Wyeth to head Synlait
Former Westland Milk boss Richard Wyeth is taking over as chief executive of Canterbury milk processor Synlait from May 19.
In a “watershed vote”, Synlait shareholders have approved a recapitalisation plan that hands over control of the listed milk processor to China conglomerate Bright Dairy.
The result also means a lifeline for the troubled Canterbury processor facing unsustainable debt levels of $560 million, including under-utilised North Island investment worth $450m.
To reduce Synlait’s debt, shareholders were asked to vote on the issuance of approximately $217.8 million of new equity capital to the company’s two largest shareholders, Bright Dairy Holdings and The a2 Milk Company, as well as Synlait’s settlement with The a2 Milk Company. Shareholders were also asked to vote on certain administrative amendments to Synlait’s constitution. All resolutions passed with around 95% support from shareholders excluding Bright Dairy, which could not vote. Synlait’s independent directors had warned that should any of the resolutions fail, the company would be forced to cease trading and initiate a formal insolvency process.
The vote has lifted Bright Dairy’s shareholding from 39% to 65% while a2MC’s stake remains at 19%.
Synlait chair George Adams says this is a watershed vote for Synlait.
“Shareholders have given us the opportunity to create a positive future for the company, its investors, farmer suppliers, customers, suppliers and for our 1,400 employees. Thank you for support.”
On behalf of Bright Dairy’s appointed directors Julia Zhu says that their decision to participate in this process has been about protecting the long-term value of Synlait.
“And it further reflects the scale of our commitment to see it rebuild stronger, while restoring farmer supplier confidence over coming years.”
Synlait will use the money raised from new shares to reduce debt and pay $180m due to retail bondholders.
Speaking at the special shareholder meeting earlier Adams expressed faith in Synlait’s viability.
He noted that Synlait retains all of the components that underpinned its earlier financial success.
Its world-class facilities have exceptional capability in quality and innovation, he says.
“Synlait can deliver products that other New Zealand companies cannot – it is the largest infant milk formula manufacturer in the southern hemisphere. That is why it has committed global customers. And in addition, at Pokeno we now have a facility that can produce advanced nutritional products incorporating plant-based ingredients.
“That makes Synlait a company worth saving – as long as we can meet the forthcoming payments and get our debt to a sustainable level.”
On the edge of the hot, dry Takapau plains, Norm and Del Atkins have cultivated a small but exceptional herd of 60 Holstein Friesian cows within their mixed breed herd of 360 dairy cows.
The DairyNZ board and management are currently trying to determine whether, and to what degree, their farmer levy payers will support any increase in their levy contributions.
Milk production is up nationally, despite drought conditions beginning to bite in some districts, according to the latest update from Fonterra.
Dry conditions are widespread but worse in some places, with rain and drought affecting farms just a few kilometres away.
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