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SML - Synlait

Started by Minimoke, Jul 29, 2022, 09:45 AM

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Sideshow Bob

Quote from: Basil on Oct 21, 2024, 09:45 AMContrary to all the politically correct corporate speak, AKA B.S., emanating from Bright, he probably sees a very gloomy future for the company which is still riddled with far too much debt.  Why be the captain of this sick ship and a puppet on a string for the CCP at the same time?

He did largely inherit a flea riddled dog.....but would have known this at the time. Perhaps not quite to what extent though......
"Mayor Quimby Even Released Sideshow Bob — A Man Twice Convicted Of Attempted Murder. Can You Trust A Man Like Mayor Quimby? Vote Sideshow Bob For Mayor."

Auto Rower

Quote from: Minimoke on Oct 21, 2024, 10:21 AMI'm always suspicious about the circumstances surrounding the departure of a person on no notice and no job to go to.
Me also it is usually a big conflict Indicator

Basil

Quote from: Sideshow Bob on Oct 21, 2024, 11:03 AMHe did largely inherit a flea riddled dog.....but would have known this at the time. Perhaps not quite to what extent though......
A lot more than just a really bad flea infestation lol

Auto Rower

https://www.nzx.com/announcements/445642.
 After reading this announcement  & talking with some farm owners /suppliers whom are very upbeat about the future with synlait ,things certainly seem to have turned around here .
 Certainly a Brighter future beckons.

Auto Rower

https://www.farmersweekly.co.nz/opinion/purata-why-were-backing-synlait/

 Definitely looking like a buy for me now ,all coming together nicely with the new management & major shareholder

BlackPeter

Quote from: Auto Rower on Feb 08, 2025, 02:13 PMhttps://www.farmersweekly.co.nz/opinion/purata-why-were-backing-synlait/

 Definitely looking like a buy for me now ,all coming together nicely with the new management & major shareholder

Just remember how they treated retail shareholders when these still did hold a tick more than 50% of the shares. Now its just an insignificant percentage of retail shareholders left with no influence at all over the board - and their interests are in no way aligned with the interests for the two elephants.

If you want to see another example - have a look at MCK's current takeover through the big boy: They first changed the accounting policies (to reduce NTA), than they made sure to find a period where the income stream is low (thanks to Covid and a government fighting tourism), and then they further reduced the remaining income stream by investing into not yet profitable business. Now they have prepared the balance sheet and the income stream for the take over they make a low ball offer for the whole thing, which well might get through.

Back to Synlait: While I am pretty sure that both A2M and City of Shanghai will do well with them - I don't see any reason for these, why they would want to share their loot with the remaining retail shareholders.
 

Poet

Quote from: BlackPeter on Feb 08, 2025, 03:49 PMJust remember how they treated retail shareholders when these still did hold a tick more than 50% of the shares. Now its just an insignificant percentage of retail shareholders left with no influence at all over the board - and their interests are in no way aligned with the interests for the two elephants.

If you want to see another example - have a look at MCK's current takeover through the big boy: They first changed the accounting policies (to reduce NTA), than they made sure to find a period where the income stream is low (thanks to Covid and a government fighting tourism), and then they further reduced the remaining income stream by investing into not yet profitable business. Now they have prepared the balance sheet and the income stream for the take over they make a low ball offer for the whole thing, which well might get through.

Back to Synlait: While I am pretty sure that both A2M and City of Shanghai will do well with them - I don't see any reason for these, why they would want to share their loot with the remaining retail shareholders.
 

All good points - I'm interested to hear your views as to why Bright and A2m didn't take the whole company out when they did the recap, why leave 15% of shares in minority hands?
It wouldnt cost them much to take that last 15% now at a 50% premium - just $60m would clean it up

BlackPeter

#1432
Quote from: Poet on Feb 08, 2025, 04:50 PMAll good points - I'm interested to hear your views as to why Bright and A2m didn't take the whole company out when they did the recap, why leave 15% of shares in minority hands?
It wouldnt cost them much to take that last 15% now at a 50% premium - just $60m would clean it up

Good question - and I am not privy to their thinking.

So - just in general ...

for some companies with cornerstone shareholders >50 % is this a method to hide wealth. I believe CDI and MCK belong into this category - and how we see now with MCK, it even gives them the opportunity to take shares off the minority holders below cost. The latter may or may not be one of the reasons for Bright Dairy and / or A2M (though I suppose that both of them have as well somewhat different agendas, even if they both ultimately are controlled by the CCP).

Easy way to rise further funds - and you can always allow new shareholders to buy in dear and lose the capital as you go. Synlait did this before - why not rinse and repeat? Who knows how many more cap rises they might need based on their history?

Being NZX listed (and still having a small number of NZ shareholders) gives them the cloak of a New Zealand company - which the CCP might see as an advantage rather than operating as fully foreign owned. No real difference for any OIO checks, but PR wise it just feels better rather than being just this evil dragon controlled entity on foreign soil.

Some companies do this to have an easy way to value their assets.

Some companies do this to have an incentive to run their organizations more professionally (I heard that e.g. from CMO), but - not sure this drives Bright Dairy.

So, sorry - I don't know - anybody else wants to chip in here?

Basil

#1433
Only reason that comes to my mind is the route they took was the cheapest way to get total effective control, I.e. a full takeover at the time of the last capital raise would probably have cost them more.

Perhaps you are on to something with it remaining listed here in terms of ESG clean and green appearances for Chinese customers ?

Maybe it's also tied in with considerations around banking requirements for the syndicate of banks?

One thing, I agree 100% with you BP that minority shareholders are in an incredibly weak and vulnerable position and expecting fair treatment in the future is a fools errand.

Poet

#1434
Quote from: BlackPeter on Feb 08, 2025, 05:37 PMGood question - and I am not privy to their thinking.

So - just in general ...

for some companies with cornerstone shareholders >50 % is this a method to hide wealth. I believe CDI and MCK belong into this category - and how we see now with MCK, it even gives them the opportunity to take shares off the minority holders below cost. The latter may or may not be one of the reasons for Bright Dairy and / or A2M (though I suppose that both of them have as well somewhat different agendas, even if they both ultimately are controlled by the CCP).

Easy way to rise further funds - and you can always allow new shareholders to buy in dear and lose the capital as you go. Synlait did this before - why not rinse and repeat? Who knows how many more cap rises they might need based on their history?

Being NZX listed (and still having a small number of NZ shareholders) gives them the cloak of a New Zealand company - which the CCP might see as an advantage rather than operating as fully foreign owned. No real difference for any OIO checks, but PR wise it just feels better rather than being just this evil dragon controlled entity on foreign soil.

Some companies do this to have an easy way to value their assets.

Some companies do this to have an incentive to run their organizations more professionally (I heard that e.g. from CMO), but - not sure this drives Bright Dairy.

So, sorry - I don't know - anybody else wants to chip in here?

Yes will be interesting to see how the cheeky offer for MCK works out - this week should tell.

It will also be interesting to see how SML/A2M handle the minorities if they (the major holders) ever want to carry out a major transaction such as selling Pokeno. They will need co-operation of minorities in that case.

Also I guess there are a number of milk suppliers who are also small shareholders, best not antagonise them by unfair treatment of minorities


BlackPeter

Quote from: Poet on Feb 09, 2025, 09:53 AM...

Also I guess there are a number of milk suppliers who are also small shareholders, best not antagonise them by unfair treatment of minorities



Well, they didn't worry about these minorities in the last cap rise, didn't they? So, why next time? As well, (I assume you realize that it used to be Synlait's big drawcard to lure suppliers that these don't need to hold shares (other than e.g. with Fonterra, where they must). Sure, there might be some who bought as well some shares voluntarily, but I don't expect them to be many. Investing the business capital of their farming operation into Synlait shares would have been one of the dumbest business decisions they ever made ...