Administrators have been appointed to Happy Valley Nutrition after the fledgling dairy company failed in its attempt to raise funds to build a dairy factory in Ōtorohanga in Waikato.
Andrew Grenfell and Kare Johnstone of McGrathNicol in Auckland were appointed as administrators, the company’s board said in a statement to Australia’s ASX, where the company is listed.
The administrators said in a statement they were undertaking “an urgent review” of the company, and expected to hold the first creditors meeting on July 18.
Happy Valley Nutrition listed on the ASX in January 2020 after raising A$12.5m ($13.2m) in an initial public offering to fund planning for the project. It anticipated it would need to raise a further A$328m within a year to fund the factory, which it expected to produce infant formula and other nutritional products for business customers.
Chairperson Kevin Bush said on Wednesday it was “disappointing” to announce the appointment of administrators.
He said the Covid period, when New Zealand was in lockdown for nearly three years, was “extremely challenging” and had materially impacted the company’s ability to progress the project.
The dairy industry had materially changed after Covid and had impacted the company’s original ambition in the infant formula market, he said.
Still, he said the company had been pursuing a “dairy protein strategy” in the last eight months which had attracted “a significant amount of interest” and it had secured agreements from buyers.
Bush said several investors had undertaken due diligence, however the current market conditions of increasing high interest rates, tightening milk supply and the emergence of China domestic milk supply had left the company unable to secure the necessary funding to continue.
The ASX had suspended the company’s shares from trading on June 29 due to concerns regarding the company’s financial condition. The shares, which were initially sold at A20c, last traded at A1.2c.
On June 30, the company’s lender agreed to extend an $11m facility for six weeks until August 16. The loan was part of a $20m funding package agreed in February 2021 to settle the purchase of Woolly Farm, Waipa Meadows and Lot 2, 5 Redlands Road for wastewater irrigation from the facility.
The company’s chief financial officer Richard Chew resigned on June 23.
