Beston Global Food, the ASX-listed group behind the Edwards Crossing Cheese Company and Mables brands, has collapsed into administration after one of Japan’s biggest dairy producers walked away from a deal to buy its assets.
KPMG had now taken control of the business, which has 160 employees in its South Australian factories, which also produce milk and butter.
Beston’s collapse is the latest instability among the country’s listed food and drink producers. Mighty Craft, the beverages group that owned 25.5 per cent of fast-growing Better Beer, fell into administration in July after months of financial turmoil.
Maggie Beer Holdings, the gourmet food producer named for one of Australia’s most famous cooks, fell to a $28 million loss last month. The company, which is also based in SA, is considering selling its Paris Creek milk and yoghurt business. Beston once had a significant stake in Paris Creek, but sold its holding in 2017 for $7 million.
Beston has blamed the high cost of energy and a slide in farmgate milk prices for its demise, as well as the collapse of a deal signed two weeks ago to sell its dairy production business to Tokyo-listed agribusiness giant Megmilk Snow Brand.
“Over the last 12 months, Beston has experienced exceptionally high operating costs, particularly due to onerous energy prices at a time when Australian farmgate milk prices have been uncompetitive in world markets,” the company said.
Beston has two large production facilities, one at Jervois, south-east of Adelaide, and the other in nearby Murray Bridge, which make butter, milk, mozzarella and other cheeses. It also supplies lactoferrin to infant formula companies in China. The company has previously said that it processes about 30 per cent of the milk in SA.
National Australia Bank is the company’s major financier. In May, Beston owed NAB about $55 million. Last year, it said it had refinanced its facility to up to $70 million.
KPMG’s Tim Mableson, appointed Beston’s administrator, said the company would continue to operate as it sought a new owner or more financing.
“Our initial focus will be to stabilise the business,” Mr Mableson said. “There are significant dairy-processing assets across two sites, strong relationships with loyal dairy farmers throughout South Australia and into western Victoria, and established distribution channels both domestically and globally.”
Beston listed on the ASX in 2015 as a holding vehicle for stakes in food businesses including Paris Creek and Ferguson Australia, the country’s largest lobster supplier, along with other dairy, meat and poultry assets. The company listed at 35¢ per share, giving it a market capitalisation of about $130 million.
It has since sold off many of those stakes. It exited the seafood industry in 2019, leaving it almost entirely exposed to the dairy industry. Shares last traded in late June, when they were selling for 0.3¢, giving Beston a market capitalisation of $59 million.
Earlier this month, Beston said Megmilk had proposed purchasing its cheese and lactoferrin production business at Jervois. Megmilk already owns a number of local assets including the Unicorn Cheese Company, an infant formula packaging facility in Tatura NSW and the Udder Delights business.
Beston chief executive Fabrizio Jorge said it was disappointing the Megmilk Snow Brand deal would not be proceeding. “The Megmilk offer would have enabled all of the jobs at Jervois to be preserved and would have led to an increase in demand for milk for processing at the Jervois factory over time,” he said.
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