The shaky financial future of Synlait Milk is being steadied after a vote in favour of major shareholders bailing it out.

Smaller shareholders agreed at a special meeting at its Dunsandel base last Wednesday to bring in nearly $218 million of new money from Chinese company Bright Dairy and The a2 Milk Company.

Bright Dairy is due to supply $185m by buying new shares at 60c each in exchange for lifting its stake to just over 65%.

Second largest shareholder a2 Milk would invest nearly $33m, at 43c a share to preserve its just under 20% stake.

Leading up to the result chairman George Adams had warned insolvency proceedings would start if the equity raise failed.

Minority shareholders’ holdings would shrink from about 41% of issued shares to 15%, albeit their value would increase from the added investment.

They were also asked to vote on Synlait’s settlement with a2 Milk as well as amendments to Synlait’s constitution.

The equity raise remains conditional on the refinancing of Synlait’s bank facilities.

To get across the line, the equity raise, a2 Milk settlement and bank refinancing must all proceed with the milk producer expecting this to be completed by Tuesday.

Mr Adams said the result was a “watershed” vote for Synlait.

“Shareholders have given us the opportunity to create a positive future for the company, its investors, farmer suppliers, customers, suppliers and for our 1400 employees.”

Bright Dairy appointed director Julia Zhu said Bright Dairy wanted to protect Synlait’s long-term value, rebuild it stronger and restore farmer supplier confidence over coming years.

Shareholders voted just over 94% in favour of a share issue to Bright Dairy at a price of 60c per share and just under 96% for an a2 Milk share issue at 43c and settlement between the companies.

Nearly 97% voted in another resolution to amend the firm’s constitution.

Listed bond holders are due to be repaid from the injection.

Before the result, the New Zealand Shareholders’ Association said the capital raise was much needed for the balance sheet, but a shareholding shuffle was a “dead rat” for minority shareholders.

Neither Bright Dairy or a2 Milk were able to vote to approve the share issue to themselves.

Synlait will stop processing milk at its Pōkeno plant south of Auckland.

Instead, Open Country will collect and process milk coming from Synlait’s 54 farmer suppliers in Waikato. Pōkeno will continue to process plant-based proteins with its Dunsandel facility remaining the hub for dairy operations.

Synlait said a buyer would not actively be sought for the site, but a compelling offer might be considered.

The company will announce its full year results for the financial year ending July on Monday.

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