SML - Synlait Milk Ltd

[Newman]

Is it possible for Synlait to avoid bankruptcy following Silver Fern Frams' approach many years ago? Shanghai Maling Food injected $260 m to get half of SFF, and other shareholders kept the other half for dividend benefits. Of course, SFF was in a much better position than Synlait now.

Both Bright Dairy and Shanghai Maling Food are controlled by Shanghai Bright Food Group.

[Bikeguy]

My thoughts are Bright want SML, and doing it in a JV with A2 makes the most sense, both financially and politically…has all this posturing and positioning by both companies just been negotiating tactics between themselves ? Only time will tell…but if you were going to make a takeover offer now’s a pretty good time considering the SP…

[Lego_Man]

My thoughts are Bright want SML, and doing it in a JV with A2 makes the most sense, both financially and politically…has all this posturing and positioning by both companies just been negotiating tactics between themselves ? Only time will tell…but if you were going to make a takeover offer now’s a pretty good time considering the SP…

We are so close to the razor wire now, the price of the bonds is saying that the equity is a zero. Dump in bonds on Friday suggests no confidence a deal can be reached to preserve the company in its current form (as noted by others on the timing/notice required for a meeting)...one would think now that we are headed into administration/receivership in the next couple of weeks? And therefore that the vultures will pick over the carcass later.

[Bikeguy]

We are so close to the razor wire now, the price of the bonds is saying that the equity is a zero. Dump in bonds on Friday suggests no confidence a deal can be reached to preserve the company in its current form (as noted by others on the timing/notice required for a meeting)...one would think now that we are headed into administration/receivership in the next couple of weeks? And therefore that the vultures will pick over the carcass later.

I agree with you that we are at the show and tell stage now, cards have to be turned up…
If it goes to the receivers I can’t see anyone being willing to bid against Bright, no one would want to pick up Dunsandel against them, SML made no secret about Brights help in securing SAMR, a not very subtle threat at the time I felt,
But equally Bright must know that winning it this way would be an equally poison chalice, a bad look and a lot of pissed of Kiwi farmers…
Your right though, it’s on razor wire for either way now.
What a shame it’s come to this, Two great companies that made a great team.

[Newman]

I agree with you that we are at the show and tell stage now, cards have to be turned up…
If it goes to the receivers I can’t see anyone being willing to bid against Bright, no one would want to pick up Dunsandel against them, SML made no secret about Brights help in securing SAMR, a not very subtle threat at the time I felt,
But equally Bright must know that winning it this way would be an equally poison chalice, a bad look and a lot of pissed of Kiwi farmers…
Your right though, it’s on razor wire for either way now.
What a shame it’s come to this, Two great companies that made a great team.

Bright Dairy and A2 Milk would not be silly to let other shareholders, some of whom are farmers, lose completely. At Friday's share price, the market value for the shares not held by Bright and A2M was $28M only. Dealing with the aftermath by letting Synlait go into receivership would cost more than $28M.

After all, Bright and/or A2M want to get Synlait at a discount price and run it profitably rather than convert other shareholders into enemies and make future business unsustainable.

[billkiapi]

Question is- can A2M let Bright control their manufacturing? And can Bright make Dunsandel profitable without A2M. Let’s hope there os a hotline between the two.

[Sideshow Bob]

Question is- can A2M let Bright control their manufacturing? And can Bright make Dunsandel profitable without A2M. Let’s hope there os a hotline between the two.

i would see that Bright already do control their (China) manufacturing. Bright control the board and a2 have no representation. The Synlait/a2 relationship must be discussed at board level and the course of the relationship/dispute must be heavily influenced or agreed to by the board. Not sure if the independent directors have been there long enough or have sufficient power to influence??

[RTM]

I am wondering if Fonterra have a role to play in any of this ? Presumably some nice modern factories, probably all converted to electric boilers.

[Bikeguy]

i would see that Bright already do control their (China) manufacturing. Bright control the board and a2 have no representation. The Synlait/a2 relationship must be discussed at board level and the course of the relationship/dispute must be heavily influenced or agreed to by the board. Not sure if the independent directors have been there long enough or have sufficient power to influence??

My thoughts are similar, it’s hard not to see how A2 production is not controlled by Bright…they make the produce, they dominate the board, they “helped” with the SAMR license that allows the product to be sold into A2’s biggest market…
A2 is currently a controlled customer, I understand this may change going forward but even their next options are Chinese? So regardless of the factory A2’s production channel is going to have a Chinese partner.
I cannot believe A2 would deliberately go to war so my thoughts are Bright are driving most of this strategy.

[Bikeguy]

I am wondering if Fonterra have a role to play in any of this ? Presumably some nice modern factories, probably all converted to electric boilers.

Are you thinking Fonterra would purchase in the event of receiver’s?