South Island company's crunch vote on $130m loan

Synlait Milk has nudged up its milk price forecast to be on level pegging with Fonterra’s...
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By Anan Zaki of RNZ

The future of South Island dairy company Synlait Milk is up in the air ahead of a crucial vote to ensure its survival.

A special shareholders meeting will be held on Thursday to approve a $130 million loan from its biggest shareholder, China's Bright Dairy.

Synlait needs the money to repay loans from its banks due on 15 July.

Bright Dairy cannot vote, but it is by no means certain that the loan will be approved by other other shareholders, notably key customer A2 Milk which owns about 20 percent of Synlait.

Synlait chairperson George Adams said as of 8 July, A2 Milk was yet to say how it would vote, but said the future of the company lies with the institutional and retail investors which own 41 percent.

Indications from those investors have been "very positive" so far, he said.

"So that's a good thing, but it is going to require all shareholders. It really is an opportunity for all shareholders to actually have their say in terms of what they want to do for the business going forward.

It was "important that shareholders get out and actually cast their vote". If shareholders did not approve the loan it left Synlait Milk with limited options, he said.

"The next steps [if the vote fails] will be a board meeting to discuss the options available to us, which I'm sure you would imagine we've traversed," he said.

"And look there really aren't that many [options]. We will be in quite a difficult position being at that stage, unable to pay our debts as and when they fall due. So we would have to really have a conversation with our banks at that stage [and] with our shareholders."

The conversations would be around what further options would be available to Synlait. "But clearly, one of the options available to us would be voluntary administration," he said.

The deadline for proxy votes is Tuesday afternoon and the special shareholders meeting will be held on Thursday afternoon.