SML - Synlait Milk Ltd

[Bikeguy]

[QUOTE=Marilyn Munroe;1047003]

My guess is the Overseas Investment Office would be keen to approve if the alternative was business closure and loss of jobs.

Boop boop de do
Marilyn

I believe the same,

[whatsup]

Can someone please post the link to Keith Woodfords link re his todays very succent commintary regarding the sad state of SML ?

[kiora]

"Keith Woodford says Synlait cannot survive without major asset sales plus major new equity"
https://www.interest.co.nz/rural-new...les-plus-major

[bull....]

"Keith Woodford says Synlait cannot survive without major asset sales plus major new equity"
https://www.interest.co.nz/rural-new...les-plus-major

light's out highest probability then bright and a2 pick over the carcass

The Directors say: “As at 31 January 2024, the Group recorded an after-tax loss for the six months of $92.2m, operating cash outflows of $98.1m and a working cash deficit of $204.9m, with loans and borrowings due for repayment and/or refinancing in the next twelve months of $514.1m ”.

Further down they refer to Synlait’s “current liabilities exceeding its current assets by $204.9m” and that Synlait is “unable to repay these debts on demand without additional support from shareholders or other sources of capital”. They then add that Synlait’s “successful execution of an equity raise, in combination with other deleveraging options by 31 July 2024… is critical to the ability of the group to continue as a trading concern”.

Auditors Price Waterhouse Cooper in their signoff draw attention to these same statements. They then reinforce this by saying in their own words that: “The ability of the Group to continue trading as a going concern is dependent on the ability of the Directors to successfully execute an equity raise in combination with other deleveraging options by 31 July 2024”.

[Toddy]

Atleast its been a long slow strangle giving mum and dad punters plenty of time to exit at a reasonable share price. Leaving the mess and games for the big boys.

[winner69]

If they ‘survive’ current crisis Woodford comment below is telling

An issue that was not discussed in the audio hook-up is the major issue of farmer loyalty. Most of the farmer-suppliers are tied to Synlait through to June 2026, but a small number can and will leave this year. Many plan to submit ‘cease to supply’ statements by June of this year, which will allow them to depart in June 2026.

These farmers do have other options in 2026, or earlier if Synlait fails in its contractual requirements to pay a competitive price. The cash required to join Fonterra is now much less than a few years ago. Pokeno farmers also have at least two other Waikato processors available. In contrast, no-one is going to sign up to a new supply contract with Synlait in the current environment

My judgment is that Synlait has no long-term future without the unconstrained loyalty of its farmer-suppliers. I doubt whether that loyalty is now recoverable as long as Synlait is limping along. Synlait will certainly not regain that loyalty if there is any risk going forward of being constrained in any way by lack of capital..

[Sideshow Bob]

From Business Desk, paywalled.

Fonterra says they are lining up......

https://businessdesk.co.nz/article/p...0b89-402467359

[Rawz]

Synlait is in a full on death spiral

[whatsup]

I guess that Fonterra is playing the long game, patience should be rewarded as IMHO its the only game in town apart for a massively delutary cash issue.
Unless the current SML share holders step up and take a massive hit on the chin which imo still does not solve their situation due to a massive debt pile which they have just added to.
Fonterra has cash and imo its in their interest to see SML fail !!, so sad really sad for N Z inc !!

[silverblizzard888]

Looks like a fire sale is happening either way and it'll definitely be either part of or all the North Island assets, which intern they will lease back and incur higher operating expenses. Dairyworks will have to go at a cut price too, the sad reality is that might not even be enough to fill the gap now with debt growing and losses mounting. Thats really the only way and probably better then going into liquidation. The death blow is when they have to announce a capital raising at a depressed price and the only one to really benefit is Bright acquiring a larger holding of the company.

In saying that, if they can pull off this great escape from liquidation, their south island assets easily outweigh their current valuation and there is a decent upside assuming the capital raising isn't extremely dilutive.