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Synlait Milk has agreed terms of a recapitalisation, including aggregate new equity of $217.8 million, with its two largest shareholders and is in the final stages of a refinancing of bank facilities.
The recapitalisation will require a Special Shareholders’ Meeting which will be held on 18 September.
The meeting is a critical step in determining the future of Synlait.
To reduce Synlait’s debt, shareholders are being asked to approve by way of ordinary resolutions the issuance of approximately $217.8 million of new equity capital by way of:
- a $185 million issue of shares to Bright Dairy Holding at an issue price of $0.60 which will increase its shareholding in Synlait from 39.01 per cent to 65.25 per cent; and;
- a $32.8 million issue of shares to The a2 Milk Company (a2MC) at an issue price of $0.43, which will result in its holding of 19.83 per cent being retained, and a settlement with a2MC and a2 Infant Nutrition Limited as announced on 16 August 2024.
Synlait chair George Adams said the quity raise is critical for Synlait’s future.
“This equity raise is critical for Synlait’s future. If the resolutions are not passed, it’s likely Synlait would need to cease trading and initiate a formal insolvency process. We are particularly grateful for the continued support of our two major shareholders, Bright Dairy and The a2 Milk Company. Their investment demonstrates their deep commitment to Synlait’s future,” said Adams.
The equity raise will only complete if it does so concurrently with the refinancing of Synlait’s bank facilities.
The equity raise, the settlement with a2MC, and the bank refinancing are inter-conditional and therefore must all be approved and occur contemporaneously (or substantially contemporaneously) with each other, or not at all.
Completion of all three components is expected on 1 October 2024.
