SML - Synlait Milk Ltd

[whatsup]

SML needs at least $200m imo to stabilise its financial position so a CR is almost inevitable (next option being a takeover which is problematic with the differing objectives of the 2 big shareholders).

So a 4 for 1 share issue (underwritten by Bright & ATM) at 25c could be what's on the card. Remember Sky TV's 2.83 for 1 rights issue at 12c?

WOW thats a biggee but even " IF " the C R is a success, where and what is SML's future outside A2M if Prof Woodwards latest writeup of A2 cow penetration has legs ?

[Newman]

The banks will not be allowing the situation to drift so there's plenty happening behind the scenes.

John Penno leaving/quitting with immediate effect is an example of what's happening behind the scene.

All comes down to what the two big shareholders want to do - the possibility does exist that they allow SML to go under and have a big bun fight over who can buy the assets they want cheaper.

Problem for them with that scenario is that they then lose control of the process and another player could end up with control of the assets.

Bright Dairy would not let Synlait go under because doing so would produce unaffordable consequences (e.g., life imprisonment and loss of personal assets) for its current and previous bosses. It is unlikely Bright Dairy wants to get 100% of Synlait, either. Two top executives of ChemChina were sent to jail recently because of their stupid decision to buy Syngenta Group.

If a capital raising goes ahead, keeping its shareholding percentage would be a likely outcome for Bright Dairy, I think.

For bondholders, a capital raising would be good news.

[Bikeguy]

SML needs at least $200m imo to stabilise its financial position so a CR is almost inevitable (next option being a takeover which is problematic with the differing objectives of the 2 big shareholders).

So a 4 for 1 share issue (underwritten by Bright & ATM) at 25c could be what's on the card. Remember Sky TV's 2.83 for 1 rights issue at 12c?

We are all just guessing here of course but I agree/feel that the above is the most likely outcome of the current situation…Bright would likely pick up the 12% it wants (possibly )cheap as chips..

[Balance]

We are all just guessing here of course but I agree/feel that the above is the most likely outcome of the current situation…Bright would likely pick up the 12% it wants (possibly )cheap as chips..

Could be 5 for 1 at 20c to raise $200m and potentially, create a huge shortfall situation for Bright to achieve over 51% shareholding.

The deal will need shareholders' approval of course but given the precarious position SML is in, that is a forgone conclusion imo.

And yes, it's a guess but based upon the information available, an educated guess?

Receivership is still a possibility but that's a guess too!

[Bikeguy]

Bright Dairy would not let Synlait go under because doing so would produce unaffordable consequences (e.g., life imprisonment and loss of personal assets) for its current and previous bosses. It is unlikely Bright Dairy wants to get 100% of Synlait, either. Two top executives of ChemChina were sent to jail recently because of their stupid decision to buy Syngenta Group.

If a capital raising goes ahead, keeping its shareholding percentage would be a likely outcome for Bright Dairy, I think.

For bondholders, a capital raising would be good news.

Makes sense,
A2 have indicated they don’t want to go down the route of a CR in previous statement ( how much of this is gamesmanship is anyone’s guess) but regardless they are going to be forced to play or lose their blocking stake…

The more I kick it around the more I feel a CR is the likeliest of the potential options.

[Bikeguy]

Could be 5 for 1 at 20c to raise $200m and potentially, create a huge shortfall situation for Bright to achieve over 51% shareholding.

The deal will need shareholders' approval of course but given the precarious position SML is in, that is a forgone conclusion imo.

And yes, it's a guess but based upon the information available, an educated guess?

Receivership is still a possibility but that's a guess too!

Yes, based upon the information available I feel it’s a guess with merit,

I like these forums because the posts often have some debate and i can learn alot from them.

[Balance]

Makes sense,
A2 have indicated they don’t want to go down the route of a CR in previous statement ( how much of this is gamesmanship is anyone’s guess) but regardless they are going to be forced to play or lose their blocking stake…

The more I kick it around the more I feel a CR is the likeliest of the potential options.

Exactly - Bright would be very happy for A2M to NOT participate in a CR!

A2M is not in the driving seat here unless the arbitration over the exclusive manufacturing agreement is a resounding win for them.

Even then, A2M needs SML to produce for them to be able to sell their IF in China until 2027.

Plenty happening behind the scenes.

[Poet]

Could be 5 for 1 at 20c to raise $200m and potentially, create a huge shortfall situation for Bright to achieve over 51% shareholding.

The deal will need shareholders' approval of course but given the precarious position SML is in, that is a forgone conclusion imo.

And yes, it's a guess but based upon the information available, an educated guess?

Receivership is still a possibility but that's a guess too!

Maybe someone can enlighten me here...
Won't bright (or ATM) need 80% shareholder approval to move beyond their current holdings (39% and 20% respectively)? And doesn't that mean that without such approval, neither of them will be able to take up more than their pro-rata entitlement in a cap raise (and in practice, they will have to take up less than their pro-rata entitlement given that not all smaller shareholders will participate)

[Bikeguy]

Maybe someone can enlighten me here...
Won't bright (or ATM) need 80% shareholder approval to move beyond their current holdings (39% and 20% respectively)? And doesn't that mean that without such approval, neither of them will be able to take up more than their pro-rata entitlement in a cap raise (and in practice, they will have to take up less than their pro-rata entitlement given that not all smaller shareholders will participate)

My understanding is neither would need shareholder approval to increase their holdings in SML.
Both would need each other’s agreement for either of them to takeover SML, either through a straight takeover offer, or a scheme of arrangement, the threshold for the latter being 75%

[Poet]

My understanding is neither would need shareholder approval to increase their holdings in SML.
Both would need each other’s agreement for either of them to takeover SML, either through a straight takeover offer, or a scheme of arrangement, the threshold for the latter being 75%

So aren't they subject to the takeover code where they can't go beyond 20% without special measures (or 39% in the case of Bright, who presumably already has approval to be at 39%)