Bright Dairy says the loan facility is one part of its wider support to see Synlait return to a much stronger financial and operating position. (file image) Photo: 123rf
Synlait Milk has set the date for a special meeting of shareholders to approve a $130 million loan from its major shareholder, Bright Dairy.
The specialty dairy company needed the money to pay bank debt due next month.
It recommended shareholders accept the arrangement, given its limited options.
It had failed to find a buyer for its DairyWorks business, was still reviewing a possible sale of its other North Island plants, and also needed to find $180m to repay a retail bond due in December.
In a statement, the company said it may need to cease trading or initiate a formal insolvency process, if alternative arrangements could not be made to satisfy the banks involved.
Bright Dairy said the loan facility was one part of its wider support to see Synlait return to a much stronger financial and operating position.
However, the outcome of the vote was far from certain, as Bright Dairy with a 39 percent stake cannot vote on the resolution, while the second largest shareholder, A2Milk, with a near 20 percent stake, was not saying either way.
A2 Milk's support for the loan was by no means a given as it was in a dispute with Synlait after it cancelled Synlait's exclusive supply agreement.
In addition to the mountain of debt and high costs, a significant majority of Synlait's nearly 300 suppliers of special A2 milk have given two years' notice to quit.
The special meeting was scheduled for 11 July.
