Pōkeno refocused away from dairy as company trims sails ahead of key meeting.
Synlait Milk’s do-or-die special meeting on September 18 will go ahead despite the complaint lodged by co-founder, former chief executive and former chair John Penno.
Penno sought to have only minority shareholders eligible to vote on two crucial resolutions to raise capital from majority owner Bright Dairy of Shanghai and major customer a2 Milk Company.
His complaint was dismissed by the sharemarket regulator NZ RegCo and the Takeovers Panel.
Synlait has warned several times that the recapitalisation is essential to ensure the future of the listed dairy company.
The votes will now proceed with Bright able to vote on the a2 Milk resolution and a2 Milk able to vote on the Bright resolution.
The intended outcome is that Bright contributes $185 million and becomes a 65% controlling shareholder and a2 Milk contributes $33m to maintain its 20% stake.
Both big brothers have said they favour the recapitalisation plan and therefore the resolutions are expected to pass.
The special shareholders meeting will be held at 9am on Wednesday at the Synlait Dunsandel plant and online.
“The support of all shareholders remains essential to safeguard the future of Synlait, and all shareholders are encouraged to exercise their right to vote at this important meeting,” the company said.
That appeal is directed at minority shareholders, whose collective influence will fall from 40% to 15%.
Synlait has argued that any other form of capital raise, or liquidation of the company, would wipe out shareholder value.
Meanwhile Synlait has decided to stop receiving milk at its Pōkeno plant in South Auckland and has called on Open Country to process the supply of 54 Waikato farms.
“They will remain Synlait suppliers until the end of their supply agreements and we will remain their first port of call for support,” chief executive Grant Watson said.
Pōkeno will change over wholly to non-dairy, plant-based proteins for the manufacture of advanced nutrition products.
Watson said that after a thorough review the company now had insight to lift the financial performance of world-class assets.
Switching between dairy and non-dairy had hindered operational efficiency.
Pōkeno began processing plant-based products for nutrition and healthcare multinational Abbott after an expensive refit.
Analysts said that the Pōkeno site cost about $400 million to build over six years and is running with annual losses as high as $40m.
A buyer for Pōkeno will not be actively sought but if a compelling offer is made the company may consider it.
Synlait has raised its forecast farmgate milk price for the current season by 60c to $8.60 and will confirm its final price for last season with the annual results on September 30.
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