definate lights out date :scared:
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Apparently the best offer for Dairyworks was $86m ($117-31.1) which isn't too bad, they should have taken it.
So what was in there that meant they put back their reporting date?
Have they been busy over Easter counting the beans and trying to flog the silver??
Highlights for me from note 2 of the financial statements that shareholders are urged to read
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Financial position
The Group obtained an amendment to the shareholder funds covenant (reduced from a requirement of $600m at all times to $400m at all times) and interest coverage ratio (reduced from a requirement of 2.25x to 1.75x for the 31 July 2024 covenant test) to allow additional time for deleveraging options to be executed by no later than 31 July 2024.
The working capital facilities as specified in note 12, expire on 1 October 2024 and will require refinancing. The revolving credit facility expires on 1 October 2025.
Equity Raise
An equity raise will be required by 31 July 2024, as a primary means in which to remain a going concern, in that it would be required in order to continue to comply with banking covenants and improve the Group’s credit quality sufficiently to retain the support of the Group’s banking syndicate and allow for the successful repayment and refinancing of syndicated debt facilities on 30 September 2024 and the subordinated bonds on 17 December 2024.
Alternative forms of financing
The Group is progressing alternative financing options, including:
i/ restructuring the banking syndicate to add additional banks or obtaining financing through a perpetual capital note (if required). The perpetual capital note could provide preferred equity funding of $100m to $150m to repay debt as part of the wider deleveraging programme, if required. The Group is well progressed with the perpetual capital note.
ii/ The Group has had positive initial discussions on a potential restructure of the banking syndicate .
Letter of support from Bright Dairy
As referred to above and within the subsequent events note 17, on 28 March 2024 the Group received a binding letter of support from Bright Dairy, the ultimate owner of the Group’s major shareholder, which indirectly owns 39.01% of the shares in the Group. The letter includes:
i/ a commitment to participate in a future equity capital raising (subject to certain terms and conditions including consideration of current shareholding structure) AND
ii/ to extend up to a $130m inter-company bridging loan at the request of Synlait to ensure short term liquidity requirements can be met (if required), subject to the Group and Bright Dairy receiving all necessary approvals. (Snoopy note: this effectively extends the bank's 'absolutely last chance deadline' of 14th July 2024 for debt repayment of $130m out a bit)
iii/ In addition, it provides support for the deleveraging options which are currently progressing.
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All the rest is simply bluster. Notable by omission is any support by the second largest shareholder A2 milk. They are still involved in mediation over an contractual dispute. I think we can read from that A2 are not supportive of Synlait.
SNOOPY
if the equity raise fails because of lack of support lights out.
bright dairy support is for working capital not repayment of debt and looks like it is made against some form of asset guarntee for the support
dairyworks wriiten down for lower sell price i imagine , but wont help situation much as far as insolvency goes
They have rolled the dice and failed. Even 9 months ago a capital raise could have been executed successfully although not optimally...now the company arguably is in a death spiral.
I have no idea where this thing trades now as there is zero incentive to hold before the cap raise.
This is why you never buy stocks with or close to 40% leverage.
Down 11c, last trade at 64c..........
Buy side predictably thin!