Debt-ridden milk producer Synlait is back from the brink of receivership after a meeting in Canterbury’s Dunsandel today.
Shareholders have voted in a landslide decision to give the green light to a $218 million dollar cash injection from Synlait’s largest shareholder, Chinese owned Bright Dairy. This increases their stake to 65%.
Synlait’s independent chairperson George Adams told the meeting: “The seriousness of today’s resolutions should not be understated, if the resolutions do not pass Synlait will be unable to repay its debt.”
The majority of votes were registered online, approving three resolutions with more than 95% in favour.
Bright Dairy appointed director Julia Zhu said: “While Synlait’s turnaround plan has a way to go yet it requires us all to pull together to help make this happen.”
The news is a relief for Synlait’s 1400 workers who were watching the meeting nervously.
“It’s a great result for us. It’s one less thing we need to worry about,” long-time worker David Williams said.
The company has been put in jeopardy due to its $450 million dollar plant in Pōkeno failing to perform — the result, a $1 million loss for the company each week.
“We were very clear in reality this was probably the end for Synlait if we didn’t get this vote passed today,” Adams said.
The deal reduces the minority shareholders stake from 41% down to 15%, something the New Zealand Shareholders Association has raised concerns about.
“I think shareholders did today what they had to do. They swallowed the dead rat they had to swallow to secure the future of the company,” the association’s chief executive Oliver Mander said.
After today’s reprieve the company will now focus on making the Pōkeno processing plant profitable in the next two years.
“This is business, you’re never out of the woods. Essentially there’s always a degree of risk in business and Synlait is no different, but what we do have is a lot of confidence in our core assets,” Adams said.
