20 August 2024

Synlait announces equity raise and Special Shareholders’ Meeting

Synlait Milk Limited has agreed terms of a recapitalisation, including aggregate new equity of $217.8 million, with its two largest shareholders and is in the final stages of a refinancing of our bank facilities.

The recapitalisation will require a Special Shareholders’ Meeting which will be held on Wednesday 18 September 2024 at [9.00 am], both in person at Synlait’s Dunsandel facility (1028 Heslerton Road, RD13 Rakaia, Canterbury, New Zealand) and online at: www.meetnow.global/nz.

The meeting is a critical step in determining the future of Synlait.

To reduce Synlait’s debt, shareholders are being asked to approve by way of ordinary resolutions the issuance of approximately $217.8 million of new equity capital by way of:

• a $185 million issue of shares to Bright Dairy Holding Limited (Bright) at an issue price of $0.60 (a 100% premium to the closing price of Synlait’s shares on the NZX Main Board on [15] August 2024 (which was the last undisturbed share price prior to announcement of the settlement with The a2 Milk Company)), which will increase its shareholding in Synlait from 39.01% to 65.25% (Bright placement); and
• a $32.8 million issue of shares to The a2 Milk Company (a2MC) at an issue price of $0.43 (a 43% premium to the closing price of Synlait’s shares on the NZX Main Board on [15] August 2024 (which was the last undisturbed share price prior to announcement of the settlement with a2MC)), which will result in its holding of 19.83% being retained (a2MC placement), and a settlement with a2MC and a2 Infant Nutrition Limited as announced on 16 August 2024.

Synlait Chair George Adams commented: “This equity raise is critical for Synlait’s future. If the resolutions are not passed, it’s likely Synlait would need to cease trading and initiate a formal insolvency process. We are particularly grateful for the continued support of our two major shareholders, Bright Dairy and The a2 Milk Company. Their investment demonstrates their deep commitment to Synlait’s future.”

The equity raise will only complete if it does so concurrently with the refinancing of Synlait’s bank facilities. The equity raise, the settlement with a2MC, and the bank refinancing are inter-conditional and therefore must all be approved and occur contemporaneously (or substantially contemporaneously) with each other, or not at all.

Completion of all three components is expected on 1 October 2024.

You can read the full announcement to the NZX here.