circumstances.”
Synlait chair George Adams says that since he joined Synlait in May this year, the board has followed a rigorous process.
“The independent directors remain confident that this is the optimal offer structure for the company.”
Penno is a 2.3% shareholder, having previously served as the CEO, the non-independent chair, and as a director of the company until May 2024.
Synlait says that at this stage, the complaint has no effect on the resolutions to be voted on at the special shareholders’ meeting nor the timing of the special shareholders’ meeting, which will proceed as scheduled.
“The support of all shareholders is essential to safeguard the future of the company. Shareholders can vote in person at the meeting or lodge their proxy appointment online at www.investorvote.co.nz.
“Synlait will provide any further updates to the market to the extent required in accordance with its continuous disclosure obligations.”
