New milk plant still awaiting funding before construction can begin

Happy Valley Milk says earthworks needed to construct $280 million plant in Otorohanga are complete.

A 6ha site has been prepared. Site works included building access roads, drainage works, public road realignments and ground improvements for the spray dryer building.

The ASX-listed company's quarterly report to the market says paperwork associated with the earthworks should be finalised this month.

"This is a major milestone and means the site is ready to commence construction as soon as funding has been secured," the company says.

It is continuing "positive discussions with strategic partners" to secure funding.

The company's expenditure for the December quarter 2021 from operating and investing activities was $1.1 million, with $4m cash on hand at December last year.

New chairman Kevin Bush says Happy Valley has been discussing with a range of parties to secure the debt and equity to commence the main construction programme.

"We are now very focused on bringing current discussions to a conclusion.

"Border closures in New Zealand obviously make these negotiations more protracted.

"We are grateful for the ongoing commitment and support of all of our stakeholders, and I am pleased to be working with them and the board on this next growth phase."

The Happy Valley Nutrition Ltd plant will produce high value specialty dairy ingredient powders for export markets.

The project has been in the pipeline for several years as Happy Valley sought resource consents and funding. Covid-19 has also delayed the project by a few years.

In February last year, Happy Valley announced that it had taken out a $13m loan and secured $7.4m through secured private placement of convertible notes. The money was used to buy strategic farmland to irrigate wastewater from the plant.

Happy Valley plans to develop a single dryer facility with the site master-planned to allow for the addition of an extra drier as well as a blending and canning plant.

New Team

A new management team will soon take charge of the Happy Valley Milk project in Otorohanga.

One of the project's major backers, Ivan Hammerschlag stepped down as chairman of the board this month and has been replaced by Kevin Bush. Hammerschlag remains a board director.

He says Happy Valley is in excellent hands with Bush at the helm.

"He's a seasoned industry executive and these are the skills we need as the company enters this next stage of growth and development.

"I remain a committed supporter of and large investor in the company."

Bush, a board member of Happy Valley, spent 12 years working in the infant nutrition sector, including senior positions with Danone across a number of global markets.

Chief executive Greg Wood has also announced that he will leave the company once funding negotiations are finalised.

In November last year, chief financial officer Gareth Jones resigned. Richard Chew has been appointed on an interim basis while the search continues for a permanent appointee.