SML - Synlait Milk Ltd

[Bikeguy]

[QUOTE=Newman;1046968]

Foreign ownership laws would prevent them doing that…QUOTE]

Could you explain a little bit more?

My understanding is that SML would be classed as a significant business assets (exceeds NZ$100 million and related to use of the land, dairy farming etc) and as such would require OIA Consent,

[Rawz]

I may be giving them to much credit, and I certainly do not think that they have been able to create the circumstances of which have been part of this, Covid etc, however yes I do think they have used the circumstances to their best outcome…the fact that Bright are taking the position they have in today’s announcement shows their intent?
We are talking about a country that pretty much took a 900 billion hit (evergreen) and it’s not even really mentioned globally…
A few hundred million to these guys is nothing in their quest for food security,
Just my thoughts though…

Yes but Bright had the supply secured at $82m investment. Nothing needed to be done. They had 4 directors on the board. Total control.

Now they have to put in more capital. Likely close to $200m. Yes it maybe small change for them but still i bet their request for funds is on some desk somewhere in China and the body behind that desk will be asking some hard questions about the absolute waste of company money. To secure the same supply.. The Bright employees in charge of the Synlait investment have completely buggered this up.

The Bright Dairy decision maker in China will be asking how can they secure supply with the least amount of capital required? And one option is to let SML go into liquidation.

[Bikeguy]

Yes but Bright had the supply secured at $82m investment. Nothing needed to be done. They had 4 directors on the board. Total control.

Now they have to put in more capital. Likely close to $200m. Yes it maybe small change for them but still i bet their request for funds is on some desk somewhere in China and the body behind that desk will be asking some hard questions about the absolute waste of company money. To secure the same supply.. The Bright employees in charge of the Synlait investment have completely buggered this up.

The Bright Dairy decision maker in China will be asking how can they secure supply with the least amount of capital required? And one option is to let SML go into liquidation.

I think all the points you make are fair ones,

I just feel Bright signalling their intentions publicly to fully participate in CR is telling, but hey I do not know for sure, reading the tea leaves

[Filthy]

i/ a commitment to participate in a future equity capital raising (subject to certain terms and conditions including consideration of current shareholding structure) SNOOPY

I wonder what the terms & conditions actually are; and what the consideration of structure is? maybe that means they do/dont want ATM to join in? - they have also omitted a key word in my view: 'fully' participate vs participate.

could a spinoff of dairyworks be considered - might be able to command a slightly higher price; although if not - think they would've been best to take the ~$86M and raise the rest from there.

I still maintain that the best time would've been in tandem with the SAMR re-reg at ~$1.80 in June. Too focused on B-corp and not maintaining shareholder value. asleep at the wheel.

net debt still going up. probably to pay for the inflated wage bill for all of those employees over $100K - a really high % of their workforce from memory. need to make a concerted effort with some cuts - like all other companies at the moment.

company has good bones and some great stainless steel - just bad management which needs sorting. need to send over some of the young guns from SKL & get customer focused again - make peace with ATM. lots of shareholders probably own both companies, and no doubt a lot of ordinary NZ'ers through kiwisaver. would be great for them to actually work together - better for NZ Inc.

[Poet]

Consideration of structure

Probably referring to brightstar ability to increase shareholding above their current 39%
If they participate in cap raise, this will almost certainly raise their shareholding above 39 and could even see them above 50%

[Snoopy]

Consideration of structure

Probably referring to brightstar ability to increase shareholding above their current 39%
If they participate in cap raise, this will almost certainly raise their shareholding above 39 and could even see them above 50%

Yes that was my thought as well Poet. If Bright increase their holding to above 50% as a result of the capital raise, that might trigger the takeovers code where they have to make a bid for the whole company. Given Bright nominally have control already with their 39% stake I am not sure how this would work in practice, because you could argue that even with a Bright stake boosted to more than 50%, effective control of the company has not changed. Perhaps it is up to the NZX to 'tick that box' and say that if Bright go over 50% as a result of the capital raising, that doesn't mean they have to make an offer for all the rest of the shares? Mind you, I don't believe there is any legal requirement to make a fair offer to minority shareholders. Bright might just make a miserly offer at the capital raising price, and hope most minority shareholders reject it?

SNOOPY

[billkiapi]

They're not asleep at the wheel, they have an argument with their biggest customer by far, and second largest shareholder A2M. Form the little we have seen about that publicly, it looks like total arrogance from SML dealing with A2M which backfired on SML. The peripheral arguments with vendors and staff don't seem to paint SML in a good light, more like trying to get one over A2M. Net result is shareholders get dumped on, while class action lawyers circle Synlait like vultures trying to tease out some profit from shareholder misery. A clean out at board and management is what is needed- maybe then A2M might consider downing weapons.

[Newman]

Capital raising would be pro-rated, and require an underwriter to pick up untaken ones. Could Bright be a underwriter or the untaken allocation be issued as preference shares?

[Marilyn Munroe]

[QUOTE=Bikeguy;1046970]

My understanding is that SML would be classed as a significant business assets (exceeds NZ$100 million and related to use of the land, dairy farming etc) and as such would require OIA Consent,

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

[Nor]

Like that waka jumping legislation that suddenly didn't work when it didn't suit.