Synlait shares dive on insolvency warning
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More news: Synlait shares plunged after the New Zealand dairy producer warned of potential insolvency if shareholders don’t approve a new loan from China’s Bright Dairy.
Shares were down 10.2% to $0.27 by 11:15am AEST.
Synlait warns of insolvency risk if new loan is not approved
The news: Beleaguered New Zealand dairy producer Synlait Milk has warned of potential insolvency if shareholders don’t approve a new loan from China’s Bright Dairy.
The numbers: The NZX and ASX-listed company will hold a special shareholder meeting on 11 July to approve a NZD130 million ($120 million) loan being made available by top shareholder Bright Dairy. That will be used to repay an existing loan NZD130 million due to banks on 15 July.
Synlait will require a simple majority of shareholders other than Bright Dairy to approve the resolution at the meeting.
The context: “If the $130 million payment is not made and the banks do not agree to alternative arrangements, the board believes Synlait will need to cease trading or initiate a formal insolvency process,” the company warned in a statement to the ASX.
The dual-listed company reported a hefty first-half loss and has previously warned of material uncertainties after heavy write-downs amid a slow recovery in business performance and worsening relations with top customer and major shareholder A2Milk. The dairy producer has also been looking to speed up the sale of its underperforming North Island manufacturing facilities and Dairyworks assets.
The source: ASX
