NZ's Synlait Milk seeks to raise $133 mln, warns about risk of insolvency (updated)

Synlait Milk

20/08/2024 07:31

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       Aug 20 (Reuters) - Synlait Milk  SML.NZ  said on Tuesday
it aims to raise NZ$217.8 million ($133.34 million) from its top
two investors in a bid to reduce its debt, a failure of which
could lead to the New Zealand-based dairy producer's insolvency.
    Synlait will issue shares worth NZ$185 million to Bright
Dairy & Food Co  600597.SS  at NZ$0.6 apiece, raising the
Chinese company's stake in Synlait to 65.25% from 39.01%.
    The kiwi firm will also issue shares worth NZ$32.8 million
to peer a2 Milk  ATM.NZ , with whom it recently resolved
disputes over exclusive manufacturing rights for some of the
latter's infant milk formula products. 
    Synlait will hold a special shareholders meeting on Sept. 18
for investors to vote on the equity raising proposals, which if
not passed might negatively affect the firm.
    "If the resolutions are not passed, it's likely Synlait
would need to cease trading and initiate a formal insolvency
process," said Synlait chair George Adams.
    The fund raising might be challenging given the firm's
over-leveraged financial condition and recent earnings
underperformance. 
    Bright Dairy and a2 Milk will not be able to vote on
resolutions relating to their own respective placements but have
expressed their intent to back each other's placements. 


($1 = 1.6335 New Zealand dollars)

 (Reporting by Rajasik  Mukherjee in Bengaluru; Editing by
Nivedita Bhattacharjee and Mrigank Dhaniwala)
 ((Rajasik.Mukherjee@thomsonreuters.com;))