SML - Synlait Milk Ltd

[Newman]

Annualising the return makes it look really cool eh

But paying $64 to get $100 in 8 months and a couple of interest payments is pretty rewarding eh.

There is no guarantee that Synlait will pay interest in June, September, and December.

[mshierlaw]

There is no guarantee that Synlait will pay interest in June, September, and December.

Under what circumstances can they withhold interest payments. Then perish the thought ..... can they default on repayment of the bond?

[Lego_Man]

Under what circumstances can they withhold interest payments. Then perish the thought ..... can they default on repayment of the bond?

They can't without interest without defaulting. They can default but that means receivership. No debt holder is going to accept restructuring when they know there's the tangible assets to pay them off if everything is liquidated.

[mshierlaw]

They can't without interest without defaulting. They can default but that means receivership. No debt holder is going to accept restructuring when they know there's the tangible assets to pay them off if everything is liquidated.

Many thanks you for your help, clarifies the situation.

[Toddy]

They can't without interest without defaulting. They can default but that means receivership. No debt holder is going to accept restructuring when they know there's the tangible assets to pay them off if everything is liquidated.

It's good that someone has read the small print. Because sometimes hidden in there are options on default of exchanging debt for equity.

[Goob]

From an ex-farmer in Waikato:

"Talked to Fonterra area rep today. Reckons might be about 220 Waikato suppliers to Synlait, thinks 70 have put in notice to stop supply."

Ghee it's hard to see any value in Pokeno if that's the reality. But at least there's a two year cessation period (according to this article) which might give them enough time to recapitalise and win back some of those farmers.

But I wonder how that looks to potential buyers. Even if they buy it and financially secure Pokeno, some of those 70 farmers might just've had enough and will go to the safer Fonterra option even under a new owner. Lots of uncertainty