Major shareholder A2 provides Synlait with $130 million loan

photo: Royal Bank of New Zealand

Troubled dairy company Synlait received a major boost after major shareholder A2 Milk said it would vote in favour of the company. Obtained a loan of US$130 million.

Synlait needs a loan from its 39% shareholder China Bright Dairy to repay bank debts by Monday.

Bright Dairy does not have voting rights, but A2 Milk’s statement is a crucial step for the special shareholders’ meeting held on Thursday afternoon.

A2 Milk owns about 20% of Synlait, but institutional and retail investors holding the rest of the company’s shares must also vote for the loan.

Synlait said that if the resolution is passed at the meeting, the company will withdraw the full amount of the loan provided by Bright Dairy.

A2 Milk is also a key Synlait customer and the company said the two sides have been in talks.

A2 said: “These discussions relate to Synlait’s broader recapitalisation plan, which includes shareholder loans and Synlait’s proposed equity raising and concurrent refinancing of bank facilities, and various other matters.”

A2 said it still had concerns and would hold discussions with Synlait in the coming weeks.

A2 said: “In the meantime, the company confirms that it has informed Synlait that it will vote in favour of today’s resolution.”

The shareholders’ meeting is scheduled for 2 p.m.