SML - Synlait Milk Ltd

[Baa_Baa]

Aperitif: where does the divestment/mothball information come from?

https://www.synlait.com/wp-content/u...2024-FINAL.pdf

[Balance]

https://www.synlait.com/wp-content/u...2024-FINAL.pdf

Thanks, Baa_Baa.

Begs the question then what the plant would be used for if the milk supply is sold to Open Country Dairy?

[aperitif]

More Notes:

Pro forma capital raise $310mm Debt
a2 and abbott buy to form a JV $300-400mm, Synlait debt free and shareholders happy.
Milk supply not an issue and advanced nutrition facility (have MVM supply) less favorable conditions in NI, fonterra also...
Purchase Bodco B&C facility circa $40-50mm with (SAMR license under Pharmalac brand) and do brand swap, close association with MVM(circa 5% stake)

Abbott - a2 have indirect product diversification through Abbotts plant based initiatives and the Pediasure brand which is ironically the same color(purple) and have massive ambition also in adult nutrition. NZ FTA agreement handy here. Not to mention the USA opportunity for IF and higher margin products. Im sure they must have been interested last year when Synlait were "exploring options", makes you think if Bortolussi has had a "chat" to Abbott's team...Pulled out of China IF market 2023, strategic stake in a2? Exploring M&A -chat in their previous call, cashed up.

[bull....]

More Notes:

Pro forma capital raise $310mm Debt
a2 and abbott buy to form a JV $300-400mm, Synlait debt free and shareholders happy.
Milk supply not an issue and advanced nutrition facility (have MVM supply) less favorable conditions in NI, fonterra also...
Purchase Bodco B&C facility circa $40-50mm with (SAMR license under Pharmalac brand) and do brand swap, close association with MVM(circa 5% stake)

Abbott - a2 have indirect product diversification through Abbotts plant based initiatives and the Pediasure brand which is ironically the same color(purple) and have massive ambition also in adult nutrition. NZ FTA agreement handy here. Not to mention the USA opportunity for IF and higher margin products. Im sure they must have been interested last year when Synlait were "exploring options", makes you think if Bortolussi has had a "chat" to Abbott's team...Pulled out of China IF market 2023, strategic stake in a2? Exploring M&A -chat in their previous call, cashed up.

makes sense what you saying in regard to pokeno. how about joint ownership by a2 and synliat ?

[Bikeguy]

makes sense what you saying in regard to pokeno. how about joint ownership by a2 and synliat ?

That seems a better fit?

[Balance]

That seems a better fit?

Effectively already joint ownership post CR with the two owning 85%.

[Bikeguy]

Effectively already joint ownership post CR with the two owning 85%.

Fair point😅

[Newman]

Effectively already joint ownership post CR with the two owning 85%.

Would selling Pokeno to a buyer other than A2 Milk require the approval of 75% of shareholders? With 20% shareholding, A2 Milk could effectively restrict what Synlait could do.

[Newman]

In his Taking Stock newsletter, Chris Lee wrote:

THE Bright Dairy/ATM proposed solution for Synlait Milk recognises that Synlait’s assets and business model have real value, well in excess of debt.

It recognises that Bright and a2 Milk are the relevant long-term beneficiaries of the business model and that Synlait’s survival must be underwritten by the two beneficiaries. The solution ensures the bond holders are repaid, and must be repaid prematurely, if the proposed solution wins shareholder voting support.

And the solution provides the motivation for all shareholders to regard Synlait in the future as being the equivalent of a private company, run for the benefit of the major shareholders.

My plan, were I an owner of SML securities, would be:

To request bond repayment when available from 1-15 October.
To sell immediately my shares at whatever price I could get.
If the proposed restructure means survival, it would mean farmers would retain access to pricing tension when selling their milk production, Fonterra an obvious choice.

And it would mean Synlait’s nett revenue could be split up by Bright and a2 Milk, possibly with a structure that suits Bright and China, as well as a2 Milk.

The prospect of the nett surplus being created to share amongst thousands of external shareholders would seem to me to be unlikely.

I am in total disagreement with the NZ Shareholders Association. I know no retail investor who would want to participate in a rights issue in the hope of being treated equally in the future.

Sell, and start again, would seem a logical step.

[bulltrap]

In his Taking Stock newsletter, Chris Lee wrote:

...
I am in total disagreement with the NZ Shareholders Association. I know no retail investor who would want to participate in a rights issue in the hope of being treated equally in the future.

Huh.

Would those retail investors be somehow worse off, if given the choice to participate in the CR, chose not to?

What about if holders were issued tradable rights, as was once common?

IMHO, there's a worrying precedent being set here, where minority shareholders (e.g., a2 and Bright) can collude to effectively take over a company, by issuing themselves equity at a deeply discounted price, and without compensating remaining holders a cent - and somehow everyone is OK with that.

GLTAH, of this and every other listed company.