SML - Synlait Milk Ltd

[Bikeguy]

The approvals in the article refer to Synlait's board and shareholders rather than Bright Dairy as the loan of $130m is not material given Bright's total assets of over $5 billion and market cap of over $2 billion.

Fly in the ointment is A2M who could conceivably vote against the Bright loan.

I am hoping it doesn’t happen, that A2 votes no, but yes you are right the risk is there, they will have their strategy as well, this is going to be either a massive change up for SML or it’s going to just plod along with Bright plugging the gaps as they arise…

[Balance]

I am hoping it doesn’t happen, that A2 votes no, but yes you are right the risk is there, they will have their strategy as well, this is going to be either a massive change up for SML or it’s going to just plod along with Bright plugging the gaps as they arise…

Bright will not be plugging the hole as they arise.

They are moving their chess pieces one at a time as the pieces are already all in place imo.

As I have written before, imagine a scenario where Bright opens up its distribution and sales channels to Synlait products after it gains control. What then?

[whatsup]

Bright will not be plugging the hole as they arise.

They are moving their chess pieces one at a time as the pieces are already all in place imo.

As I have written before, imagine a scenario where Bright opens up its distribution and sales channels to Synlait products after it gains control. What then?

Its called " the long game ! "

[Newman]

Bright will not be plugging the hole as they arise.

They are moving their chess pieces one at a time as the pieces are already all in place imo.

As I have written before, imagine a scenario where Bright opens up its distribution and sales channels to Synlait products after it gains control. What then?

It's not if, but when, and at a big discount to A2M's IF retail price. At that time, A2M's share price would repeat what Synlait has experienced in the past two years.

On May 30, 2024, The Chinese Communist Party Boss of Shanghai visited Bright Dairy and expressed support for Bright's strategy, suggesting Bright has completed all preparations for actions, including a dividend policy change to allow cutting cash dividends to 20% of net profit when big spending is required.

[whatsup]

It's not if, but when, and at a big discount to A2M's IF retail price. At that time, A2M's share price would repeat what Synlait has experienced in the past two years.

On May 30, 2024, The Chinese Communist Party Boss of Shanghai visited Bright Dairy and expressed support for Bright's strategy, suggesting Bright has completed all preparations for actions, including a dividend policy change to allow cutting cash dividends to 20% of net profit when big spending is required.

Are you saying that A2M will then be a price taker, I would have thought that A2 would have had a SRP agreement with its purchasers ! Bright Dairy should still be one of many purchasers in China or would they form a buying cartel in China ( which I thought is illegal ) ?

[Bikeguy]

Are you saying that A2M will then be a price taker, I would have thought that A2 would have had a SRP agreement with its purchasers ! Bright Dairy should still be one of many purchasers in China or would they form a buying cartel in China ( which I thought is illegal ) ?

Personally I hope that this can all be resolved in a win win for both of these companies, they both did well when they were working well together…hopefully this can be the case again as to me it looks on the face of it to be fairly simple?

However I am still not convinced that they are actually a war with each other, I’m still quite sceptical of that, my personal belief is this is all very much a strategy, one driven primarily by Bright, with A2 a valuable but very much captured partner along for the ride …just my personal opinion

[Balance]

Personally I hope that this can all be resolved in a win win for both of these companies, they both did well when they were working well together…hopefully this can be the case again as to me it looks on the face of it to be fairly simple?

However I am still not convinced that they are actually a war with each other, I’m still quite sceptical of that, my personal belief is this is all very much a strategy, one driven primarily by Bright, with A2 a valuable but very much captured partner along for the ride …just my personal opinion

A2 invested $288m in SML - $100m+ more than Bright.

A lot for A2 to lose if an amicable agreement is not reached by all parties concerned. Then, there’s the matter of the SAMR to export A2 IF into China.

[billkiapi]

A2M and a handful of other shareholders can stop the loan proceeding at the vote, and they've already "lost" their capital investment anyway so why not. They have options such as arbitration of the dispute and Yashili. What's interesting is the need for 10 days notice for an SGM for the vote which means we are really talking end of June-ish if the notices came out this week. If July 15 comes around and Synlait doesn't pay, the banks call on the underwriter (Bright) who have no security - basically they'd burn 130M and get nothing. It'd be a big move for A2M but not out of the question.

[Bikeguy]

A2M and a handful of other shareholders can stop the loan proceeding at the vote, and they've already "lost" their capital investment anyway so why not. They have options such as arbitration of the dispute and Yashili. What's interesting is the need for 10 days notice for an SGM for the vote which means we are really talking end of June-ish if the notices came out this week. If July 15 comes around and Synlait doesn't pay, the banks call on the underwriter (Bright) who have no security - basically they'd burn 130M and get nothing. It'd be a big move for A2M but not out of the question.

I agree it’s definitely not out of the equation, if I wasn’t holding both companies I would be happily sitting by with a lot of interest to see how this plays out …as it is I am unhappily sitting by with great interest to see how it all plays out, lol

[billkiapi]

Have to wonder what SML did to annoy A2M that it has got this bad