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

[Bikeguy]

Lots of uncertainty with this one, I see a little more volume today…I guess if they announced any asset sales prior to CR would see a decent return on investment…
Wouldn’t fit with my feeling that they don’t want us to participate in a CR though…

[Balance]

https://www.ruralnewsgroup.co.nz/dai...t/takeover-bid

Takeover bid?
Written by Milking It

OPINION: Canterbury milk processor Synlait is showing no sign of bouncing back from its financial doldrums.

The listed company’s share price has dropped to 50c/share, valuing the company at only around $100 million. The share price has been travelling south despite the company working hard to sell off under-utilised assets and reduce debt.

Milking It reckons all this means a takeover bid could be around the corner. Watch out for Bright Dairy of China; it already owns 39% of Synlait and could easily fork out a couple hundred million to buy the company outright.

The Chinese know how to run successful dairy companies in NZ; just look at Westland Milk, which reported a record revenue of over $1b last financial year.

[Bikeguy]

https://www.ruralnewsgroup.co.nz/dai...t/takeover-bid

Takeover bid?
Written by Milking It

OPINION: Canterbury milk processor Synlait is showing no sign of bouncing back from its financial doldrums.

The listed company’s share price has dropped to 50c/share, valuing the company at only around $100 million. The share price has been travelling south despite the company working hard to sell off under-utilised assets and reduce debt.

Milking It reckons all this means a takeover bid could be around the corner. Watch out for Bright Dairy of China; it already owns 39% of Synlait and could easily fork out a couple hundred million to buy the company outright.

The Chinese know how to run successful dairy companies in NZ; just look at Westland Milk, which reported a record revenue of over $1b last financial year.

My feeling is this is the outcome that Bright really want and have engineered…maybe like has been pointed out I am giving them to much credit however these guys are not short term players nor like you point out above are they ignorant in the industry they are heavily in…they are across the NZ dairy industry involved in multiple JV, just can’t see them letting Synlait go,
A2 have a blocking stake ? How does Bright stack up with foreign ownership laws if it makes an outright ownership bid?

[Newman]

How does Bright stack up with foreign ownership laws if it makes an outright ownership bid?

If Bright Dairy really wants to control Synlait, it has many options. For example, it could lend $200m to Synlait at an interest rate of 10%+. Can Synlait borrow from other parties to pay $130m back to banks by July 15 and pay $180m bonds in December? The answer is obviously NO. Selling assets in a hurry is not a good idea at all.