SML - Synlait Milk Ltd

[bull....]

share price might jump biggly after a yes vote ? make rights issue price much higher tham most people think

[Bikeguy]

Bright and A2M would choose the next move to maximize their benefits. Selling assets at a discount might not be a good choice for them. Building the Pokeno plant was expensive and challenging. Why would Bright want to sell Pokeno when it has access to capital at interest rates lower than small shareholders could expect?

Intelligent points

[Bikeguy]

SB888, that trade at .20 has paid off big time mate, well done!!

[Charlie]

I bought in at .24 and very happy too . 5% of my holdings so didnt want to risk any more.

[bull....]

if this jumps to a dollar ? ( hopefully after vote , wishing hard ) make a massive difference to money needed for raise.

[whatsup]

.28 open and .41 high so far for the day, fortune favours the brave !! well done all

[Balance]

SB888, that trade at .20 has paid off big time mate, well done!!

Well done indeed!

He who dares wins!

[Toddy]

Yes, well done guys. Way braver than me taking on the big boys in town.

[Balance]

Answer from Chairman to question about size of CR - "hundreds of millions of dollars."

Sounding like $200m to $250m to me.

[Balance]

Loan proposal approved - clear from meeting.

Proxy votes - 59m or 27% in favour so A2M would have been defeated anyway if it voted against the loan.

235,000 shares against the proposal.

[Newman]

Answer from Chairman to question about size of CR - "hundreds of millions of dollars."

Sounding like $200m to $250m to me.

The capital raising would be large enough to pay back bonds, further reduce bank debt, retain farmers, enhance Pokeno productivity, and produce a good after-tax profit to please shareholders.

Could a CR of $250-300m and a share price return to $1 before Christmas be expected?

[Toddy]

The capital raising would be large enough to pay back bonds, further reduce bank debt, retain farmers, enhance Pokeno productivity, and produce a good after-tax profit to please shareholders.

Could a CR of $250-300m and a share price return to $1 before Christmas be expected?

Yeah sure, if they raised 218m off current shareholders that's a buck a share into the bucket.

[silverblizzard888]

Very impressed with the Chairs performance and lots of interesting updates provided. First off great to have the resolution passed and loan from Bright on its way, next step will be capital raising. There was some good updates provided.

Asset Sales
Sounds like Dairyworks is off the table, theres no strong offers and Synlaits sick of being lowballed and most probably Pokeno too since they think the asset will be important for future growth, but will depend on how the CR goes.

Capital Raising
With asset sales unlikely to be sold off now and the Chair speaking about 'hundreds' of millions being raised, that will be their first target to raise enough to pay down debt. Asset sales will only be back on the table if they fail to raise the amount they want.

Pokeno
An important update on Pokeno was provided, the Chair spoke about Pokeno having supplied Abbott for 12 months and that the ramp up is still to come for more plant based products, they had only just completed a testing phase for another of their products, so ramp up soon after. They are also working with Bright to create a new product too. Pokeno cash burn will be solved soon with hints that 2025 Synlait will be cashflow positive.

Share price
Share price has rebounded well and with things looking much brighter going forward it can still continue to perform. At 37.5 cents and an $81m mcap its still looking like good value.

[whatsup]

With a M C of circa $60 mil and $250,000,000 funding to raise ?

[silverblizzard888]

With a M C of circa $60 mil and $250,000,000 funding to raise ?

The Chair did say they will be raising several times their market cap, so yes it looks like the case. If the share price is higher by end of August then less dilution.

[bull....]

Very impressed with the Chairs performance and lots of interesting updates provided. First off great to have the resolution passed and loan from Bright on its way, next step will be capital raising. There was some good updates provided.

Asset Sales
Sounds like Dairyworks is off the table, theres no strong offers and Synlaits sick of being lowballed and most probably Pokeno too since they think the asset will be important for future growth, but will depend on how the CR goes.

Capital Raising
With asset sales unlikely to be sold off now and the Chair speaking about 'hundreds' of millions being raised, that will be their first target to raise enough to pay down debt. Asset sales will only be back on the table if they fail to raise the amount they want.

Pokeno
An important update on Pokeno was provided, the Chair spoke about Pokeno having supplied Abbott for 12 months and that the ramp up is still to come for more plant based products, they had only just completed a testing phase for another of their products, so ramp up soon after. They are also working with Bright to create a new product too. Pokeno cash burn will be solved soon with hints that 2025 Synlait will be cashflow positive.

Share price
Share price has rebounded well and with things looking much brighter going forward it can still continue to perform. At 37.5 cents and an $81m mcap its still looking like good value.

you were right when you said a while back at just over 20c that liquidation value was worth more than current price. probably still case now. so agree probably good value still with uncertainty significantly reducing.

[Toddy]

So what kind of carrot are they offering farmers to stay or sign up.

The farmers will be a big winner out of today's cap raising announcement for sure.

[silverblizzard888]

So what kind of carrot are they offering farmers to stay or sign up.

The farmers will be a big winner out of today's cap raising announcement for sure.

Can’t remember precisely but the farmers wanted upfront payment incentives and synlait promising competitive milk pricing to fonterra

[nztx]

So what kind of carrot are they offering farmers to stay or sign up.

The farmers will be a big winner out of today's cap raising announcement for sure.


Will they ? So who is left digging repeated holes in their front garden for CR after CR ?

Any news on a future dividend out of this or do the Chinese lenders get first lick of the lollypop right up the top of the queue .. or maybe better dodging the mayhem ahead in future rounds of craziness .. by simply leaving funds in the bank on high interest ? :)

[RupertBear]

Very impressed with the Chairs performance and lots of interesting updates provided. First off great to have the resolution passed and loan from Bright on its way, next step will be capital raising. There was some good updates provided.

Asset Sales
Sounds like Dairyworks is off the table, theres no strong offers and Synlaits sick of being lowballed and most probably Pokeno too since they think the asset will be important for future growth, but will depend on how the CR goes.

Capital Raising
With asset sales unlikely to be sold off now and the Chair speaking about 'hundreds' of millions being raised, that will be their first target to raise enough to pay down debt. Asset sales will only be back on the table if they fail to raise the amount they want.

Pokeno
An important update on Pokeno was provided, the Chair spoke about Pokeno having supplied Abbott for 12 months and that the ramp up is still to come for more plant based products, they had only just completed a testing phase for another of their products, so ramp up soon after. They are also working with Bright to create a new product too. Pokeno cash burn will be solved soon with hints that 2025 Synlait will be cashflow positive.

Share price
Share price has rebounded well and with things looking much brighter going forward it can still continue to perform. At 37.5 cents and an $81m mcap its still looking like good value.

I was also very impressed with the Chairs performance.

[Toddy]

Will they ? So who is left digging repeated holes in their front garden for CR after CR ?

Any news on a future dividend out of this or do the Chinese lenders get first lick of the lollypop right up the top of the queue .. or maybe better dodging the mayhem ahead in future rounds of craziness .. by simply leaving funds in the bank on high interest ? :)

Farmers will win for sure.
Chinese will win.
A2, secure short term product.

Retail investors need to find big $$$ to keep the faith.

I ways wonder where Kiwi mum and dad's are getting this money from. It's no IFT cap raise for sure. This is a rescue package, think RYM, FBU etc

[Snoopy]

I was also very impressed with the Chairs performance.


Four legs at the start of the performance and four legs at the end. Not bad, although in fairness that kind of performance is expected these days. What about the person who was sitting in the chair? How did he do?

SNOOPY

[Balance]

Farmers will win for sure.
Chinese will win.
A2, secure short term product.

Retail investors need to find big $$$ to keep the faith.

I ways wonder where Kiwi mum and dad's are getting this money from. It's no IFT cap raise for sure. This is a rescue package, think RYM, FBU etc

Synlait will go on from here to recover and prosper - that is my belief.

Covid dealt a very cruel blow to any number of companies and sadly, some did not survived.

Think of the number of NZ companies which needed to do CR in the last 3 years to survive. And how they have gone on to recover and do well.

Synlait is going to survive - it is fortunate to have a major shareholder with deep pockets, commitment and distribution in a huge market in China which wants dairy products from NZ.

[nztx]

Synlait will go on from here to recover and prosper - that is my belief.

Covid dealt a very cruel blow to any number of companies and sadly, some did not survived.

Think of the number of NZ companies which needed to do CR in the last 3 years to survive. And how they have gone on to recover and do well.

Synlait is going to survive - it is fortunate to have a major shareholder with deep pockets, commitment and distribution in a huge market in China which wants dairy products from NZ.


Another A2M upwards trajectory .. headed off in direction of a big 20 .. or maybe not so soon ? :)

[RupertBear]

Four legs at the start of the performance and four legs at the end. Not bad, although in fairness that kind of performance is expected these days. What about the person who was sitting in the chair? How did he do?

SNOOPY

Ok it took me a while Snoopy but I finally got it! :lol:

So to be more precise, I thought George Adams, the man in the chair, was excellent. :)

[Balance]

Ok it took me a while Snoopy but I finally got it! :lol:

So to be more precise, I thought George Adams, the man in the chair, was excellent. :)

Agreed. Given that the approval was in the bag (proxy votes), I thought he was patient, frank and as forthcoming as could be with all the questions throw at him. Best in mind that he is new as chairman but comes across as very well briefed.

One hopes that Synlait will achieve the cashflow positive outcome in 2025 he alerted to.

[Toddy]

Forbar say RYM 300 percent returns. Makes you think, puting even MORE money in to Synlait would probably be a slow painful wait to earn a decent return on your capital.

I understand that this waiting game on the outcome of this rescue package has been fun for many. But the opportunity cost of reinventing will be massive in this downward interest rate environment. The fund managers will find it a hard sell to the story to invest more funds to the big boss.

[Balance]

Forbar say RYM 300 percent returns. Makes you think, puting even MORE money in to Synlait would probably be a slow painful wait to earn a decent return on your capital.

I understand that this waiting game on the outcome of this rescue package has been fun for many. But the opportunity cost of reinventing will be massive in this downward interest rate environment. The fund managers will find it a hard sell to the story to invest more funds to the big boss.

The issue with Synlait going forward is not whether its fortunes will recover - it will imo. The factors which brought this company close to receivership (but for Bright) are now well known and imo, reversible.

The big issue for me is whether the interests of minorities are in synch with that of Bright who is expected to increase its shareholding beyond its current level. Bright controlling Synlait at an operational level raises the all important question of where Synlait’s future profits exporting to the huge China market will reside - in NZ or in China via ‘transfer pricing’.

Bright is not rescuing Synlait for free!

So shareholders and potential investors need to watch that carefully before putting in more funds via the CR.

Different for those who are currently not invested - as can be seen in recent times, brave & shrewd investors like ssb888 can double their monies by buying off the panic-stricken investors.

[bull....]

Adams said the company could now get on with a capital raising through the sale of new shares, which was likely to be "several hundred million dollars" but would avoid the need to sell assets. Details would be released next month, but the matter was complicated and needed to be fair to all.
"We have a complex relationship with two major shareholders, which we've got to resolve to ensure we can deliver an equity raise ... we've also got to take into account the volatility of our share price and bond price."

https://www.rnz.co.nz/news/business/521906/synlait-milk-shareholders-back-large-loan-from-chinese-major-shareholder

[silverblizzard888]

In my view Bright probably sees their investment in Synlait as a means of growing their business into foreign markets that would otherwise be harder to enter themselves, so they would to that extent never really want to fully own Synlait as theres benefits for it to remain NZX listed and to maintain local shareholders. Hence why they have backed Synlait even though they never fully utilised Synlait for their benefit, though they are now working on a new product together that will see Synlait potentially producing a lot more product for them.

Synlait has always been a growth aspired company hence why maintaining Pokeno was so important to them even though it has nearly taken them under. If they make it through this with a successful capital raising they become a whole lot stronger and have a lot of potential to become a much better company than they have been in the past. I like the stance of the new Chair, he seems to have all four feet on the ground (pun intended), a more traditional finance guy who doesn't run before he walks and the perfect guy to help reset the A2 relationship.

[Mel]

Hopefully, Adams and the team can quickly address the exclusivity dispute with A2M in the near future also (secondary priority) as that's the other fly in the ointment. I was impressed with his pragmatism, so hopefully that leads to some good outcomes.

[silverblizzard888]

Adams said the company could now get on with a capital raising through the sale of new shares, which was likely to be "several hundred million dollars" but would avoid the need to sell assets. Details would be released next month, but the matter was complicated and needed to be fair to all.
"We have a complex relationship with two major shareholders, which we've got to resolve to ensure we can deliver an equity raise ... we've also got to take into account the volatility of our share price and bond price."

https://www.rnz.co.nz/news/business/521906/synlait-milk-shareholders-back-large-loan-from-chinese-major-shareholder


The referenced quotes sound like it was from yesterdays meeting, I don't recall the Chair saying the word 'several' hundred million, he just said hundreds of millions, but he did use the word 'several' when he said they would need several times their market cap. Not sure if i missed the word or its a misquote

[Mel]

The referenced quotes sound like it was from yesterdays meeting, I don't recall the Chair saying the word 'several' hundred million, he just said hundreds of millions, but he did use the word 'several' when he said they would need several times their market cap. Not sure if i missed the word or its a misquote
Their share price is quite volatile, so 'several' times market cap could be a 'few' or otherwise!

[bull....]

The referenced quotes sound like it was from yesterdays meeting, I don't recall the Chair saying the word 'several' hundred million, he just said hundreds of millions, but he did use the word 'several' when he said they would need several times their market cap. Not sure if i missed the word or its a misquote

if its several hundred milliuon fits in with my thinking earlier in the thread of a billion odd shares need issued in the raise, but of course if the price rises more this reduces as the issue price would be higher. in the scheme of things its really not important as there financial position after raise is what matters. so bigger the better. both a2 and bright got plenty of coin.

[whatsup]

I cannot understand why anyone is buying SML shares atm when one could buy the rights at what imo will be a massive fire sale !

[silverblizzard888]

if its several hundred milliuon fits in with my thinking earlier in the thread of a billion odd shares need issued in the raise, but of course if the price rises more this reduces as the issue price would be higher. in the scheme of things its really not important as there financial position after raise is what matters. so bigger the better. both a2 and bright got plenty of coin.

The bigger the raise the better the company will be to put this debt issue behind them, but of course the dilution will be big and harsh, though if the CR is too small then it risk this debt issue coming back to bite them again.

$300-400m raise would put to bed any issue of debt and all steam ahead for growth
$200-300m raise is an optimal raise for company and shareholders, to reduce debt to a comfortable level and focus on getting back to cashflow positive and paying down debt
$100-200m raise would not likely be enough to reduce debt and would look to North Island asset sales.

[clearasmud]

I cannot understand why anyone is buying SML shares atm when one could buy the rights at what imo will be a massive fire sale !

Because you get the rights for free.

[whatsup]

Because you get the rights for free.

Im talking about new S Hers !

[bull....]

i just find it hard to see how they can survive

with 585m debt


based on there ebit forecast of 45 - 60m that would imply they could have only round 300m debt which they could service on those ebit figures
so that implies a cap raise of say 300m and issue of at least 2.5 billion shares :scared: at say 12c
probably need to raise more for a buffer if conditions dont improve

prob only want 200m debt at most and hope the issue price is higher than 12c

[bull....]

hopefully the cap raise allows participates to oversubscribe there current holdings . that suit bright and some others

[blackcap]

Because you get the rights for free.

I think you are right. You get the rights attached to your shares. If the rights issue is done at say 20 cents and the SP is trading at 30 cents, the rights will have a value of about 10 cents. It all depends on the future prospects at the end of the day as to how well the SP will hold up.

[clearasmud]

I think you are right. You get the rights attached to your shares. If the rights issue is done at say 20 cents and the SP is trading at 30 cents, the rights will have a value of about 10 cents. It all depends on the future prospects at the end of the day as to how well the SP will hold up.

Yes if you buy shares now the rights are worth quite a bit as your share purchase now will only be a fraction of your Total investment.
NTA of the shares now must be about $2.50 to give you an idea.

[whatsup]

Yes if you buy shares now the rights are worth quite a bit as your share purchase now will only be a fraction of your Total investment.
NTA of the shares now must be about $2.50 to give you an idea.

You really think so with all of the problems that they have out there, biggest one imo is farmer supply issue, where is their future with the farmer suppliers bailing out of their supply contracts, talk about stranded assets !!!

[Balance]

You really think so with all of the problems that they have out there, biggest one imo is farmer supply issue, where is their future with the farmer suppliers bailing out of their supply contracts, talk about stranded assets !!!

Farmers are well known for their loyalty to processor .... NOT!

Whoever pays the most and is perceived as reliable payers get the produce.

[silverblizzard888]

Interview with a Synlait supplier, but nothing new said. Supplier was supportive, main concern is certainty for the future.

https://www.newstalkzb.co.nz/on-air/mike-hosking-breakfast/audio/cameron-henderson-synlait-supplier-on-the-companys-shareholders-voting-in-favour-of-a-130m-loan/

[Toddy]

Farmers are well known for their loyalty to processor .... NOT!

Whoever pays the most and is perceived as reliable payers get the produce.

Yes, it's called business. It's no different from mum and dad's shopping around electricity providers for a good deal.

And Fonterra will match the offer for certain customers, just like your bank matching another banks discounted mortgage rate.

[silverblizzard888]

Yes, it's called business. It's no different from mum and dad's shopping around electricity providers for a good deal.

And Fonterra will match the offer for certain customers, just like your bank matching another banks discounted mortgage rate.

Mind you Fonterra also expects its suppliers to stump on money in the hundreds of thousands or even millions for shares in Fonterra to match how much they supply, for the farmers without the extra capital its a bit of a stretch, so its not a straight forward swap.

[Toddy]

Mind you Fonterra also expects its suppliers to stump on money in the hundreds of thousands or even millions for shares in Fonterra to match how much they supply, for the farmers without the extra capital its a bit of a stretch, so its not a straight forward swap.

Yes, deal structures can take on many forms like part payments for investment capital. Farmers dont mind as long as they are earning a return on the capital. Also the processors don't like to have too many stretched farmers on their books as that can lead to many other issues.

Having my capital tied up in the Kiwifruit shares (Zespri and Eastpack) is definitely not ideal. But as long as they beat the cost of capital and it secures my pack out then I don't mind.
And the banks are allowed to include Zespri shares as a capital asset for lending purposes.

[Balance]

Shareholders really should be turning their attention to influencing the CR terms and conditions so that it's a fair CR to all shareholders.

Forgone conclusion that the CR will be dilutary but it does not have to be unfair to other shareholders.

Remember that a shareholders' vote is required to approve the CR so there's one more hurdle Synlait has to clear before the CR goes ahead and Synlait is recapitalised.

[winner69]

Seems Synlait management still have no idea what’s going on

Guidance withdrawn …but we’ll fiddle with ebitda numbers to give the bank the $45m they promised

Incredible

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/434597/422859.pdf

[Toddy]

This company provides plenty of lessons over and over for investors.
It basically ticks almost every box imaginable on why you should not invest and how to lose money investing.

[Newman]

Seems Synlait management still have no idea what’s going on

Guidance withdrawn …but we’ll fiddle with ebitda numbers to give the bank the $45m they promised

Incredible

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/434597/422859.pdf

Synlait's performance will remain unsatisfactory until a capital raising is completed to pay off a large part of its debt and Pokeno stops losing money. This situation is well known before the $130 m loan vote.

[bull....]

Synlait's performance will remain unsatisfactory until a capital raising is completed to pay off a large part of its debt and Pokeno stops losing money. This situation is well known before the $130 m loan vote.

exactly. downgrade again is no surprise

[Rawz]

exactly. downgrade again is no surprise

SML reaffirmed guidance only 6 weeks ago. So it really is a surprise. Like W69 says SML management really have no idea what is going on in their business

[bull....]

SML reaffirmed guidance only 6 weeks ago. So it really is a surprise. Like W69 says SML management really have no idea what is going on in their business

read the announcement. due to costs of strategic review and shipping delays. if you didnt believe that a furthur softening in demand is possible then you have not done your homework as they said this was possible as well in previous announcements

[Rawz]

read the announcement. due to costs of strategic review and shipping delays
all these guys do is manufacture and ship. Literally their business.
6 weeks ago....

come on dont fall for their excuses

[bull....]

all these guys do is manufacture and ship. Literally their business.
6 weeks ago....

come on dont fall for their excuses

said timing issue so that implies revenue will be in next period

[whatsup]

Hasent the farm gate milk price been down graded several times over the last month, if so I wonder if this is now being reflected in the SML update ?

[billkiapi]

How can they reasonably obtain a shareholder vote and then announce a serious problem for the profitability obligations they agreed to 4 days later?

[Toddy]

Well done regulators for not interfering in the process and allowing this company to survive.

Good macro vision.

[Newman]

A New Zealand sheep milk company has scored a big win in China - gaining brand registration for its infant milk formula.
https://www.nzherald.co.nz/nz/spring-sheep-waikato-based-sheep-milk-company-scores-a-big-win-in-china/F4UFOAPCUBGTNFMY2C75G3E2GE/

[kiora]

A New Zealand sheep milk company has scored a big win in China - gaining brand registration for its infant milk formula.
https://www.nzherald.co.nz/nz/spring-sheep-waikato-based-sheep-milk-company-scores-a-big-win-in-china/F4UFOAPCUBGTNFMY2C75G3E2GE/

Wow This big?
https://www.rnz.co.nz/news/business/470392/new-image-group-buys-beauty-products-company-nutrimetics

After this

https://www.rnz.co.nz/news/business/470013/takeover-offer-lands-new-image-group-with-1-point-5m-penalty

[Newman]

Pressure on Synlait’s independent directors ahead on capital raise - Stock Takes
https://www.nzherald.co.nz/business/decision-time-for-synlaits-independent-directors-stock-takes/KOZVTWOGVRHIDIQQJOLB52QOME/
Pay walled.

Interestingly, the report presented a view of some shareholders in two paragraphs below:

"Synlait’s current share price suggests the business is worth $62m. Yet when you look at the sum of the assets and strip out debt the value of the business is conservatively worth just over $600m.

In other words, Synlait is worth more dead than alive under any scenario to resuscitate the business that does not reflect its intrinsic value".

[Newman]

Synlait & The a2 Milk Company settle disputes.

Does this suggest that capital raising is agreed upon between them?

[Newman]

With a combined shareholding of 59%, Bright and A2 Milk would have a high chance of getting the vote on the capital raising pass (75%), though some institutional and retail shareholders would be unhappy.

[Bikeguy]

I feel this is pretty good, A2 wanting another manufacturing slot etc shows these guys are going to keep it together for a while yet, at least till 2027, so has to begin to bring some confidence back…interesting timing to? CR just around the corner…

[Sideshow Bob]

https://www.nzx.com/announcements/436291

ynlait Milk Limited (Synlait) and The a2 Milk Company have conditionally agreed to resolve all disputes subject to arbitration, including those regarding exclusivity, pricing, and other issues.

Synlait CEO Grant Watson commented: “Settling these disputes is another positive step forward in our business recovery plan. With the disputes behind us, we are pleased to be able to confirm to our shareholders The a2 Milk Company’s support for our upcoming equity raise. This marks genuine progress for Synlait – we are delivering on the turnaround actions needed to reset our performance and better position the company for the future.”

A summary of the settlement is set out on the next page. However, notably:
- Synlait has agreed that the exclusivity it has under the Nutritional Powders Manufacturing and Supply Agreement (NPMSA) for a2 Platinum® and other nutritional products will cease to apply from 1 January 2025; however, Synlait expects to continue to produce all products under the NPMSA in the short term.

- Synlait will continue to hold the Chinese regulatory State Administration for Market Regulation (SAMR) registration (currently expiring September 2027), attached to its Dunsandel facility, after settlement takes effect. The registration is for The a2 Milk Company’s Chinese labelled 至初® Infant Formula (stages one, two and three). Despite the exclusive supply arrangements ending, Synlait expects that The a2 Milk Company’s China label products will continue to be produced at Synlait’s Dunsandel facility unless The a2 Milk Company can obtain its own SAMR registration to manufacture those products.

- Synlait will make available to The a2 Milk Company an additional SAMR registration slot at Dunsandel for a potential new China label registered product – The a2 Milk Company and Synlait will work together to develop the new product, prepare the SAMR registration dossier and seek registration from SAMR by December 2029.

- As part of the settlement, The a2 Milk Company will make a one-off payment to Synlait in the order of $24.75 million. That payment includes amounts that had largely been withheld in accordance with the terms of the NPMSA from payment pending resolution of matters in dispute. Although Synlait is receiving a payment and pricing on certain existing products manufactured for The a2 Milk Company will increase incrementally, the wider settlement arrangements mean that, when taken as a whole, the overall profitability of the products produced for The a2 Milk Company is expected to be moderately impacted due to additional costs and adjustments to manufacturing standards. Despite this, new business opportunities exist with The a2 Milk Company, in relation to potential long term US IMF market access and the development of an additional China label product subject to US Food and Drug Administration and SAMR approval respectively.

Settlement conditional on completion of Synlait’s deleveraging plan – major shareholders indicate support

The settlement is conditional on Synlait completing an equity raise and a refinancing of its existing banking facilities. Synlait is working to finalise the terms of the equity raise and the bank refinancing. Shareholders will have the opportunity to vote on these matters at a Special Shareholders’ Meeting.

Further information will be set out in the notice of meeting, which is expected to be released this month.

Provided the settlement conditions are satisfied, the arbitration to resolve the disputes will end. In the meantime, the arbitration hearing for exclusivity and other matters has been adjourned.

The a2 Milk Company has agreed to support and subscribe to an equity raise. As previously indicated, Bright Dairy fully supports Synlait raising equity capital, subject to terms being finalised, and all necessary approvals being received.

The a2 Milk Company Settlement Deed – Key Terms

Settlement payment from The a2 Milk Company to Synlait
- A one-off settlement payment from The a2 Milk Company to Synlait in the order of $24.75 million will be made.
- The payment includes amounts that had been withheld in accordance with the terms of the NPMSA from payment pending resolution of matters in dispute.
Exclusivity disputes
- The parties have agreed that The a2 Milk Company’s cancellation of its exclusivity obligation under the NPMSA by notice on 15 September 2023 is valid but that exclusivity will not end until 1 January 2025.
- The parties have agreed that Synlait’s commitments in the NPMSA to procure the supply of a minimum annual volume of product, and certain priority arrangements in favour of The a2 Milk Company, shall continue after the end of exclusivity on 1 January 2025.
- Synlait will make available to The a2 Milk Company an additional slot at Dunsandel for a potential new China Label registered product – The a2 Milk Company and Synlait will work together to develop the new product, prepare the SAMR registration dossier and seek registration from SAMR by December 2029.

The parties have agreed that:
- The a2 Milk Company owns the intellectual property rights for the product specifications of all finished products currently manufactured under the NPMSA; and
- The a2 Milk Company is free to manufacture, and/or procure the manufacture of the products utilising the product specifications.

Pricing disputes
- The parties have agreed to resolve the various pricing disputes between them as to the application of the controllable and non-controllable costs provisions in the NPMSA.

New products dispute
- The parties have agreed that the infant milk formula products developed for the United States market are products supplied under the NPMSA, with The a2 Milk Company contributing to certain Synlait development costs and US Food Drug and Administration registration costs.

Operational matters
- The parties have agreed that, going forward, Synlait will provide The a2 Milk Company with enhanced access to Synlait’s site, people and information relevant to Synlait’s supply to The a2 Milk Company in addition to adjustments to manufacturing standards.

[blackcap]

This makes the bonds a pretty safe bet now.

[Bikeguy]

This makes the bonds a pretty safe bet now.

Balance was right on the money with saying he was certain they would be safe, man there has been some money made and lost on those bonds!!

[blackcap]

Balance was right on the money with saying he was certain they would be safe, man there has been some money made and lost on those bonds!!

There certainly has. I purchased about a year ago at 17% and was never really worried (thought they had enough on the balance sheet to cover), but really was perplexed at the over 100% yields at times.

Fortune favours the brave in this instance.

[silverblizzard888]

Good outcome for both parties and good to have A2 supporting the capital raise. Announcement for capital raise should be anytime now.

[Bikeguy]

There certainly has. I purchased about a year ago at 17% and was never really worried (thought they had enough on the balance sheet to cover), but really was perplexed at the over 100% yields at times.

Fortune favours the brave in this instance.

Well done Blackcap, good on you for holding your nerve!!

[X-men]

There will be a CR next week

[Balance]

Good outcome for both parties and good to have A2 supporting the capital raise. Announcement for capital raise should be anytime now.

Final negotiations over the weekend and announcement next week.

[X-men]

Probably 28c a share CR

[X-men]

Lord.....to raise $90m...it needs to issue 300m shares... massive dilution to the existing shareholders....

Long..long way to recover...

[blackcap]

Lord.....to raise $90m...it needs to issue 300m shares... massive dilution to the existing shareholders....

Long..long way to recover...

I think they are looking to raise in excess of $200m from what I heard. I could be very wrong though. Massive dilution coming.

[Bikeguy]

With both SML and A2M both supporting the CR I will be participating, clearly SML is going to survive for another few years and without such a heavy debt load so I believe it has a fair chance of coming right…

[silverblizzard888]

They will have to raise a minimum of $200m, potentially up to $300m due to the $180m bond payment coming up because asset sales seem difficult in this environment and if you're going to raise you might as well do it all in one go and fix it straight away than raise a little and hope things improve.

[blackcap]

They will have to raise a minimum of $200m, potentially up to $300m due to the $180m bond payment coming up because asset sales seem difficult in this environment and if you're going to raise you might as well do it all in one go and fix it straight away than raise a little and hope things improve.

So about 4 x current market cap.

That makes it about a 5 for 1 rights issue at $0.30.

But if A2 and Bright both support and there is an underwrite, this will be a goer.

Tough on existing shareholders who will potentially have to turf in another $1.50 for every share they have.

[Balance]

Last heavily dilutary CR was Sky TV way back in 2020.

Sp was 33c when the 2.83 :1 rights issue at 12c per share to raise $157m was announced vs market cap at the time of $144m.

Theoretical ex-rights price was 17.5c.

SP traded as low as 15c during the CR trading period.

SML's CR is going to be a biggie - call it 4:1 at 25c to raise $200m.

Ex-rights price (based upon yesterday's closing sp of 36.5c) would be 27.3c.

So expect the sp to drift below that during the rights trading period?

[Newman]

Synlait has 218.5 m shares. If it raises $1 from each existing share to get net proceeds of approximately $200 m, this would translate to 4 new shares at $0.25 each in capital raise.

[bull....]

OK im all in for the mighty sum of $200 today

nearly up 100% now as they said at meeting may need several 100 m in raise and as my calc's suggested on this thread that fits in with there forecast ebitda forward. anyway the higher the price goes higher the cap raising price should be.

[blackcap]

nearly up 100% now as they said at meeting may need several 100 m in raise and as my calc's suggested on this thread that fits in with there forecast ebitda forward. anyway the higher the price goes higher the cap raising price should be.

Yep, if this upwards trajectory continues, they might be able to get away with a 3 for 1, rather than a 4 or 5 for 1.

I see my bonds are now in the money, bought them at 17%, now trading at 40% but I have a capital gain. Mathematical quirks at play.

[Balance]

Yep, if this upwards trajectory continues, they might be able to get away with a 3 for 1, rather than a 4 or 5 for 1.

I see my bonds are now in the money, bought them at 17%, now trading at 40% but I have a capital gain. Mathematical quirks at play.

Only 4 months left to maturity for the bonds.

Actually less as bond holders can require early redemption in the event of any change in Bright’s shareholding.

What an outstanding investment the bonds were when the panicked stricken holders were dumping them at 100%+ interest rates.

There was NEVER any possibility that Synlait would be allowed to go broke. And even if it did, there was plenty of asset base to realise to pay back the bonds.

[Goob]

Today was one of the biggest moves in the bonds, now up at 91c. Does anyone know what came out of the A2 Milk result today that was bullish for SML?

[Newman]

Today was one of the biggest moves in the bonds, now up at 91c. Does anyone know what came out of the A2 Milk result today that was bullish for SML?

1). The capital raise is almost certain after Synlait announced its dispute with A2M was solved; thus, bonds will be paid back. Even at 38% annual return, it is best available on the bond market.

2) A2M full-year results demonstrate its IFM business in China was solid, which totally relies on Synlait to continue.

[blackcap]

There was NEVER any possibility that Synlait would be allowed to go broke. And even if it did, there was plenty of asset base to realise to pay back the bonds.

That was my basis for purchasing the bonds.

[Goob]

1). The capital raise is almost certain after Synlait announced its dispute with A2M was solved; thus, bonds will be paid back. Even at 38% annual return, it is best available on the bond market.

2) A2M full-year results demonstrate its IFM business in China was solid, which totally relies on Synlait to continue.

I'm interested in what moved the bonds today, so the first point would've already been in the price... I suppose it was your 2nd point then. To go from 0.78 to 0.91 on that news in a day seems like a lot — so was wondering if perhaps A2 said something more specific re. Synlait.

[allfromacell]

I'm interested in what moved the bonds today, so the first point would've already been in the price... I suppose it was your 2nd point then. To go from 0.78 to 0.91 on that news in a day seems like a lot — so was wondering if perhaps A2 said something more specific re. Synlait.

I think the NZX is just a low liquidity market that is slow to react and terribly inefficient and pricing instruments. The big news was the settlement.

For retail it's a blessing, ample opportunities to take advantage of it.

[Balance]

I think the NZX is just a low liquidity market that is slow to react and terribly inefficient and pricing instruments. The big news was the settlement.

For retail it's a blessing, ample opportunities to take advantage of it.

Yup - not often one gets to invest in bonds yielding over 100%!

[billkiapi]

well, that announcement makes it clear Bright takes control....

[Bikeguy]

well, that announcement makes it clear Bright takes control....

What announcement?

[Ggcc]

What announcement?

Look at nzx.com. Its all on there

[Bikeguy]

What announcement?

Found it, cheers

[winner69]

What announcement?

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/436510/425123.pdf

Not asking you for any cash

[mfd]

Am I reading this right? Bright buying shares at 60c, A2 get theirs at 43c? Maybe this is part of the dispute settlement from the other day.

[bull....]

great news no discounted cash issue :t_up: 60c tomorrow :t_up:

[Bikeguy]

great news no discounted cash issue :t_up: 60c tomorrow :t_up:

****, I waited so I had my powder dry for the CR

[Bikeguy]

http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/436510/425123.pdf

Not asking you for any cash

I was holding out to get some in the CR cheap… I am new to shares and have never seen a CR done this way

[winner69]

Other shareholders other than Bright/A2 own 40% of Synlait

After the raise they'll own 15%

Take it or Synlait 'cease trading'

That's how the cookie crumbles

Not the end of their troubles I fear …more pain to come methinks

[Rawz]

Wow how in the world is that fair for the small retail shareholder

[sb9]

All in all, Bright made sure they had game under control and they played very well. Gotta give it to the Chinese business operandi.

[Rawz]

How much have bright tipped in now?

[sb9]

Just a pocket change of $185ml, at least they’re paying top rate at 60c a piece, A2 got bit of bargain at 43c a piece for $33ml tip.

Time and again retail holders are just nuisance in the whole game.

[moimoi]

I was holding out to get some in the CR cheap… I am new to shares and have never seen a CR done this way

And you might not ever see it done this way again as it is undoubtably VERY VERY UNUSUAL in NZ or AUS capital markets.

A takeover has just occurred without it being transparently disclosed. This takeover, has enabled Bright to take complete control of SML without making an offer to the existing shareholder base, under the disguise of "the only viable option capital raise".

A2. the only other participant. spends a token $32M to keep its licence intact, while every other shareholder gets stiffed.

No wonder the SML Founder exited recently.

Effectively this is now a private company and should be de-listed forthwith.

IMO there is next to no reason or benefit to any shareholder other than Bright and A2M to remain involved.

GLTA.

[silverblizzard888]

I think some shareholders will have felt hard done by since they held back capital on the side for the raise and missed buying cheaper shares earlier. They should have at least offered shareholders a chance to buy at 43 cents in a smaller raise just to let other shareholders participate, but I can understand they wanted to get things done with speed and less paperwork. Overall its a decent deal with Bright and A2 paying a premium. The deal gives Bright basically control of the company, but I wouldn't see it as entirely bad thing because now they can demand better terms from A2 in the future and not get pushed around.

[Rawz]

SB888 you and a handful of other retail investors bought below 60cents. Most will be well underwater at 60cents. With the benefit of hindsight the sp has been manipulated down to 30cents to make 60cents look good. Bad deal.

Well done Bright. But still how much in total has Bright now put in? Must be close to $500m??

[Bikeguy]

I guess the ship is steadied for the foreseeable? Both big shareholders are now locked in so will have no desire to see this go down so maybe the market will have a return in confidence with SML and the share price will climb back up abit?

[silverblizzard888]

SB888 you and a handful of other retail investors bought below 60cents. Most will be well underwater at 60cents. With the benefit of hindsight the sp has been manipulated down to 30cents to make 60cents look good. Bad deal.

Well done Bright. But still how much in total has Bright now put in? Must be close to $500m??

It would have been tough for Synlait to raise $200m from the local markets given their track record, it was always going to be done at the mercy of Bright. Its not great for shareholders who paid more than 60 cent for their shareholders, but atleast now the company lives to fight another day and if they can get it back to the glory days it'll be worth 2 or 3 times its value which is better than the current situation. Bright has taken considerable risk putting this much capital on the line, after all theres no guarantee Synlait will not continue to decline after this raise as shown by their raise during covid. Management team needs straighten up and get the company running again.

[clearasmud]

It would have been tough for Synlait to raise $200m from the local markets given their track record, it was always going to be done at the mercy of Bright. Its not great for shareholders who paid more than 60 cent for their shareholders, but atleast now the company lives to fight another day and if they can get it back to the glory days it'll be worth 2 or 3 times its value which is better than the current situation. Bright has taken considerable risk putting this much capital on the line, after all theres no guarantee Synlait will not continue to decline after this raise as shown by their raise during covid. Management team needs straighten up and get the company running again.

What's wrong with an underwritten capital raise.
We aren't stupid this way minorities are getting squeezed out.

[silverblizzard888]

What's wrong with an underwritten capital raise.
We aren't stupid this way minorities are getting squeezed out.

Nothings wrong with an underwritten raise, I'm not sure why they didn't offer it and raise more money, the board should definitely be questioned on why they left other shareholders out, in the last meeting they said they wanted to be fair to every shareholder, so they should definitely be questioned on it. Good time for Shareholder Association to involved. Theres also an upcoming meeting when this gets voted on for shareholders to express their opinion.

[moimoi]

I guess the ship is steadied for the foreseeable? Both big shareholders are now locked in so will have no desire to see this go down so maybe the market will have a return in confidence with SML and the share price will climb back up abit?

Neither Bright or A2 have any requirements around the pricing of the SML shareprice. Its irrelevant to them. Both have obtained what they wanted. The same empiracally can not be said of any other shareholder.

GLTA.

[moimoi]

It would have been tough for Synlait to raise $200m from the local markets given their track record, it was always going to be done at the mercy of Bright. Its not great for shareholders who paid more than 60 cent for their shareholders, but atleast now the company lives to fight another day and if they can get it back to the glory days it'll be worth 2 or 3 times its value which is better than the current situation. Bright has taken considerable risk putting this much capital on the line, after all theres no guarantee Synlait will not continue to decline after this raise as shown by their raise during covid. Management team needs straighten up and get the company running again.

As a matter of course every existing shareholder should be given the opportunity to participate in a re-capitalisation of the company they are invested in.!!

[clearasmud]

Nothings wrong with an underwritten raise, I'm not sure why they didn't offer it and raise more money, the board should definitely be questioned on why they left other shareholders out, in the last meeting they said they wanted to be fair to every shareholder, so they should definitely be questioned on it. Good time for Shareholder Association to involved. Theres also an upcoming meeting when this gets voted on for shareholders to express their opinion.

This capital raise should have been dressed up with the earlier loan.
It likely would have passed.
It this new proposal likely to be passed?
I think so.

[Mel]

I'm not overly familiar with the OIO, but does this Bright transaction not require their approval given its value and in what is an effective takeover?

[silverblizzard888]

I'm not overly familiar with the OIO, but does this Bright transaction not require their approval given its value and in what is an effective takeover?

It seems they would require approval unless theirs an exception to this rule "if the overseas person holds an interest of more than 25% but less than 50%, consent is required for increasing its interest above 50%"

[blackcap]

It would have been tough for Synlait to raise $200m from the local markets given their track record, it was always going to be done at the mercy of Bright. Its not great for shareholders who paid more than 60 cent for their shareholders, but atleast now the company lives to fight another day and if they can get it back to the glory days it'll be worth 2 or 3 times its value which is better than the current situation. Bright has taken considerable risk putting this much capital on the line, after all theres no guarantee Synlait will not continue to decline after this raise as shown by their raise during covid. Management team needs straighten up and get the company running again.

Retail shareholders can always buy on market at $0.60 or thereabouts, and have been able to buy bucketloads at prices a lot lower the last few months. No grumbling required by retail shareholders here.

That said, they are being squeezed out and will not have much of a future in this company. May well be a blessing in disguise. Who knows where to from here for SML.

Also that being said, bonds likely to trade at less than 10% tomorrow?

[Toddy]

Game set and match is my prediction. I'm guessing that under the takeover code Bright will have to offer all retail investors 60 cents a share. And maybe they will have to take it. As the letter states, no deal means that they will have to cease trading.
.
And well done to those who took the risk and invested over recent months. It was a risk that has paid off.

[Ferg]

Is $218m new capital enough? Last interim report had bank debts of $411m (being $112+$68.9+$154.3+$75.7). Add $180m for the bonds and total debts were $591m as at 31 January. $218m doesn't go nicely into $591m.....so is this enough?

With the change of control I believe bondholders can now call up their loans. $218m - $180m leaves at most $38m for other debt reduction. I thought it was the banks pushing this process.....would they agree to getting less than 20% of the funds raised? In light of various current headwinds faced by SML I doubt debts will have reduced since the HY, although A2 did recently release a large payment that had been withheld.

Lastly, shares on issue go from 218.6m to 603.2m. Looking forward to assumed revenues of say $1.7b and 3% NPAT, that gives a future EPS of 8.5c so I can't see the SP going over $1 any time soon. This 8.5c is assuming various headwinds are navigated by Management.

I don't think they have raised enough so I expect there may be more news to come. And on that note, I expect SML will "clear the decks" and write off a lot of things off in the annual report for the period ended July 2024. All other losses reported to date may pale in comparison to what is coming.

GLTAH, not advice, this is all just my opinion.

[aperitif]

Watch them magically find a buyer for dairyworks now...

My notes post 1H

Pokeno is interesting and could be sold to a2, although they don't have the SAMR license its very plausible they could acquire Bodco(B&C facility in Hamilton) for circa $60mm as they hold the SAMR license for their Pharmalac brand into China(Stage 1-3). DB did allude to the possibility of doing a "brand swap" on the 1H call. Of note also, Bodco was previously supplied by MVM prior to a2 buying it. The founding shareholders of Bodco also founding shareholders of MVM & CAHG a Chinese SOE.


They've spent around $425mm on capex and is currently under utilized(Abbott a major customer). Discount? Market access to USA and diversification for Abbott.

[bull....]

I was holding out to get some in the CR cheap… I am new to shares and have never seen a CR done this way

generally you need to own stock to participate in a cap raise.
Sometimes you can purchase stock at lower prices after or during a cap raise but you take the risk of missing out all together sometimes too.
it all depends on the company situation to decide which action is best to take.

[bull....]

Nothings wrong with an underwritten raise, I'm not sure why they didn't offer it and raise more money, the board should definitely be questioned on why they left other shareholders out, in the last meeting they said they wanted to be fair to every shareholder, so they should definitely be questioned on it. Good time for Shareholder Association to involved. Theres also an upcoming meeting when this gets voted on for shareholders to express their opinion.

be interesting how s/h assoc act in this case. they should probably have a moan about them not offering a SPP
but i see in there statement they must have been told there was no appetite for new stock by big brokers and insto's

The size of the required recapitalisation is significant, with the proposed proceeds to be raised under the equity raise representing around three times Synlait’s current market capitalisation. Raising that amount of new equity capital is highly challenging in any circumstance but is particularly so for Synlait given its current over-geared financial position and recent financial underperformance.Accordingly, after taking external financial advice, the Independent Directors formed the view that the optimal offer structure for the company and its shareholders is via the placements to its two major shareholders, Bright Dairy and a2MC.

[blackcap]

be interesting how s/h assoc act in this case. they should probably have a moan about them not offering a SPP
but i see in there statement they must have been told there was no appetite for new stock by big brokers and insto's

The size of the required recapitalisation is significant, with the proposed proceeds to be raised under the equity raise representing around three times Synlait’s current market capitalisation. Raising that amount of new equity capital is highly challenging in any circumstance but is particularly so for Synlait given its current over-geared financial position and recent financial underperformance.Accordingly, after taking external financial advice, the Independent Directors formed the view that the optimal offer structure for the company and its shareholders is via the placements to its two major shareholders, Bright Dairy and a2MC.




I actually don't have a major problem with it. It is being done at a "Premium" to the current SP. And a large one at that. In fact you can argue existing shareholders are not being diluted, in fact the opposite.

But it would have been nice to offer shares to existing shareholders at 60 cents as well.

(To be fair, how many existing shareholders would take up the rights at 60 cents? I am sure bugger all)

[snigmac]

The raise is really confusing. On one hand, if you value the company at its current market cap, each share you hold is going to be worth less. However, if u value the company at for example 90m plus the funds that have been raised, technically there is no discount...

[blackcap]

The raise is really confusing. On one hand, if you value the company at its current market cap, each share you hold is going to be worth less. However, if u value the company at for example 90m plus the funds that have been raised, technically there is no discount...

That may be so, but if you value the company at $90m, then you would surely have been backing up the truck the last few months.

If SML had come out and said, right we are doing a rights issue at 60 cents, and Bright will underwrite it, then realistically how many shareholders would dip into their pockets at 60 cents considering what has gone on the last year. The company is not out of the woods, even with the debt reduced as suppliers have been leaving etc. Who knows, will SML be profitable going forward?

[snigmac]

Abit of uncertainty here, wonder how the market will react? Might see a few people who have bought recbetly taking a profit and rebuying pending what the share price is after the raise.

[Bikeguy]

I actually don't have a major problem with it. It is being done at a "Premium" to the current SP. And a large one at that. In fact you can argue existing shareholders are not being diluted, in fact the opposite.

But it would have been nice to offer shares to existing shareholders at 60 cents as well.

(To be fair, how many existing shareholders would take up the rights at 60 cents? I am sure bugger all)

Can I ask you a question Blackcap? I’m interested in what you mean by “quite the opposite “
Can you explain what you mean as I would like to learn, thank you

[Toddy]

Watch them magically find a buyer for dairyworks now...

My notes post 1H

Pokeno is interesting and could be sold to a2, although they don't have the SAMR license its very plausible they could acquire Bodco(B&C facility in Hamilton) for circa $60mm as they hold the SAMR license for their Pharmalac brand into China(Stage 1-3). DB did allude to the possibility of doing a "brand swap" on the 1H call. Of note also, Bodco was previously supplied by MVM prior to a2 buying it. The founding shareholders of Bodco also founding shareholders of MVM & CAHG a Chinese SOE.


They've spent around $425mm on capex and is currently under utilized(Abbott a major customer). Discount? Market access to USA and diversification for Abbott.

100 percent agree. Someone had to save this basket case. And they should be rewarded for doing so.

[blackcap]

Can I ask you a question Blackcap? I’m interested in what you mean by “quite the opposite “
Can you explain what you mean as I would like to learn, thank you

Using the closing price of $0.40, Bright are adding in $ at $0.60.

Current market cap is $86m. Bright/A2 are adding $218m meaning new value of company is $304m

If you have say 1,000 shares right now, your "value" is $400.

Post this "recapitalisation" your $1000 shares are worth circa $506.

(384m shares plus existing 216m shares makes a total of 600 million shares, dividing new value of enterpirse of $304m by 600m gives per share valuation of $0.506)

Thus there is no dilution and as a retail shareholder you are actually better off.

[Bikeguy]

Using the closing price of $0.40, Bright are adding in $ at $0.60.

Current market cap is $86m. Bright/A2 are adding $218m meaning new value of company is $304m

If you have say 1,000 shares right now, your "value" is $400.

Post this "recapitalisation" your $1000 shares are worth circa $506.

(384m shares plus existing 216m shares makes a total of 600 million shares, dividing new value of enterpirse of $304m by 600m gives per share valuation of $0.506)

Thus there is no dilution and as a retail shareholder you are actually better off.

Legend, many thanks Blackcap

[Mel]

Can someone please explain how/why A2 picked up shares at 43c, when Bright paid 60c?

[Balance]

Can someone please explain how/why A2 picked up shares at 43c, when Bright paid 60c?

Because Bright is paying a premium for taking majority control.

[winner69]

Can someone please explain how/why A2 picked up shares at 43c, when Bright paid 60c?

Probably to do with maintaining their 20% holding …. While keeping total $ raised to a certain amount ..and Bright control premium

[Sideshow Bob]

I wonder if under the revised shareholder structure if A2 will have anyone on the board?

[bulltrap]

Because Bright is paying a premium for taking majority control.

A stealth takeover premium for a stealth takeover.

[Newman]

I wonder if under the revised shareholder structure if A2 will have anyone on the board?

A2 milk would say goodbye to Synlait within a few years.

[whatsup]

As a matter of course every existing shareholder should be given the opportunity to participate in a re-capitalisation of the company they are invested in.!!

Before that happens if I was a share holder I would want to know what is the viability of their Pokeno plant, its not covering costs yet, its farmers are leaving in droves as they do not pay what Fonterra does and its not the greatest area of dairy farming even though they haul milk from a wide area. Farmers will always go to who ever pays the best and highest price even though they have to give 2 years to leave.

[Toddy]

A stealth takeover premium for a stealth takeover.

Not the right words for someone 'saving' the company.
A2 will get what the need.

Retail investors are cornered. They can decide to stay cornered or alternatively save themselves the stress and get out and reinvest in a company that is not effectively privately owned.

I think it's a very positive outcome given the debt stress. It's like winning the lottery.

[bulltrap]

I think it's a very positive outcome given the debt stress. It's like winning the lottery.

It's a small win for those who paid lottery ticket prices for the shares or bonds.

For the retail shareholders who paid a premium to NTA for a solid business, liquidation value should've been their worst-case outcome. But now they're unlikely to get that.

[blackcap]

It's a small win for those who paid lottery ticket prices for the shares or bonds.

For the retail shareholders who paid a premium to NTA for a solid business, liquidation value should've been their worst-case outcome. But now they're unlikely to get that.

Liquidation value might have been zero.

I think any shareholder, whether you got in at $5.00 or recently at $0.25, can be happy with the recapitalization effort that has been achieved. There is now a going concern going forward.

Did shareholders, really want a 4 for 1 at $0.25? How would that have helped anyone?

[bull....]

i had liquidation value over $2 so was a screaming buy in the 20s. anyway should move higher to 60c easliy now bright running the show

[blackcap]

I am holding onto my purchase in the early 20's and will wait for the (inevitable?) Bright takeover at about $1.

[bull....]

settling down at mid point of 43/60

[sunnysleeper11]

i had liquidation value over $2 so was a screaming buy in the 20s. anyway should move higher to 60c easliy now bright running the show
im screaming I didn't buy
your valuation - is this assets minus debt (essentially)?

[bull....]

im screaming I didn't buy
your valuation - is this assets minus debt (essentially)?

thats a basic way to do it. anyway i added in a premium for dunsendel.

of course why it might look like this on paper in reality things can turn out different , just look how they had to write down dairyworks when no buyers apperared. anyway there assets would have to have been written down rediculously to get anywhere near 20c.

still risky business as bright dairy need to turn it around so that take time and maybe more money from bright ?

[Newman]

It seems that Synlait share price stabilized at around 46 cents. Who would complain about the capital raise placement to A2m?

[aperitif]

a2 and Abbott will buy Pokeno circa $300-400mm. It makes too much sense, this plant was built for a2's English label ramp up originally, Bodco BC facility(SAMR under Pharmalac) will get acquired too($50-60mm), do a "brand swap" and have a second China label in the market. Auckland facility will produce new EL and have supply from MVM. You have geographic diversification, a plant they know well, and a LARGE multinational(Abbott) who is ramping Soy/Hybrid powders, has recently pulled out of the China IF market and a massive presence in USA infant.

[Newman]

NZ Herald: China’s Bright Dairy set to take majority stake in Synlait, Pōkeno decision four to six weeks away (pay walled)