I have been a long term critic of Synlait.
But today's news may see them turn a corner.
I am very pleased to see they have conducted a structural review and they say "Grant Watson and his executive leadership team have refreshed Synlait's strategy with the Board in recent months. The refreshed strategy will deliver greater focus against Synlait's core business opportunities being Advanced Nutrition, Ingredients, Consumer (including Dairyworks) and Foodservice."
Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.
Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)
Now to the criticism.
I am a firm believer that the Board is full of "Directors" and their job is strategy and governance.
From the CEO down they are operational folk and not Directors. So don't call them "directors". "General Manager" is fine.
I hope this isn't just window dressing.
o Chief Financial Officer (Robert Stowell)
o CEO Dairyworks and Director of Consumer (Tim Carter)
o Director of Operations (Nigel Macdonald)
o Director of Quality, Regulatory and Laboratory (Suzan Horst)
o Director of People and Culture (Boyd Williams)
o Director of Ingredients (to be confirmed)
o Director of Advanced Nutrition (to be confirmed)
o President China and Director of Foodservice (to be confirmed)
o Director of On-Farm Excellence and Business Sustainability (to be
confirmed)
o Director of Strategy, Innovation and Corporate Affairs (to be confirmed)
Very difficult for anyone to change the embedded culture of a company. Takes years even when it is possible.
Their bonds trade at over 8% last time I looked which gives a good indication of the risks here in my opinion. For mine, the responsibility with hiring the right CEO with the right approach and setting the right culture starts with the board and they have shown truly abysmal leadership over the years.
I would not put money on this pink, poorly performing leopard changing its spots anytime soon.
Advanced nutrition ingredients.
Wonder what international company makes milk based nutritional products?
Could that be the position formally known as "The Tea Lady".?
Quote from: Minimoke on Jul 29, 2022, 09:45 AM...
Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.
Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)
would you mind passing this on to literally every company?
Quote from: Minimoke on Jul 29, 2022, 09:45 AMI have been a long term critic of Synlait.
But today's news may see them turn a corner.
I am very pleased to see they have conducted a structural review and they say "Grant Watson and his executive leadership team have refreshed Synlait's strategy with the Board in recent months. The refreshed strategy will deliver greater focus against Synlait's core business opportunities being Advanced Nutrition, Ingredients, Consumer (including Dairyworks) and Foodservice."
Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.
Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)
Just goes to show the previous CEO was a really strange person with goals that we very poorly aligned with shareholders interests. I guess if you have no idea how to show real leadership you just make it up as you go along LOL Problem is it will takes years of good leadership just to undo the damage already done.
Quote from: Basil on Jul 29, 2022, 08:21 PMJust goes to show the previous CEO was a really strange person with goals that we very poorly aligned with shareholders interests. I guess if you have no idea how to show real leadership you just make it up as you go along LOL Problem is it will takes years of good leadership just to undo the damage already done.
There was trouble at mill the moment Leon got up to speak at his very first annual meeting. Jabbered away in te maori. And no maori in the audience. But there were a few Chinese - total silence on that front. Which must have been an insult of some SML's owners. It was all down hill from there
Quote from: NZInvestor on Jul 29, 2022, 09:45 AMI have been a long term critic of Synlait.
But today's news may see them turn a corner.
I am very pleased to see they have conducted a structural review and they say "Grant Watson and his executive leadership team have refreshed Synlait's strategy with the Board in recent months. The refreshed strategy will deliver greater focus against Synlait's core business opportunities being Advanced Nutrition, Ingredients, Consumer (including Dairyworks) and Foodservice."
Hopefully gone is the te maori, the tree planting, the pink roads, the B Corp and every other social construct they have pursued over many years.
Focus on milk and how to add value to the benefit of shareholders. (Without wrecking canterbury's waterways)
The social constructs...hei aha. They have been a silly distraction at worst. The real kicker though has been some appalling decision making that has resulted in A grade capital destruction. The Talbot purchase aces this sorry arse list, closely followed by legal and other unnecessary expenses around the Pokeno factory and the whole Munchkin / USA muck around. Also yet to prove their worth are the top dollar Dairyworks purchase (for example where are they at with the long promised liquid milk exports to China?) and the $18m expansion to to the Dunsandel lactoferrin facility. So yes, hopefully this strategic review will allow them to clearly articulate how the various parts of the business are going to work as a whole to drive the company forward. That's what I'm waiting to hear.
Quote from: Hectorplains on Aug 09, 2022, 07:16 PMThe social constructs...hei aha. They have been a silly distraction at worst. The real kicker though has been some appalling decision making that has resulted in A grade capital destruction. The Talbot purchase aces this sorry arse list, closely followed by legal and other unnecessary expenses around the Pokeno factory and the whole Munchkin / USA muck around. Also yet to prove their worth are the top dollar Dairyworks purchase (for example where are they at with the long promised liquid milk exports to China?) and the $18m expansion to to the Dunsandel lactoferrin facility. So yes, hopefully this strategic review will allow them to clearly articulate how the various parts of the business are going to work as a whole to drive the company forward. That's what I'm waiting to hear.
Remember back in Nov 2020 there was announcement of a new (Asian) international customer. Commercial production was to start mid 2022. And they were going to spend $70m of the capital raise money to fund the plant expansion.
Fast forward to this years half year results and we get "Ensure readiness to successfully commence commercial production for Synlait Pokeno's new multinational customer." as a key priority for H2 2022.
SP today is $3.31. I reckon there is a fair bit of anticipation built in.
1 1/2 months to year end announcement. Its going to be an interesting one - especially with falling milk commodity prices.
How many years now without a dividend ?...sorry I have lost count.
Why anyone would bother with slow motion train (wreck ?) on a journey to nowhere is beyond me.
Quote from: Basil on Aug 09, 2022, 09:43 PMHow many years now without a dividend ?...sorry I have lost count.
Why anyone would bother with slow motion train (wreck ?) on a journey to nowhere is beyond me.
Neither dividend nor any material capital appreciation compared to listing price (somewhere around $2.70 I think) nearly a decade ago.
However - there was quite an exciting roller coaster ride in between (great for traders) ... and don't discount the power of the colour scheme ... :p ;
On a more serious note ... they invested not just into Te Reo translators, but as well into a lot of good looking stainless steel. If they find a business case to match, this company might be at some stage a steal ... they just need to look out a bit harder.
Synlait is clearly a solution ... they just didn't found the problem yet :) ;
Maybe if they had of painted all their processing facilities in shocking pink with contrasting jade green Te Reo signage that would have solved all their problems ;D For the record I always said once you promote all things ESG to the point where such things are of equal importance to the company as earnings are, you have lost the plot on the very reason the company exists. The warning signs of extremist socialist policies were there for all to see. Without doubt this company took ESG things further than any other listed company on the NZX and the results are plain for all to see. Massive destruction of shareholder wealth relative to the NZX50 over the same timeframe. The whole board should resign in disgrace.
I could not ever invest in a company where the same directors today are the ones that let such extremist socialist and ESG policies wreck such destruction upon shareholders so for me this will always remain uninvestable. I'm not bitter and twisted, I made a few bucks but I think this makes for a brilliant case study for investment analysis classes at University of what not to do and how not to govern. As for their "disclosure" around the Pokeno fiasco...oh my goodness, more stuff for University students to ponder over for decades to come....
Quote from: NZInvestor on Aug 09, 2022, 08:53 PMRemember back in Nov 2020 there was announcement of a new (Asian) international customer. Commercial production was to start mid 2022. And they were going to spend $70m of the capital raise money to fund the plant expansion.
Fast forward to this years half year results and we get "Ensure readiness to successfully commence commercial production for Synlait Pokeno's new multinational customer." as a key priority for H2 2022.
SP today is $3.31. I reckon there is a fair bit of anticipation built in.
1 1/2 months to year end announcement. Its going to be an interesting one - especially with falling milk commodity prices.
Agreed on all points bar falling milk commodity prices. There are competing factors that make it difficult to have any certainty around prices. Synlait recently increased its base milk price forecast to $9.50/kgMS, saying that this reflects an improved outlook for 2022-23 dairy commodity prices. Further supports are probable in a weaker NZ dollar and the reduced global milk supply.
Quote from: Hectorplains on Aug 10, 2022, 09:12 PMAgreed on all points bar falling milk commodity prices. There are competing factors that make it difficult to have any certainty around prices. Synlait recently increased its base milk price forecast to $9.50/kgMS, saying that this reflects an improved outlook for 2022-23 dairy commodity prices. Further supports are probable in a weaker NZ dollar and the reduced global milk supply.
I have to learn how to post pictures.
In the meantime I have to use words.
At the moment the average whole milk powder commodity price is the lowest its been since Aug 2021. And its about the same average price as Feb 2021. The concern is the trend. Been trending consistently down since a high n march 2022.
Synlait has its forecast price but farmers may be disappointed. Which is perhaps why Canterburys Choice has set out on their own selling A2 milk (see A2 thread)
I used to be in prime "sell" mode with SML. But am currently giving them the benefit of the doubt with a very cautious "hold". I'm looking forward to the next announcement. In particular debt levels, inventory computer implementation costs and name of new international asian customer.
I am so disinterested I havent even been to the local supermarket to see their fancy recyclable bottle.
But their upcoming court case against Talbot should be interesting. I'm not even even sure if they are back in manufacture mode again.
And on a side note Environment Canterbury are getting two unelected Maori Councillors who are apparently excellent caretakers of the land. They will make up 2 out of 16 seats. And I know the current other 14 councillors are totally smitten with all things Maori. Lets see what they do about the totally unnatural use of the canterbury plains and its aquifers.
I really have difficulty with these companies that start calling their employees "directors". Today it is announced Director Martijn Jager is leaving. And Adam Maxwell is a new director. Bu these folk were just in charge of nutritionals and ingredients.
With the new international client coming on board I would have thought it would have been quite a good time for a boss of Nutritionals and Ingredients
Mickey mouse would have done a better job in recent years.
Quote from: Basil on Aug 23, 2022, 11:15 AMMickey mouse would have done a better job in recent years.
I wonder if Boyd Williams will be next to go. Director of, among other things "performance" (Wasn't mickey mouse a performers?
I see a pile of performance rights got cancelled today.
Quote from: NZInvestor on Aug 23, 2022, 10:46 AMI really have difficulty with these companies that start calling their employees "directors". Today it is announced Director Martijn Jager is leaving. And Adam Maxwell is a new director. Bu these folk were just in charge of nutritionals and ingredients.
With the new international client coming on board I would have thought it would have been quite a good time for a boss of Nutritionals and Ingredients
When is this new customer being revealed it was supposed to be mid 2022 not late 2022 its beginning to drag out now
Quote from: Auto Rower on Aug 23, 2022, 12:39 PMWhen is this new customer being revealed it was supposed to be mid 2022 not late 2022 its beginning to drag out now
Maybe things are not going as planned
I see their bonds are now over 8%. Market starting to get worried ?
Fonterra signalling a slight downward movement of milk solid price this morning - but in a still a wide range
On the back of A2M's good news today. Not so good news from Synlait (or maybe some really good news) Hamish Reid has decided to leave the company - instead preferring the life as a consultant. That's a few senior execs walking the plank recently.
Not necessarily a bad thing - Hamish can go off and help the micro brewers and sandal makers with their B Corp accreditations.
Results due 26th. I suspect, contrary to popular sentiment here, that they will surprise on the plus side, with a positive forward guidance. 8) 8) 8)
Quote from: Hectorplains on Sep 01, 2022, 06:53 PMResults due 26th. I suspect, contrary to popular sentiment here, that they will surprise on the plus side, with a positive forward guidance. 8) 8) 8)
We might even get to hear who the mystery international customer is. Or we may not.
Either they do so on the 26th or make it next year for reasons to be revealed :o surprise Surprise
With Synlait what we mostly have is talk and promises that things are going to get better.
Maybe reflect on how they have performed over the long run.
In December 2013 after their first 6 months of trading they were $3.82. Here we are in 2022 9 years later and the share price is $3.42, (from Reserve bank inflation calculator they should be $4.58 to have maintained relative value) so they have lost ~ 25% of their value in the last 9 years and never once paid a dividend.
Of course we have the well discussed Pokeno fiasco fresh in our minds and their endless ESG annunciations to reflect on too.
Trust us we know what we are doing has been their approach the whole way.
These guys have done nothing but destroy trust and destroy shareholder capital.
I do not trust them and do not trust any forward looking statement they make.
Quote from: Basil on Sep 04, 2022, 10:11 AMWith Synlait what we mostly have is talk and promises that things are going to get better.
Maybe reflect on how they have performed over the long run.
In December 2013 after their first 6 months of trading they were $3.82. Here we are in 2022 9 years later and the share price is $3.42, (from Reserve bank inflation calculator they should be $4.58 to have maintained relative value) so they have lost ~ 25% of their value in the last 9 years and never once paid a dividend.
Of course we have the well discussed Pokeno fiasco fresh in our minds and their endless ESG annunciations to reflect on too.
Trust us we know what we are doing has been their approach the whole way.
These guys have done nothing but destroy trust and destroy shareholder capital.
I do not trust them and do not trust any forward looking statement they make.
Suppose you look back these days and reflect how clever you were selling at $11/$12 or whatever ....especially when fundamentals at that time were saying only worth $3/$4 ...well done sir
I've still got a morbid fascination with keeping my SML financial model up to. Date ...just in case they look good and might be a buy. You never know.
Odd observation> I was coming back from the coast the other day and two Synlait tankers heading up over Arthurs towards the coast. One was grinding up the hill really slow. As if it was chock full of milk. No idea what they were up to.
AMAZING TURNAROUND - a $29m loss into a $39m profit
Good stuff and well done Synlait
And F23 looking good - npat about $80m by looks of it
And these new customers will see proft over $100m in F24 .... cool
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/399427/379770.pdf
Quote from: winner (n) on Sep 27, 2022, 09:51 AMAMAZING TURNAROUND - a $29m loss into a $39m profit
Good stuff and well done Synlait
And F23 looking good - npat about $80m by looks of it
And these new customers will see proft over $100m in F24 .... cool
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/399427/379770.pdf
Good result. So they've impaired Talbot cheese by $12m - where's the Court case at and when are we back making cheese?
Most Definitely a great sustainable forward looking turnaround Winner :)
Quote from: Hectorplains on Sep 27, 2022, 10:50 AMGood result. So they've impaired Talbot cheese by $12m - where's the Court case at and when are we back making cheese?
I have been told the cheese is being made elsewhere..
Who told you that an undercover brother ! & ask them how long for :o is the plant due to come back on line mcdongle.
Have heard nothing more than that... sorry
Fair enough mcdongle I am looking at explanations/reasons for the sp price drop probably just the bears
Sml share price back over 310 today I reckon
Quote from: winner (n) on Nov 15, 2022, 08:15 AMSml share price back over 310 today I reckon
Why?
Quote from: Left Field on Nov 15, 2022, 11:38 AMWhy?
Edit: Sorry, I misunderstood the dialogue.
Winner just teasing us ... looking at the volume I'd say just some school child investing their pocket money into the factory their dad might work in.
Not sure anybody can take from that a guide for the trend ...
Quote from: Left Field on Nov 15, 2022, 11:38 AMWhy?
Just an aberration yesterday -- a bit of noise
Ranges between 310 to 350 at moment ....but looking good for 400 next year when the new customer starts firing up
Quote from: winner (n) on Nov 15, 2022, 11:55 AMJust an aberration yesterday -- a bit of noise
Ranges between 310 to 350 at moment ....but looking good for 400 next year when the new customer starts firing up
Insider knowledge or hope / speculation :) ?
I have heard through the grapevine there have been some solid appointments in Management in the mid/upper levels of late. Movers and shakers so to speak with experience. Might be worth watching for the "inflection point". (don't we love those!?)
SML topping the leader board today so Winner on form with his 'aberration' talk.
All is well.
Yikes- back in the 290s
Maybe not an aberration after all ---- just the start of a new norm of a share price hanging around 250-300
They better have a great story to tell at the ASM in a few weeks time or else this may just happen
Shame they got kicked out of that Index .... triggered the down turn
Pink ASM preso for ASM hard on the eyes to read but I think I saw ambition to have more than $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%)
So planning 9% pa revenue growth but big jump in profits ... maybe as high as 30% pa
Share price recovered from that recent dip and at $3.18 back in that 310/350 trading range
With Customer S about to start buying and with what the 'new' team intends to do I reckon share price could be lose to $5 by the time of next years ASM
Penno said at ASM that this new customer is a "truly world-class first-tier consumer company" says and in a few years time will be their biggest customer and Pokeno will be going flat out just producing for them.
Lot to like about Synlait
Bumped into a neighbour yesterday who works on the recruitment side of things at Synlait.
They now employ more people than before the recent round of layoffs he said...
https://www.marketscreener.com/quote/stock/SYNLAIT-MILK-LIMITED-14391761/financials/
Analysts are neutral on it. Currency seems headed upwards.
Its hard to forget the truly shocking lack of disclosure around Pokeno in the past.
Its also notable that Synlait has never paid a dividend.
Their absolute obsession with all things ESG is tiresome to say the least.
Their balance sheet is not in the best shape.
Good the new CEO has some aspirational goals and is bringing a fresh approach.
Good luck with it.
Golly gosh ....share price up 7% today to 340
Break through 350 and it will be on way to 5 bucks
Lots to like about Synlait's future
Quote from: winner (n) on Dec 05, 2022, 06:43 PMGolly gosh ....share price up 7% today to 340
Break through 350 and it will be on way to 5 bucks
Lots to like about Synlait's future
Are you just commenting on the daily share price ripple - or are you aware of any fundamental changes?
Just asking to understand whether you talk about the short term (hype-driven) future or the long term (value-driven) future of the company.
Quote from: BlackPeter on Dec 06, 2022, 10:37 AMAre you just commenting on the daily share price ripple - or are you aware of any fundamental changes?
Just asking to understand whether you talk about the short term (hype-driven) future or the long term (value-driven) future of the company.
As I posted the other day its good they have stated what their 'ambition' is - like $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%).
Implies profits could grow at 25%/30% pa over the next few years
This Customer S must be about to start buying ... possibly hear who after Christmas (speculation)
So now I reckon about $4 is a fair short term fundamental value but as financials improve rerate likely.
So not much hype in talking about a $5 share price in a years time
Just have to get in early to make the most of what's to come
BP - didn't you load up at about 200/210 '''good on you
Quote from: winner (n) on Dec 06, 2022, 11:45 AMAs I posted the other day its good they have stated what their 'ambition' is - like $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%).
Implies profits could grow at 25%/30% pa over the next few years
This Customer S must be about to start buying ... possibly hear who after Christmas (speculation)
So now I reckon about $4 is a fair short term fundamental value but as financials improve rerate likely.
So not much hype in talking about a $5 share price in a years time
Just have to get in early to make the most of what's to come
BP - didn't you load up at about 200/210 '''good on you
Interesting.
Agree - ambitious goals are good, however after the A2M disaster there are in my mind still some clouds around the next big customer who will save the company. I guess, it can go either way.
And no, I didn't load up about 200/210 - not quite sure, when they have been that cheap. Have they?
I used to buy in (a long time ago) when they hovered above $3 ... and was quite impressed by John
Penno (CEO at that stage) and Nigel Greenwood (yes, he used to be CFO for Synlait) and sold out around the time it all turned pink. Didn't touch them since - despite liking to support local companies.
I think I would like to see their plan for the future and the business case around this big mysterious client before I buy back in. Sure, this probably means I am losing out on lots of hype, but it might save me as well from another client S bubble.
Quote from: winner (n) on Dec 06, 2022, 11:45 AMAs I posted the other day its good they have stated what their 'ambition' is - like $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%).
Implies profits could grow at 25%/30% pa over the next few years.......
Will be interesting to see if what's good for SML will also be good for ATM (as 20% shareholder) etc etc??
Quote from: Left Field on Dec 06, 2022, 03:00 PMWill be interesting to see if what's good for SML will also be good for ATM (as 20% shareholder) etc etc??
What was ATM's average buy in price? Must have been around 10 dollars per share.
I recon lots of things must go right before ATM see at least their capital back ...
Quote from: BlackPeter on Dec 06, 2022, 04:24 PMWhat was ATM's average buy in price? Must have been around 10 dollars per share.
I recon lots of things must go right before ATM see at least their capital back ...
Was $6.63 Peter
Only $140 under water but strategic investment ..... cheap as to 'secure supply'
Quote from: winner (n) on Dec 06, 2022, 04:49 PMWas $6.63 Peter
Only $140 under water but strategic investment ..... cheap as to 'secure supply'
Are you sure? Their last (and quite big) buy in was at $10.90, which means that their first buy in must have been really cheap to get that average.
Quote from: BlackPeter on Dec 06, 2022, 05:08 PMAre you sure? Their last (and quite big) buy in was at $10.90, which means that their first buy in must have been really cheap to get that average.
Here's what they've bought over the years
09/03/2017 14,634,119 at $3.27
13/08/2018 1,700,000 at $9.01
01/08/2018 14,840,527 at $10.94
23/03/2020 4,400,000 at $4.97
Nov 2020 7,777,863 at $5.12
TOTAL 43,352,509 at $6.63
What's $140 million between friends or associated companies, just a mere pittance lol
Then they go off and invest hundreds of millions more in their own stainless steel that's going to lose millions more every year until the late 2020's...heck you'd struggle to make this stuff up and write a more complete corporate fiasco short story if you tried....its more entertaining than watching the complete box set series of Faulty Towers lol.
Quote from: winner (n) on Dec 06, 2022, 06:11 PMHere's what they've bought over the years
09/03/2017 14,634,119 at $3.27
13/08/2018 1,700,000 at $9.01
01/08/2018 14,840,527 at $10.94
23/03/2020 4,400,000 at $4.97
Nov 2020 7,777,863 at $5.12
TOTAL 43,352,509 at $6.63
Interesting - cheers. I didn't realize that they kept accumulating after filling their truck in August 2018. Who knows, maybe SML slipped too low on my current watchlist :) - or alternatively it is too high on theirs.
Time will tell :) ;
Announcement of new international customer way, way over due.
SAP implementation costing a fortune.
Still not much happening for me to want to delve any deeper into them
A price sensitive announcement that there won't be much change in FY23 (revenue same as probably, but NPAT possibly down a smidgen.)
https://www.nzx.com/announcements/404539
Still no details relating to the much mentioned new BIG international customer.
Quote from: Left Field on Dec 22, 2022, 08:40 AMA price sensitive announcement that there won't be much change in FY23 (revenue same as probably, but NPAT possibly down a smidgen.)
https://www.nzx.com/announcements/404539
Still no details relating to the much mentioned new BIG international customer.
So not a DOWNGRADE .....that's good
They say "Synlait intends to exit FY23 and enter FY24 with a similar level of profitability experienced before FY21."
Suppose that means FY23 profit will be around $75m/$80m .......and they making less than $28m this H123
No worries all bright and rosy for F24 and beyond and on track for that $5 share price
Quote from: winner (n) on Dec 22, 2022, 08:51 AMSo not a DOWNGRADE .....that's good
how does the saying go....if it walks like a duck, looks like a duck, sounds like a duck' that's a shocka of an announcement with lots of warning caveats why guidance may not be meet
Quote from: Minimoke on Dec 07, 2022, 08:56 PMAnnouncement of new international customer way, way over due.
SAP implementation costing a fortune.
Still not much happening for me to want to delve any deeper into them
I got something right this year.
In today's announcment
"Delayed shipments of Ingredient products, resulting in lower sales volumes (down approximately 45%) due to Synlait's SAP implementation"......
" Increased costs due to SAP stabilisation activities"
Just been to my back shed and pulled out my bargepole.
Quote from: Minimoke on Dec 22, 2022, 09:08 AMI got something right this year.
In today's announcment
"Delayed shipments of Ingredient products, resulting in lower sales volumes (down approximately 45%) due to Synlait's SAP implementation"......
" Increased costs due to SAP stabilisation activities"
Just been to my back shed and pulled out my bargepole.
You sure your bargepole is long enough for this stock ;) ?
Quote from: BlackPeter on Dec 22, 2022, 10:49 AMYou sure your bargepole is long enough for this stock ;) ?
I copped a lot of flack on that Australian forum for my views on Synlait. So I just put the barge pole away and just stayed clear of this dog. Havent looked at it in an detail since that abject failure Clements left. Since its local I keep thinking I should come back and have a look again. But after today's announcement will have me with my pole at full stretch.
Initial market reaction down 4.5% to $3.41
I posted this elsewhere in April 2021. Essentially the new CEO has achieved zip for shareholders.
Yeah, that's not a great announcement. A bit of a bugger really, I'd hoped they might've pushed forward from the mess of the last 2 years. Instead they have uncovered new issues...hmmm. If 2024 is now to be their year, then there's little point getting on board until much closer to then and only with the confirmation of much more positive guidance. Disappointing with a big D.
Messaged someone who works in Synlait IT Dept about this, They replied.
Haha $50M system and they can't ship product overseas 🤣 😂
Quote from: mcdongle on Dec 22, 2022, 01:25 PMMessaged someone who works in Synlait IT Dept about this, They replied.
Haha $50M system and they can't ship product overseas 🤣 😂
Just a thought.
Couldn't they run the two systems in parallel until they were confident SAP worked (who in their right mind would turn off one IT system while another is being developed)
Could use pen and paper.
At some point you have to turn one system off and another on. Thats when the fun started so i am told
WOW - Synlait one of Bell Potters picks for 2023
Synlait Milk (SM1)
SM1 is NZ's fourth largest milk processor and a B2B supplier of dairy ingredients (SMP, WMP & AMF), infant
formula (IMF) products and Lactoferrin. SM1 counts global FMCG companies among its client base, including the
a2Milk Co (A2M) for which SM1 is the exclusive supplier of infant formula in China, Australia and NZ.
FY22 was a year of transition for SM1, with FY23e set to benefit from new customers in nutritionals
and stabilising demand from A2M. The optimisation of capacity from ingredients towards nutritionals and
valued added products results in a favourable margin gain for SM1, while also accelerating deleveraging (pre-
payments and utilisation of assigned receivable facilities for IMF).
This combination of operating leverage and balance sheet deleverage is likely to emerge as a key driver of future share price direction. We view the positive outcome on the USFDA process for A2M as an incremental positive for SM1.
Buy, Price Target $3.60
Quote from: winner (n) on Dec 23, 2022, 10:49 AMWOW - Synlait one of Bell Potters picks for 2023
Synlait Milk (SM1)
SM1 is NZ's fourth largest milk processor and a B2B supplier of dairy ingredients (SMP, WMP & AMF), infant
formula (IMF) products and Lactoferrin. SM1 counts global FMCG companies among its client base, including the
a2Milk Co (A2M) for which SM1 is the exclusive supplier of infant formula in China, Australia and NZ.
FY22 was a year of transition for SM1, with FY23e set to benefit from new customers in nutritionals
and stabilising demand from A2M. The optimisation of capacity from ingredients towards nutritionals and
valued added products results in a favourable margin gain for SM1, while also accelerating deleveraging (pre-
payments and utilisation of assigned receivable facilities for IMF).
This combination of operating leverage and balance sheet deleverage is likely to emerge as a key driver of future share price direction. We view the positive outcome on the USFDA process for A2M as an incremental positive for SM1.
Buy, Price Target $3.60
I presume the target price is ASX? They're currently around $3.25 - that's not a great deal of upside they're picking, less than 10 percent.
Quote from: Minimoke on Dec 22, 2022, 01:27 PMJust a thought.
Couldn't they run the two systems in parallel until they were confident SAP worked (who in their right mind would turn off one IT system while another is being developed)
Could use pen and paper.
Another large exporter recently rolled out a SAP system - well about August 2021 and still employing heaps of people to get it right. Been a disaster.....
Quote from: Sideshow Bob on Dec 23, 2022, 10:43 PMAnother large exporter recently rolled out a SAP system - well about August 2021 and still employing heaps of people to get it right. Been a disaster.....
To be fair, its not likely to be SAP's fault. Any ERP system is just automating the processes which the company used to run manually (or on a patchwork of manual and software). If the previous process was a mess, you get with an ERP system just an automated mess.
However - ERP systems force companies to think about standardisation of process components they did run so far ad hoc (you can't automate ad hoc) ... and unless this is properly resourced and planned and done by people who know the ERP system in consultation with the people who run the processes you just make everything worse, no matter whether the system is supplied by SAP, Oracle, BAAN or whoever.
Discl: know a bit about ERP systems and hold SAP shares :) ;
I'm not even sure why SML would go with SAP. Its a massively complex product for what is pretty much a simple milk processor.
Quote from: Minimoke on Dec 24, 2022, 10:55 AMI'm not even sure why SML would go with SAP. Its a massively complex product for what is pretty much a simple milk processor.
Agreed. There are very good alternative systems nowadays like NetSuite from Oracle. It is an online simplified ERP system that seems to have all the necessary bells and whistles for (not just) manufacturers, at a fraction of the cost of SAP. There are numerous options for add-ins and support. When comparing to SAP it doesn't feel like you are wading through chest high treacle.
All hunky dory with SAP
https://www.reseller.co.nz/article/703487/synlait-beds-down-57-5m-on-premise-sap-rollout-dodging-accounting-rule-change/
Quote from: Minimoke on Dec 24, 2022, 10:55 AMI'm not even sure why SML would go with SAP. Its a massively complex product for what is pretty much a simple milk processor.
SAP is the name of the company, not of the product.
The ERP system they are offering can be configured as simple or as complex as your (or whoever is doing and / or paying for the job) heart desires. Same is however true for the offerings of the other companies you mention, though not all of them are as scalable as the SAP suite.
Shame that just over a year ago Synlait appointed another Fonterra has been as CEO
Doesn't seem to be working out
Fonterra has beens been any good anywhere else?
Doesn't seem to be anybody on the Synlait Exec team in charge of IT
Suppose it's left to the CFO (jeez an accountant in charge of IT) or the Director ofOperations to drive this SAP thing.
The Board seems a bit light on IT knowledge as well though the new appointment Paul has ' extensive experience in planning and operations, finance, and information technology.' ...but then again he's a Fonterra has been as well.
So probably it's all down to the Hon. Ruth Richardson to sort the mess out ...go Ruth baby you can do it
Quote from: winner (n) on Dec 26, 2022, 11:26 AMShame that just over a year ago Synlait appointed another Fonterra has been as CEO
Doesn't seem to be working out
Fonterra has beens been any good anywhere else?
I don't know if you could rightly call him a 'has-been' - did he even set the world on fire at Fonterra?
Synlait's board is so uninspiring. Three placeholders from Bright Dairy but they felt the need to bring in Paul Washer , this month, because of his Chinese experience and connections? Then there's Ruth Richardson - who is now 72 years old and claims the disastrous Dairy Brands amongst her previous governance roles.
Quote from: Hectorplains on Dec 26, 2022, 11:42 AMI don't know if you could rightly call him a 'has-been' - did he even set the world on fire at Fonterra?
Synlait's board is so uninspiring. Three placeholders from Bright Dairy but they felt the need to bring in Paul Washer , this month, because of his Chinese experience and connections? Then there's Ruth Richardson - who is now 72 years old and claims the disastrous Dairy Brands amongst her previous governance roles.
You're right Hec ......'has been' probably wrong description ..my bad as a 'has been' generally does refer to somebody who was once great / good.
A bit of worry that Synlait thinks anybody who spent time at Fonterra must be bloody good and worth hiring.
Quote from: Hectorplains on Dec 26, 2022, 11:42 AMI don't know if you could rightly call him a 'has-been' - did he even set the world on fire at Fonterra?
Synlait's board is so uninspiring. Three placeholders from Bright Dairy but they felt the need to bring in Paul Washer , this month, because of his Chinese experience and connections? Then there's Ruth Richardson - who is now 72 years old and claims the disastrous Dairy Brands amongst her previous governance roles.
Agree 100% that the rot with this company starts at the board level and permeates downward from there.
This company fails my investment selection criteria on so many different level's including woeful governance, egregious risk taking (Pokeno), poor management with no track record of growth, highly risky commodity processing company trading at grossly excessive multiples for the agri sector and last but certainly not least, amongst the most excessive level's of ESG extremism on the NZX. It also has excessive debt and too much reliance on a few key customers. In terms of not seeing anything I like this runs a very close race with OCA lol
OCA still has its share of devotees (over at the other site) who are happy to continue to drink the OCA-aid. It's hard to find a fan for SML anywhere. I thought they might've turned the corner with the full year announcement but the latest update suggests it's more a case of driving in circles. Despite Bell Potter's pick, I can't see any reason to jump in.
Was $7 five years ago so it's halved since then and never paid a dividend. That's an 'interesting" track record.
Jeez Basil .....fancy saying SML has no track record of growth
Last 7 years sale growth has been at 20% pa ...yep CAGR 20%
And forecast about 10% pa over next 5 years
That's pretty good
Sales growth is meaningless without earnings growth. You know me mate, I am a numbers man. I let the numbers do the talking and all their endless ESG greenwashing propaganda is just B.S. as far as I am concerned.
Growth company or no growth cyclical commodity processing company?
From 2022 annual report earnings per share
2018 41.55 cps
2019 45.33 cps
2020 41.45 cps
2021 (13.77 cps)
2022 17.62 cps
2023F 25 cps
2024F 35 cps
2025F 39 cps
Forecasted eps is average of analysts' from Market screener
https://www.marketscreener.com/quote/stock/SYNLAIT-MILK-LIMITED-14391761/financials/
No growth agri stocks are worth about 7 times, (account for agri risk) forecasted earnings in my books.
7 times 25 cents is $1.75, half where it sits now.
Academic interest of mine...fascination with corporate train wrecks.
Don't worry about my opinion though mate, no dividends = no interest from me. Going forward from here I won't own no dividend stocks at any price. As a matter of principle any company that thinks they are entitled to retain 100% of earnings is a culture of corporate self-centeredness I'm simply not willing to support. Happy to leave start-up companies and any other non-dividend paying companies to others.
Quote from: Basil on Dec 28, 2022, 12:42 PMWas $7 five years ago so it's halved since then and never paid a dividend. That's an 'interesting" track record.
Was $13 a few years ago
Really cheap now
Bell Potter like them.
Synlait Milk (SM1)
SM1 is NZ's fourth largest milk
processor and a B2B supplier of dairy
ingredients (SMP, WMP & AMF), infant
formula (IMF) products and Lactoferrin.
SM1 counts global FMCG companies
among its client base, including the
a2Milk Co (A2M) for which SM1 is the
exclusive supplier of infant formula in
China, Australia and NZ.
FY22 was a year of transition for
SM1, with FY23e set to benefit
from new customers in nutritionals
and stabilising demand from A2M.
The optimisation of capacity from
ingredients towards nutritionals and
valued added products results in a
favourable margin gain for SM1, while
also accelerating deleveraging (prepayments and utilisation of assigned
receivable facilities for IMF). This
combination of operating leverage and
balance sheet deleverage is likely to
emerge as a key driver of future share
price direction. We view the positive
outcome on the USFDA process for
A2M as an incremental positive for
SM1.
Buy, Price Target $3.60
Quote from: winner (n) on Dec 28, 2022, 03:30 PMWas $13 a few years ago
Really cheap now
cheaper - yes, cheap? - Who knows?
Dividend yield: NIL; - cheap????
forward PE (if these optimistic analysts are right): 12.6 - not cheap for a agricultural stock
backward PE(10 years): 17.6: really not cheap for a quite boring agricultural stock;
SP is 137% of NTA, of which lots is stainless steal (hard to sell). Hmm - cheap?
Debts are lower than they used to be, but still aver 50% of assets. Cheap given the lousy earnings?
Are you sure?
Maybe the still unknown white knight is printing dollars in the cellar ... and plans to use SML as money washing machine. They might be suitable for that job.
I suppose moving to nutritional drinks is something like this?
https://www.netpharmacy.co.nz/products/ensure-nutrition-powder-vanilla-flavour
Quote from: mcdongle on Dec 29, 2022, 09:05 AMI suppose moving to nutritional drinks is something like this?
https://www.netpharmacy.co.nz/products/ensure-nutrition-powder-vanilla-flavour
They're looking more at what they call a "single serve, ready-to-drink, on-the-go product." What we in simpler, less verbose, times referred to as 'cans" or 'bottles.' There was mention of them making a UHT coffee drink for an existing big brand customer under a contract manufacturing arrangement in New Zealand and Australia. There was no mention of any sales projections.
It does sound more promising and vastly more scalable than their daft swappa bottle nonsense.
Ah Gotcha, Found this.
https://www.kiwichemist.co.nz/products/ensure-twocal-hn-200ml-vanilla
Quote from: Minimoke on Sep 07, 2022, 09:59 PMOdd observation> I was coming back from the coast the other day and two Synlait tankers heading up over Arthurs towards the coast. One was grinding up the hill really slow. As if it was chock full of milk. No idea what they were up to.
Just come back from another trip away. This time coming over the Lewis. And what do I spy near Hanmer - another Synlait truck. This is about 3 hours away from Dunsandel. So I'm wondering just how far afield do tankers go to get their milk?
Still no news about the big "new international customer" - an announcement way, way over due. SP yesterday $3.56
Quote from: Minimoke on Jan 05, 2023, 09:03 AMJust come back from another trip away. This time coming over the Lewis. And what do I spy near Hanmer - another Synlait truck. This is about 3 hours away from Dunsandel. So I'm wondering just how far afield do tankers go to get their milk?
Still no news about the big "new international customer" - an announcement way, way over due. SP yesterday $3.56
1. I'm not sure on the geographical distances but they have around 220 South Island farms supplying them.
2. In regards to the much touted "International Customer" the commercial production for them has been announced as starting in "early" 2023. 'Early' can be a bit like 'imminent,' it's meaning being fairly fluid. Certainly they still appear to be in no great hurry to break the news and name the company.
Their share price has edged up a tad - hovering in the mid 360's. An end to the 'pin the name on the donkey game' might provide some upward impetus - even if only briefly.
Synlait can only name the Company, When the Company says they can, That is part of the deal.
Quote from: mcdongle on Jan 10, 2023, 09:19 AMSynlait can only name the Company, When the Company says they can, That is part of the deal.
Synlait first announced the "established, global category leader" back in November 2020. They stated they would need a $70m investment in processing and packaging customisation. And that they expected production to start mid 2022.
5 days later they went to market seeking a $200m capital raise. In part to fund this new "established, global category leader"
And since then silence on where this money has gone and who it is being spent on.
That is simply not good enough.
(And if you now have just 2 big customers why would you need to spend all that money on SAP?)
Quote from: mcdongle on Jan 10, 2023, 09:19 AMSynlait can only name the Company, When the Company says they can, That is part of the deal.
Fair enough cannot blame synlait for keeping to the agreement ,certainly has dragged on a bit !!!
Quote from: mcdongle on Dec 29, 2022, 11:43 AMAh Gotcha, Found this.
https://www.kiwichemist.co.nz/products/ensure-twocal-hn-200ml-vanilla
Thats an Abbott product
Yawn - they have published another "sustainability Report" today.
Dont be fooled that it addresses the sustainability of their share price.
No word on how energy and related costs have gone up.
And still no word on their new international customer.
SP opens today at $3.53
And sorry Synlait - you are making zero impact on global carbon emissions - they are still going up. And we arent going to hell in a hand basket
No doubt Synlait's customer would have expectations or requirements that Synlait measure, reduce, eliminate, mitigate their environmental emissions and footprint. Just as Synlait's customer customer would have expectations.
All dairy companies will be doing this to a greater or lesser degree. Does it mean they get more money for their products? Probably not. But just a cost of doing business.
Quote from: Sideshow Bob on Jan 23, 2023, 11:53 AMNo doubt Synlait's customer would have expectations or requirements that Synlait measure, reduce, eliminate, mitigate their environmental emissions and footprint. Just as Synlait's customer customer would have expectations.
All dairy companies will be doing this to a greater or lesser degree. Does it mean they get more money for their products? Probably not. But just a cost of doing business.
I've just looked at FCG Fonterror Co-Op shares and no such reports from them in the past few years.
Quote from: Minimoke on Jan 23, 2023, 12:36 PMI've just looked at FCG Fonterror Co-Op shares and no such reports from them in the past few years.
https://www.fonterra.com/content/dam/fonterra-public-website/fonterra-new-zealand/documents/pdf/sustainability/2022/fonterra-sustainability-report-2022.pdf
Quote from: Minimoke on Jan 23, 2023, 09:28 AMYawn - they have published another "sustainability Report" today.
Dont be fooled that it addresses the sustainability of their share price.
No word on how energy and related costs have gone up.
And still no word on their new international customer.
SP opens today at $3.53
And sorry Synlait - you are making zero impact on global carbon emissions - they are still going up. And we arent going to hell in a hand basket
Actually - the last market update was only one month back .... I guess you can't really complain that they don't keep their shareholders up to date, can you?
Here it is if you missed it:
https://announcements.nzx.com/detail/404539
Admittedly - it all sounds a bit soft ... but maybe soft is good (as in "fluffy"?) ... and they are clearly softening up their share holders. Pink - soft - fluffy - Synlait. All good.
Quote from: BlackPeter on Jan 24, 2023, 10:22 AMActually - the last market update was only one month back .... I guess you can't really complain that they don't keep their shareholders up to date, can you?
Here it is if you missed it:
https://announcements.nzx.com/detail/404539
Admittedly - it all sounds a bit soft ... but maybe soft is good (as in "fluffy"?) ... and they are clearly softening up their share holders. Pink - soft - fluffy - Synlait. All good.
I'm not complaining about them keeping shareholders up to date. The point I was making was the irrelevant window dressing they do like to keep the market informed about. All this ESG stuff is nice window dressing but so often doesnt address the issue of returning value to shareholders.
Fonterra doesn't do it - while they might create reports that look good on their website they don't report them to the Market.
I'd be really interested in an update from SML: on what they are going to achieve an actual return to shareholders - be it a substantial improvement in their share price or an actual dividend.
And in the meantime they arent telling the market about what is happening at Pokeno or with this new International Customer/s other than
"Synlait's new multinational customers will start to lift margins and improve asset utilisation at Pokeno and Dunsandel (Liquids facility)."Instead they seem to be pouring endless money into their SAP implementation.
Quote from: Minimoke on Jan 24, 2023, 10:41 AMI'm not complaining about them keeping shareholders up to date. The point I was making was the irrelevant window dressing they do like to keep the market informed about. All this ESG stuff is nice window dressing but so often doesnt address the issue of returning value to shareholders.
Fonterra doesn't do it - while they might create reports that look good on their website they don't report them to the Market.
I'd be really interested in an update from SML: on what they are going to achieve an actual return to shareholders - be it a substantial improvement in their share price or an actual dividend.
And in the meantime they arent telling the market about what is happening at Pokeno or with this new International Customer/s other than "Synlait's new multinational customers will start to lift margins and improve asset utilisation at Pokeno and Dunsandel (Liquids facility)."
Instead they seem to be pouring endless money into their SAP implementation.
Lets face it - many companies are attracting investor money for various investments, and sometimes they are successful and sometimes not. Investors have full control over whether they want to give the respective companies their money or not, i.e. given that they did get money from their investors and the share price is essentially unchanged over the last 10 years or so (with the exception of the A2 hype mountain on the way they consistently hovered between something like $3 and $3.50).
Based on that do I assume a certain number of share holders just love the consistency of this company, otherwise they would give their money somebody else. Your dollar stays exactly that and on top of that one gets from time to time a nice story, a healthy snack at the AGM and a new soft colour to enjoy. One could say investing into Synlait is as good (or even better) as having money under the mattress! No need to complain. Anybody who does not like it can give their money to somebody else ...
Quote from: BlackPeter on Jan 24, 2023, 11:12 AMLets face it - many companies are attracting investor money for various investments, and sometimes they are successful and sometimes not. Investors have full control over whether they want to give the respective companies their money or not, i.e. given that they did get money from their investors and the share price is essentially unchanged over the last 10 years or so (with the exception of the A2 hype mountain on the way they consistently hovered between something like $3 and $3.50).
Based on that do I assume a certain number of share holders just love the consistency of this company, otherwise they would give their money somebody else. Your dollar stays exactly that and on top of that one gets from time to time a nice story, a healthy snack at the AGM and a new soft colour to enjoy. One could say investing into Synlait is as good (or even better) as having money under the mattress! No need to complain. Anybody who does not like it can give their money to somebody else ...
I agree. For "investors" who are torn between putting their money under the mattress and wanting to enter the sharemarket then Synlait has been as good a choice as any over the past couple of years. Though I would have recommended a bank account because at least you would have got a return from an increasing interest rate.
Though I am not sure those that subscribed to the $200m capital raise back in 2020 at $5.10 feel so good. Remember that - it was to "Complete the investment phase of its strategy including the customisation of Synlait Pokeno and Auckland for processing and packaging equipment to service its new multinational customer". Though they probably feel not as bad as those that bought at peak in 2018 at $13.50.
If I was looking for a company with a consistent SP I'd be wanting a consistent dividend to go with it. And preferably one that didn't keep green and rainbow washing the business
Probably would have done just as well under the mattress....
Although life is alot about timing!!
Great everyone else is laying off staff while SML fearlessly forges ahead with yet more recruitment. Here's another hungry mouth sucking on the SML udder. (https://www.nzx.com/announcements/405816) That has to be their stupidest job title yet - does someone else have an executive role as President Newspeak and Director of Meaningless Monikers?
OMG what a disaster
The 2 year recovery now a 3 year recovery
Might make $15m this year ...jeez last year they made $38m ....big big drop
Never mind, the new customer will save them
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408512/390881.pdf
Quote from: winner (n) on Mar 17, 2023, 09:56 AMOMG what a disaster
The 2 year recovery now a 3 year recovery
Might make $15m this year ...jeez last year they made $38m ....big big drop
Never mind, the new customer will save them
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408512/390881.pdf
Look at it from the bright side - they still make some money (i.e. there is potential to deteriorate) ... and shareholders clearly must love the colour. Which other holding could provide that much pink?
Still trying to recover from Leons mismanagement. He left quite the legacy!
Hows that BCorp status working out for profitability Leon?
Quote from: winner (n) on Mar 17, 2023, 09:56 AMOMG what a disaster
The 2 year recovery now a 3 year recovery
Might make $15m this year ...jeez last year they made $38m ....big big drop
Never mind, the new customer will save them
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408512/390881.pdf
Guidance range of $15m to $25 M. That's quite the range...more fully called a Clayton's guidance.
Currently trading at NZ $2.83. Back to its historical lows. With more room to go.
So its time for a chart.
sm1.png
Back in the good days ......2018 ASM
IMPRESSIVE RESULT APPLAUDED BY SHAREHOLDERS
Quote from: winner (n) on Mar 17, 2023, 01:21 PMBack in the good days ......2018 ASM
IMPRESSIVE RESULT APPLAUDED BY SHAREHOLDERS
Yes, I do remember this AGM. Amazing vibes ...
Coincidentally - this would have been the ideal time to sell out (talking about exuberance and all these things :) ;.
Quote from: BlackPeter on Mar 17, 2023, 10:08 AMLook at it from the bright side - they still make some money (i.e. there is potential to deteriorate) ... and shareholders clearly must love the colour. Which other holding could provide that much pink?
https://www.afr.com/life-and-luxury/fashion-and-style/the-designer-who-pioneered-millennial-pink-is-headed-for-australia-20220729-p5b5re
"Years later the term "Millennial pink (https://www.afr.com/life-and-luxury/food-and-wine/vegan-restaurants-steal-the-show-in-new-york-20221014-p5bpxo)" would be coined to describe what became the tone of the second half of the previous decade."
They need to rebrand again, like Afterpay did. Its all about Millenial Mint now
https://www.image.ie/editorial/move-over-millennial-pink-its-all-about-millennial-mint-146943
In BusinessDesk -
Octagon's chief investment officer, Paul Robertshawe, said the market had been anticipating that Synlait would take longer to complete its financial recovery, especially as China had been closed.
"But this is a material miss to even those expectations," he told BusinessDesk.
Robertshawe added that the number of causes for the company's recovery deferral had also been broader than the market was anticipating. "The number of causes is a bit surprising. Some of those things you might have anticipated."
The highlighted comment a bit telling
Quote from: Minimoke on Mar 17, 2023, 12:44 PMCurrently trading at NZ $2.83. Back to its historical lows. With more room to go.
So its time for a chart.
sm1.png
Now in unchartered territory. Trading has hit $2.73. I don't think it has ever been this low before.
Lowest since it hit $2.60 sometime in March 2016 (even though it closed at $3.05 in March 2016)
Lowest ever $1.98 in August 2015
Think it floated at about $2.20 but was quickly traded up to over $2.50
Disaster at the moment though isn't it
Yahoo data
Share price still sinking ...maybe will reach 2 bucks after all.
Half year result next Monday
They didn't give guidance for half year but seeing full year could be $20m profit I wouldn't be surprised that half year was break even or maybe a loss.
Be hard to put a pretty story around that in the presos
Owe you a beer or two with this one mate after you talked some realism into me several years back and I got out at an average price of ~ $11. Been looking for a reentry point ever since but none have presented as compelling although I did get very close to pulling the trigger a while back when they were talking about getting back to $75m profit and the share price was ~ $3.50. I remember at the last minute pulling back and thinking "we'll see" because their track record is so chequered now. Very pleased I did.
Must admit I'm totally lost as to what it might be worth now?
Profit was going to be $75m, then a lot less, now $15-25m, all within the space of 6 months or so.
Have management got any forward visibility at all ?
Can you trust any forward guidance they say anymore ?
Suppose they do make $20m, (although I'd be more inclined towards the bottom of the range) that's only 9 cents per share.
Just as well its all going to come right in the future, or is it ?
What about the significant remaining debt and servicing that, debt servicing covenants possible breech? $342m in debt at last balance date and market cap now only $542m, hmmm. I guess if it gets to around half NTA (showing as $2.69 on direct broking website) so about $1.30 it could be a takeover target?
The other thing is IF it goes under $2 and stays there for a while, (not saying it will because we have to be a bit precious with price targets now, or so I am told), my calculations suggest that it will probably exit the NZX50. Got a good boost of nearly 20% when it entered the index, remember that fondly, so another significant leg down upon potential exit of same seems quite plausible.
It seems to be there's an awful lot of execution risk around their rebuilding plans.
Gosh you'd have to be very "brave" to take a punt of this at the current price at about 28 times FY23 earnings.
Just as well this is the bottom or the earnings cycle, or can we be sure of that any more?
Quote from: winner (n) on Mar 20, 2023, 04:24 PMLowest since it hit $2.60 sometime in March 2016 (even though it closed at $3.05 in March 2016)
Lowest ever $1.98 in August 2015
Think it floated at about $2.20 but was quickly traded up to over $2.50
Disaster at the moment though isn't it
Yahoo data
Yes, floated at $2.20 in July 2013 and never paid a dividend since.
Another stock headed back under the float price ?
Director of Operations Resigns. Rats deserting sinking ship?
Quote from: Minimoke on Mar 23, 2023, 09:10 AMDirector of Operations Resigns. Rats deserting sinking ship?
There's been a fair bit of exec staff churn in the last couple of years. That said some of those roles show SML as world class in inflated job titles (https://www.fastcompany.com/90857184/managers-beware-of-inflating-job-titles#:~:text=Demonstrating%20the%20rise%20in%20job,containing%20the%20word%20%E2%80%9Csenior.%E2%80%9D)
Quote from: Hectorplains on Mar 23, 2023, 06:19 PMThere's been a fair bit of exec staff churn in the last couple of years. That said some of those roles show SML as world class in inflated job titles (https://www.fastcompany.com/90857184/managers-beware-of-inflating-job-titles#:~:text=Demonstrating%20the%20rise%20in%20job,containing%20the%20word%20%E2%80%9Csenior.%E2%80%9D)
Being Bcorp certified probably means you have to have lots of fancy ESG sounding titles.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391412.pdf
Very UGLY numbers.
Huge increase in debt to $518.6 million. Market cap now down to $520m Hmmm
Red is the new pink, right ?
Not impressed....... management and board asleep at the wheel??
https://www.nzx.com/announcements/408954
Revenue down 3% to $769.8 million.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) down 25% to $51.5 million.
• Adjusted EBITDA down 5% to $55.0 million.
• Net profit after tax (NPAT) down 83% to $4.8 million.
• Adjusted NPAT down 43% to $8.9 million.
• Net debt up 32% to $518.6 million.
• Gross profit up 18% to $81.7 million.
• Forecast base milk price for 2022 / 2023 season remains at $8.50/kgMS.
Quote from: Left Field on Mar 27, 2023, 10:42 AMNot impressed....... management and board asleep at the wheel??
https://www.nzx.com/announcements/408954
Revenue down 3% to $769.8 million.
• Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) down 25% to $51.5 million.
• Adjusted EBITDA down 5% to $55.0 million.
• Net profit after tax (NPAT) down 83% to $4.8 million.
• Adjusted NPAT down 43% to $8.9 million.
• Net debt up 32% to $518.6 million.
• Gross profit up 18% to $81.7 million.
• Forecast base milk price for 2022 / 2023 season remains at $8.50/kgMS.
All as expected /forecasted, poor show the last two years resting on their Pink Laurels procrastinating about the pink Idealistic politically correct gravy train .
Will they ever get back to making moolah is there any Incentive for management to Improve & enter the real world.
Reminds me of Ozz but change the glasses from green to pink
They desperately need to spend another $50 million making sure they recertify themselves to the very latest and best "B Corp" certification standards...that'll fix everything ;D
Another theory is that the SP is being driven down to allow ATM to do a full take over.
Interesting times.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391414.pdf
People might like to focus on the debt situation which looks very serious.
See note 11.
Firstly in terms of cash flow from operations this was negative $124.6m.
There's a lot of bank debt facilities maturing in October 2023.
Key Covenants include:-
Interest cover ratio of no less than 3.0 times at all times.
I note finance costs for the half year were $14.47m and net profit was only $4.8m Hmmm
It's clear to me they are in breach of their banking covenants.
In addition, they have $180m of corporate bonds maturing in late 2024.
Sometimes old sayings like "I wouldn't touch this with a 40ft barge pole" don't quite cut the mustard...
Quote from: Basil on Mar 27, 2023, 10:03 AMhttp://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/408954/391412.pdf
Very UGLY numbers.
Huge increase in debt to $518.6 million. Market cap now down to $520m Hmmm
Red is the new pink, right ?
Obviously having trouble driving their new ERP system
As such you'd have to have doubts over the 'robustness' of the numbers ...bound to be some big 'adjustments' in the future to make things balance
I see there's another market update coming on 8 May with their investor day with insto's visiting the Pokeno site. Just as well downgrades never come in 3's or 4's eh ;) Break-even the next updated forecast down from $15-$25m ?
Looks like a really good horse race developing between this and WHS as to who gets to $1.50 first and who gets booted out of the NZX50 first.
A2 sp up on the SML result but only because China label reregistration is on track, i wouldn't like to see them take a bigger stake in this dog of a company, better to focus their efforts and resources on the MVM plant.
Silence on how that "new International Customer" is going. No mention of how their recyclable milk bottle supply is going. No mention on why their debt is up so much. Didn't they do a bond raise a few years back to stabilise debt issues. I'd be looking very, very closely a those covenants again.
Now trading at $2.25
I don't think I could be a SAP sales person. In good conscience i'd be going "mate, one customer - an excel spreadsheet should do it!"
Question for the accountants. At what point is a company insolvent?
Current debts trade and other payables $442,982,000
Current receivables $139,916.000 + cash on hand $12,424,000 = $152,340,000.
A $290m shortfall to pay current debts.
And then take net assets = $814,782,000. But this is only because they are valuing property/plant at $1,017,000,000
I'm reminded Bonds are unsecured!
I've now added up employee and contractor costs for the six months. And I get $75,000000. Lets call it $12,450m a month Which coincides nicely with the amount of cash in hand.
Seems to me they are on a knife edge of not being able to pay staff.
For minimoke
Synlait halts production of award winning reusable stainless steel milk bottle
https://www.stuff.co.nz/business/131468739/synlait-halts-production-of-award-winning-reusable-stainless-steel-milk-bottle
Also for minimoke
New capital - They raised $200m at $5.10 in November 2020 - just over 2 years ago .... discount to prevailing shareprice of $5.93
Another one on cards?
Quote from: Minimoke on Mar 27, 2023, 01:33 PMQuestion for the accountants. At what point is a company insolvent?
Current debts trade and other payables $442,982,000
Current receivables $139,916.000 + cash on hand $12,424,000 = $152,340,000.
A $290m shortfall to pay current debts.
And then take net assets = $814,782,000. But this is only because they are valuing property/plant at $1,017,000,000
I'm reminded Bonds are unsecured!
All their bank facilities mature in October 2023 so have to be classified as current liabilities, (within 12 months). The mind boggles as to "IF" or on what terms new bank facilities might be offered? I agree 100% mate, they are in a very serious financial situation.
It would seem to me someone is going to have to throw this company a lifeline in terms of new capital but who would do that after al, they recently raised $200m more as Winner has posted above. Surely nobody is game to stump up another $200m? Didn't they say at the last capital raise they were going to "refocus on making money and have much less focus on all the ESG stuff" or words to that effect? What are they going to say now, oh gosh, we really mean it this time?
Regarding their unsecured bonds SML010 $180m maturing 17/12/2024. Last traded at 8.75% = 92 cents on the dollar. Crickey!, I think the buyer is VERY BRAVE!
Quote from: winner (n) on Mar 27, 2023, 01:50 PMFor minimoke
Synlait halts production of award winning reusable stainless steel milk bottle
https://www.stuff.co.nz/business/131468739/synlait-halts-production-of-award-winning-reusable-stainless-steel-milk-bottle
That really says it all, Award winning green Initiative's that make no profit , no sane business would have a barr of it .
Especially if they where an owner of that company & not just a dreamer/ ticket clipper
Jeez, SML Bonds selling at 8.25% pa
Buy $91.60 for $100.00....get $6.70 in interest through to Dec 2024 and the $100 in December 2024
Thats $15.10 return in 21 months .....any takers
How sure are you that you're going to get your $100 back in December 2024?
Quote from: winner (n) on Mar 27, 2023, 03:43 PMJeez, SML Bonds selling at 8.25% pa
Buy $91.60 for $100.00....get $6.70 in interest through to Dec 2024 and the $100 in December 2024
Thats $15.10 return in 21 months .....any takers
let me just dig out my barge pole. At current spend with no new capital i dont see them lasting to december 2023
Expect SML to call on 20% shareholder ATM for a cash injection....in return for a controlling share.. that ATM may not necessarily want.
Quote from: Whome on Mar 27, 2023, 09:51 PMExpect SML to call on 20% shareholder ATM for a cash injection....in return for a controlling share.. that ATM may not necessarily want.
All shareholders will be called on. Current market cap now $500m. 20 = $100m for ATM. We can see why the bought Matuara.
ATM should have had a seat on the board since day one. Essentially their investment is a write off except for the value they get from a A2 formula maker.
ATM probably just waiting for when they can buy the whole plant at fire sale receivership prices.
ATM takeover of SML a distinct possibility IMO....
In their last Annual Report ATM alluded to the 'need for/investigating further acquisitions' (I suspect ATM need a lot more processing power if they want to enter the USA IF market)
As to the wisdom of such a takeover..... well that's another story.
Quote from: Minimoke on Mar 28, 2023, 06:53 AMAll shareholders will be called on. Current market cap now $500m. 20 = $100m for ATM. We can see why the bought Matuara.
ATM should have had a seat on the board since day one. Essentially their investment is a write off except for the value they get from a A2 formula maker.
ATM probably just waiting for when they can buy the whole plant at fire sale receivership prices.
Agreed. Why would anyone want the whole company inclusive of all the vast numbers of ESG "enthusiasts" and their hugely bloated management structure. Just buy the stainless steel at 10-15 cents on the dollar, if the opportunity presents.
According to the last annual report 363 people earning over $1ook and 42 driving this company into the ground earning over $200,000
sm2.png
"Impressive" payroll, no question but WHS payroll is FAR more bloated than that. Retailing goods must be far more complex than making them ;)
Quote from: Basil on Mar 22, 2023, 06:43 PMYes, floated at $2.20 in July 2013 and never paid a dividend since.
Another stock headed back under the float price ?
And today underwater at $2.17. 10 years and it has gone no where.
Quote from: Minimoke on Mar 28, 2023, 03:15 PMAnd today underwater at $2.17. 10 years and it has gone no where.
But what a ride ......all way to about 13 bucks and back again
Quote from: winner (n) on Mar 28, 2023, 03:27 PMBut what a ride ......all way to about 13 bucks and back again
Was a lot of fun when it entered the NZX50 index. Could be even a lot more pain coming for shareholders if it gets booted out.
In the NZ Herald today (paywalled, Rising Debt puts Synlait's balance sheet in the spotlight
https://www.nzherald.co.nz/business/synlaits-balance-sheet-in-the-spotlight-as-debt-rises/A6RGPXYQRVD7DKAT5JUYZ2J77Y/
Forbar's analyst clearly very unimpressed with the very surprising extent to which debt increased and also thinks costs will continue to rise and margins get even more pressured going forward. Hmmm
Quote from: Minimoke on Mar 28, 2023, 10:28 AMAccording to the last annual report 363 people earning over $1ook and 42 driving this company into the ground earning over $200,000
sm2.png
Almost 40% of staff on over 100k? That's pretty crazy.
Quote from: Gerald on Mar 28, 2023, 06:23 PMAlmost 40% of staff on over 100k? That's pretty crazy.
I wonder if they still get their paid day off to plant trees?
Quote from: Basil on Mar 27, 2023, 01:58 PMAll their bank facilities mature in October 2023 so have to be classified as current liabilities, (within 12 months). The mind boggles as to "IF" or on what terms new bank facilities might be offered? I agree 100% mate, they are in a very serious financial situation.
It would seem to me someone is going to have to throw this company a lifeline in terms of new capital but who would do that after al, they recently raised $200m more as Winner has posted above. Surely nobody is game to stump up another $200m? Didn't they say at the last capital raise they were going to "refocus on making money and have much less focus on all the ESG stuff" or words to that effect? What are they going to say now, oh gosh, we really mean it this time?
Regarding their unsecured bonds SML010 $180m maturing 17/12/2024. Last traded at 8.75% = 92 cents on the dollar. Crickey!, I think the buyer is VERY BRAVE!
The Chinese cornerstone shareholders (City of Shanghai) might be happy to put in some more money or even launch a take over. Dragons are always hungry and I am sure Kiwis will be happy to sell for a pittance. Don't we have a track record of first trashing companies and then selling them for a song ...?
This would allow them as well to make the company colours a bit more bearable. I think bright red trucks with a yellow dragon painted on it would be an improvement to the current pink ...
The part that looks off to me is that in a declining revenue environment (1H22, 2H22 and 1H23 are $791m, $870m and $770m respectively) SML increased stocks on hand from $233m as at July 2022 to $468m as at Jan 2023. Why would they do that? Haven't we seen this picture before? Sinking $235m cash into stock resulted in negative operating cashflows for 1H23 of -$125m...! Not only is there a cost of holding excess inventory but it also carries a risk of future write downs given the bulk of that increase was finished product which AFAIK has a shelf life. The stock turn ratio will be awful. "And the band played on" ... production boosts efficiency by pumping out ever more product irrespective of downstream sales.
Meanwhile accounts receivable increased while sales fall, and the days sales outstanding ratio will also have blown out. And under note 7 we see a comment about "receivables purchases agreements ... entered into with its bankers". It appears they have been factoring their debtors which I call the "dance of the desperate...". This cost them $2.4m in FY22 and $2m in 1H23 for an annualised cost of $4m?! That buys a lot of staff if they didn't factor such debts. Plus I believe there is an exposure to late payment penalties if clients pay the banks late assuming I am reading the FY22 notes correctly......oh dear.
Best not to look too closely under the hood.....
Quote from: Ferg on Mar 29, 2023, 03:02 PMThe part that looks off to me is that in a declining revenue environment (1H22, 2H22 and 1H23 are $791m, $870m and $770m respectively) SML increased stocks on hand from $233m as at July 2022 to $468m as at Jan 2023. Why would they do that? Haven't we seen this picture before? Sinking $235m cash into stock resulted in negative operating cashflows for 1H23 of -$125m...! Not only is there a cost of holding excess inventory but it also carries a risk of future write downs given the bulk of that increase was finished product which AFAIK has a shelf life. The stock turn ratio will be awful. "And the band played on" ... production boosts efficiency by pumping out ever more product irrespective of downstream sales.
Meanwhile accounts receivable increased while sales fall, and the days sales outstanding ratio will also have blown out. And under note 7 we see a comment about "receivables purchases agreements ... entered into with its bankers". It appears they have been factoring their debtors which I call the "dance of the desperate...". This cost them $2.4m in FY22 and $2m in 1H23 for an annualised cost of $4m?! That buys a lot of staff if they didn't factor such debts. Plus I believe there is an exposure to late payment penalties if clients pay the banks late assuming I am reading the FY22 notes correctly......oh dear.
Best not to look too closely under the hood.....
I had a macro look at current cash vs current liabilities and that to mee looks ugly enough. A thorough look through the accounts will only, as you have pointed out, bring to light the real horror of the situation.
Invetnory is an issues - wheres tehat big internaitnal customer. Are they even in play yet? Other than that I presume is must be A2 orders.
And whre is Talbot Cheese Factory at - not sure if this has re-opening or not.
And I should check to see how lactoferrin is going because apparently there was real good money to be made there.
Seems people are now taking the time to look under the hood with SP down again to day to $2.05
I reckon there has been an engineering / design problem with their new rail sidings. Instead of terminating next to Outwards goods, I reckon they have the freight train arriving smack bang on the middle of the plant at full speed.
Quote from: Minimoke on Mar 29, 2023, 03:31 PMI had a macro look at current cash vs current liabilities and that to mee looks ugly enough. A thorough look through the accounts will only, as you have pointed out, bring to light the real horror of the situation.
I agree. I saw that post and you raise a good question around solvency. Cash + debtors at $152m is way below trade and other payables of $423m. This obviously doesn't bring in inventory but if I were to run the numbers through my cash flow cycle calculator, I know it would not be pretty...maybe I should do that but other tasks have priority at the moment.
The question is how do you turn off production to stop tying up working capital into unsold stock without a) incurring losses on unproductive staff and b) losing the capacity to restart production at the required level of activity after a period of inactivity? In other words, if you lay off staff to lower production in the short term, can you get them back for the long term? Oh dear....as you say, where is this new customer? If they came online, would that alleviate the cash and inventory issues?
New customer held up because they have to learn how to load a new customer on to the computer system
From BusinessDesk all OK if you remain patient-
So, if the demand side of things picks up, the new SAP ERP system runs more smoothly, there are no obstacles with the China registration and the new customer is onboarded, some patience might in fact be warranted.
https://businessdesk.co.nz/article/primary-sector/if-things-pan-out-for-synlait-the-wait-will-be-worth-it
That a big IF
Frankly I am absolutely shocked by their debt situation and their balance sheet looks highly stressed.
Thanks to Ferg we now know that they have been factoring their debtors which is well known as "lending of last resort" and is known to be very expensive. No wonder there is a lot of talk in their presentation of "stabilizing" the business.
As for people paying 91.5 cents on the dollar for their unsecured December 2024 bonds. I not sure some investors have a proper handle on the risks of default here.
Quote from: Basil on Mar 30, 2023, 09:42 AMtheir balance sheet looks highly stressed.
[snip]
As for people paying 91.5 cents on the dollar for their unsecured December 2024 bonds. I not sure some investors have a proper handle on the risks of default here.
Agreed and agreed. I too am staggered at the stressed Balance Sheet.
I had half an eye on the bonds but thought I should at least look at the Balance Sheet first....*backs away slowly*....
Trading halt
Giving punters time to work out how much the NEW CUSTOMER is worth ......and share price rockets over 3 bucks
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410243/392965.pdf
Oh dear. What is this "New information" synlait has to digest while it has its shares placed in a trading halt. I don t think it can be positive. No announcement from A2M so can't involve then. Has the new international customer pulled the plug?
Quote from: winner (n) on Apr 21, 2023, 08:51 AMTrading halt
Giving punters time to work out how much the NEW CUSTOMER is worth ......and share price rockets over 3 bucks
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410243/392965.pdf
Or bank coventants have been breeched and they have had enough.
I see market cap is now down to $468m. A2M own approx 20% and they have enough cash on hand to buy out right at bargain basement prices.
Getting a new Director of People and Culture though
Something to do with those Chinese accreditations?
Quote from: winner (n) on Apr 21, 2023, 08:57 AMGetting a new Director of People and Culture though
Ex Fonterror. Hope she has done her due diligence.
Quote from: winner (n) on Apr 21, 2023, 09:00 AMSomething to do with those Chinese accreditations?
That would impact A2M and no announcement from them (yet)
Quote from: winner (n) on Apr 21, 2023, 08:57 AMGetting a new Director of People and Culture though
[/quoteQuote from: Minimoke on Apr 21, 2023, 08:54 AMOr bank coventants have been breeched and they have had enough.
I see market cap is now down to $468m. A2M own approx 20% and they have enough cash on hand to buy out right at bargain basement prices.
Quote from: winner (n) on Apr 21, 2023, 08:57 AMGetting a new Director of People and Culture though
Hmmm just in time to sort the redundancies...
Less than a month ago Synlait said "Synlait continues to manage several risks, including, but not limited to, the SAMR re-registration timeline and supporting activities, the onboarding timeline for Synlait Pokeno's new multinational, UHT volume ramp up, a tight labour market, and high inflationary cost pressures. These factors could impact Synlait's current guidance.
Synlait will look to provide a further update on its performance and outlook on 8 May 2023 at its Investor Day.
So seems to me one of these things has turned to custard.
I had hoped they had learnt from their disastrous Talbot Cheese purchase the importance of making sure factory productions standards were met. Maybe not. So perhaps its the SAMR process in trouble
Over the past few years they have been very quiet on the new "multinational". And "onboarding always seemed to be something in the future. That's they identified this as a risk a month ago was a surprise - their should have been no risk as thy have had years to get things set up.
UHT Volume ramp up. A bit of a slow down here wouldn't have had, I would think a material impact.
Tight labour market - my observation is it seems to be easing a bit.
High inflationary cost pressure - will inflation announced yesterday was much lower than expected.
So we are left with SAMR, Multinational or banks.
Quote from: Minimoke on Apr 21, 2023, 09:22 AMLess than a month ago Synlait said "Synlait continues to manage several risks, including, but not limited to, the
SAMR re-registration timeline and supporting activities, the onboarding
timeline for Synlait Pokeno's new multinational, UHT volume ramp up, a tight
labour market, and high inflationary cost pressures. These factors could
impact Synlait's current guidance.
Synlait will look to provide a further update on its performance and outlook on 8 May 2023 at its Investor Day.
So seems to me one of these things has turned to custard.
I had hoped they had learnt from their disastrous Talbot Cheese purchase the importance of making sure factory productions standards were met. Maybe not. So perhaps its the SAMR process in trouble
Over the past few years they have been very quiet on the new "multinational". And "onboarding always seemed to be something in the future. That's they identified this as a risk a month ago was a surprise - their should have been no risk as thy have had years to get things set up.
UHT Volume ramp up. A bit of a slow down here wouldn't have had, I would think a material impact.
Tight labour market - my observation is it seems to be easing a bit.
High inflationary cost pressure - will inflation announced yesterday was much lower than expected.
So we are left with SAMR, Multinational or banks.
You have negated the possibility that they have found a new and novel way to lose a lot of money.
Lets look at staff turnover in past year
- 13 June 2022 Director, Legal, Risk and Governance, Deborah Marris
- 12 December Director of People & Culture Boyd Williams resigns
- 23 March 2023 Director of Operations Nigel Macdonald resign
Quote from: Hectorplains on Apr 21, 2023, 09:27 AMYou have negated the possibility that they have found a new and novel way to lose a lot of money.
I give them credit for taking some time to decide how best to loose money - so I think this would have been flagged in the last guidance.
Quote from: Hectorplains on Apr 21, 2023, 09:27 AMYou have negated the possibility that they have found a new and novel way to lose a lot of money.
LOL Post of the day...change all the signage and paint all the stainless steel a deeper shade of pink, that'll fix everything ;D
While we await an update, lets remind ourselves of their debt situation
sm1.png
Covenants were
"The following summarises banking covenants effective for the year ending 31 July 2023:
1. Total shareholder funds of no less than NZD $600m at all times.
2. Working capital ratio of no less than 1.5x at all times.
3. Interest cover ratio of no less than 3.0x at all times.
4. Leverage ratio of no greater than 4.0x at 31 July 2023.
5. Senior leverage ratio of no greater than 3.0x at 31 July 2023.
Lot of debt eh mini
And last 12 months cash flow close to a $100m outflow
Quote from: winner (n) on Apr 21, 2023, 10:05 AMLot of debt eh mini
And last 12 months cash flow close to a $100m outflow
I'de be worried if I was an unsecured bond holder.
Quote from: Minimoke on Apr 21, 2023, 09:41 AMI give them credit for taking some time to decide how best to loose money - so I think this would have been flagged in the last guidance.
I think the only 'credit' will be drawn from shareholders' pockets. Another Cr seems inevitable.
Quote from: Minimoke on Apr 21, 2023, 10:07 AMI'de be worried if I was an unsecured bond holder.
Trading at 9.35%...
Quote from: Hectorplains on Apr 21, 2023, 10:37 AMTrading at 9.35%...
On trading halt so could see 10%+ after announcement.
Could be good buying as rights issue is almost inevitable.
Quote from: Teitei on Apr 21, 2023, 11:06 AMOn trading halt so could see 10%+ after announcement.
Could be good buying as rights issue is almost inevitable.
A lot of other risk remains. You have to make an assumption in tandem with a substantial rights issue that the banks will roll over a lot of their $350m debt that comes due in October 2023 and that they can turn this ship around in FY24 so there's decent scope for servicing all the remaining debt going forward.
Bonds mature in Dec 2024. I think it's the risks around the return of your money or not, not the return on your money in the meantime that should be front and central with investors considerations here.
I'd be more worried about the equity c. $450m instead of the bonds. Remember Sky TV did a rights issue at 12c so they could pay off their bonds that at one point yielded 40% with a year to maturity. Buyers of the bonds got their return...SML likely similar - could be a raise at c. $1 a share to shore them up...probably need $200m+ to take care of the bond and some cash comfort etc
Quote from: Arbroath on Apr 21, 2023, 11:56 AMI'd be more worried about the equity c. $450m instead of the bonds. Remember Sky TV did a rights issue at 12c so they could pay off their bonds that at one point yielded 40% with a year to maturity. Buyers of the bonds got their return...SML likely similar - could be a raise at c. $1 a share to shore them up...probably need $200m+ to take care of the bond and some cash comfort etc
Jeez it's just over 2 years ago since they raised $200m at $5.10
Was a bargain back then ..punters couldn't enough ....overvsubscribed
I wonder what the Auditors are thinking / doing?
Quote from: winner (n) on Apr 21, 2023, 12:09 PMJeez it's just over 2 years ago since they raised $200m at $5.10
Was a bargain back then ..punters couldn't enough ....overvsubscribed
Production for the new international customer was expected to commence mid 2022 and have a positive impact on earnings in FY23 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/362927/334702.pdf
They made a "whopping" $4.8m in the first half of FY23.
Apart from the $180m of bond debt lets look at their other debt facilities
• A secured revolving credit facility (Facility A) of NZD $66.7m maturing 1 October 2023, with NZD $33.3m amortising
31 July 2023 and the remainder maturing on 1 October 2023.
• A secured revolving credit facility (Facility B) of NZD $50m maturing 1 October 2023.
• A secured revolving credit facility (Facility C) of NZD $50m maturing 1 October 2023.
• A secured working capital facility of NZD $250m maturing 1 October 2023 which included temporary increases to
NZD $300m from 20 October 2022, to NZD $330m from 21 December 2022, and then decreasing over 6 months
to NZD $250m from 30 June 2023. Facility limits were updated on 21 December 2022 in an amended agreement.
So, revolving credit is maxed out at $166.7m and due 1 October 2023
And they have $184.3m in working capital taken up and maturing 1 October 2023. So essentially no head room there.
they have to get that working capital debt down to $250m by 30 June 2023. Then the next interesting date is all other debts sorted by 1 October 2023. None of those dates are far away.
Quote from: Basil on Apr 21, 2023, 12:27 PMProduction for the new international customer was expected to commence mid 2022 and have a positive impact on earnings in FY23 http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/362927/334702.pdf
They made a "whopping" $4.8m in the first half of FY23.
Which compared with $27.9m the prior year. This new international customer must be a taker, not a giver.
Don't forget folks if considering making a bid for the bonds in due course that they are subordinated and unsecured. i.e. rank behind all bank debt. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/345177/313032.pdf
Quote from: Basil on Apr 21, 2023, 12:41 PMDon't forget folks if considering making a bid for the bonds in due course that they are subordinated and unsecured. i.e. rank behind all bank debt. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/345177/313032.pdf
And then you have account payable sitting at $423m against receivables due of $140m and $12m cash on hand.
There will be a bit of a long line for any available cash if things turn pear shaped.
Oh my goodness !
Quote from: Minimoke on Apr 21, 2023, 12:58 PMAnd then you have account payable sitting at $423m against receivables due of $140m and $12m cash on hand.
There will be a bit of a long line for any available cash if things turn pear shaped.
they certainly need to reduce their WC by unlocking a chunk of the cash stored in inventory
Quote from: Arbroath on Apr 21, 2023, 01:28 PMthey certainly need to reduce their WC by unlocking a chunk of the cash stored in inventory
Increase in finished goods due to " The increase is due to higher holdings of ingredients inventories due to delayed shipments resulting from ERP implementation issues and a stock build of consumer-packaged infant formula in preparation for the
21 February 2023 expiry of the SAMR license
Quote from: Minimoke on Apr 21, 2023, 09:02 AMEx Fonterror. Hope she has done her due diligence.
You mean - like Leon did when he came from Fonterra?
But than - Leon had an amazing SP cushion to work with. Not sure, the company can survive another SP drop like that? But hey, its just the people and culture position, isn't it? Maybe she gets rid of this awful pink ...
Just came across this pearl:
https://nz.finance.yahoo.com/news/investors-undervaluing-synlait-milk-limited-200037945.html
QuoteKey Insights:
Synlait Milk's estimated fair value is NZ$4.08 based on 2 Stage Free Cash Flow to Equity
Current share price of NZ$2.14 suggests Synlait Milk is potentially 48% undervalued
Our fair value estimate is 35% higher than Synlait Milk's analyst price target of NZ$3.03
No worries - it is clearly a deep value game :) ;
Discl: I find that hard to believe, but if its on the internet, it must be true, isn't it?
Quote from: BlackPeter on Apr 21, 2023, 05:01 PMJust came across this pearl:
https://nz.finance.yahoo.com/news/investors-undervaluing-synlait-milk-limited-200037945.html
No worries - it is clearly a deep value game :) ;
Discl: I find that hard to believe, but if its on the internet, it must be true, isn't it?
not only is it on the internet but its written in a financial sheet. So absolutely bang on the truth
https://www.goodreturns.co.nz/article/976521637/sharemarket-starts-week-on-a-buoyant-note.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+24+Apr+2023
Interesting what Shane Solly had to say, bottom of article.
Quote from: Basil on Apr 24, 2023, 08:21 PMhttps://www.goodreturns.co.nz/article/976521637/sharemarket-starts-week-on-a-buoyant-note.html?utm_source=GR&utm_medium=email&utm_campaign=GoodReturns+Market+Report+for+24+Apr+2023
Interesting what Shane Solly had to say, bottom of article.
NZK or SKT type cash issue I reckon - big, discounted and fat left over for the underwriters to move later. Not good for existing shareholders overall
Find out Wednesday
Then again maybe everything is fine 8)
Quote from: Crackity on Apr 24, 2023, 09:08 PMNZK or SKT type cash issue I reckon - big, discounted and fat left over for the underwriters to move later. Not good for existing shareholders overall
Find out Wednesday
Then again maybe everything is fine 8)
We know they've been factoring their debtors, (lending of last resort). We also know they have to get their main revolving credit facility at the bank down to $250m by 30 June.
My intuition tells me the bank have that credit facility on auto reduce every month and they have either run out of cash or are very close to doing so.
Will institutions step up and support them with a capital raise yet again ?
Surely, they need at least another $200m, (again), to steady the ship but is that throwing good money after bad ?
Does the market still have confidence in the board and senior management or are most investors already sick of all the endless ESG B.S. B. Corp nonsense and pathetic financial results. ?
Another crazy element was having all of the debts maturing at the same time.....from a treasury policy perspective that seems naive.
When they said '. SAP significantly impacted Synlait's ability to release and ship products to customers in Q1 FY 23.' I thought jeez the computer is holding the company to ransom.
Seems the system said CANNOT RELEASE ORDER FOR DELIVERY so no sale made
What happened to the old fashioned approach in such circumstances .... Like Customer X wants a few tonnes of that stuff in our over fill warehouses so just deliver it now and worry about the paper work later
Bloody circus if you ask me.
You'd could be forgiven for wondering if this is being deliberately run into the ground so the major Chinese shareholder can buy the company for peanuts.
Quote from: Basil on Apr 25, 2023, 10:22 AMYou'd could be forgiven for wondering if this is being deliberately run into the ground so the major Chinese shareholder can buy the company for peanuts.
"Never attribute to malice that which is adequately explained by stupidity."
Sounds like a famous quote and most likely applicable in this case :)
Quote from: Basil on Apr 25, 2023, 10:31 AMSounds like a famous quote and most likely applicable in this case :)
Hanlon's razor -
The razors....more or less fyi
Occam's razor: Entities should not be multiplied without necessity
Sagan standard: Extraordinary claims require extraordinary evidence
Hitchens razor: What can be asserted without evidence can be dismissed without evidence
Hume's razor: Causes must be sufficiently able to produce the effect assigned to them
Duck test: If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck
Popper's falsifiability principle: For a theory to be considered scientific, it must be possible to disprove or refute it
Newton's flaming laser sword: If something cannot be settled by experiment, it is not worth debating
Grice's razor: Address what the speaker actually meant, instead of addressing the literal meaning of what they actually said
Hanlon's razor: Never attribute to malice that which can be adequately explained by incompetence or stupidity
Quote from: Basil on Apr 25, 2023, 10:31 AMSounds like a famous quote and most likely applicable in this case :)
It's hard to pick a top five for Synlait's inept management. These would all be strong contenders:
1. Holding the SMR license that A2 depend on but getting screwed over by A2 in the supply deal.
2. Purchasing Talbot cheese.
3. The Pokeno covenant debacle and associated costs.
4. The Munchkins muck around.
5. Recycled milk cans.
Of course this may all be eclipsed by Wednesdays big reveal, especially if they've stuffed up the Abbott's deal.
No.2 Didnt they only purchase the crappy bits of Talbot Cheese?
Quote from: Hectorplains on Apr 25, 2023, 11:24 AMIt's hard to pick a top five for Synlait's inept management. These would all be strong contenders:
1. Holding the SMR license that A2 depend on but getting screwed over by A2 in the supply deal.
2. Purchasing Talbot cheese.
3. The Pokeno covenant debacle and associated costs.
4. The Munchkins muck around.
5. Recycled milk cans.
Of course this may all be eclipsed by Wednesdays big reveal, especially if they've stuffed up the Abbott's deal.
Great list but we can't forget too that Leon had the entire executive team working on the Certified B Corp process for months...you know the one where the entire culture of the company is changed such that people and planet are put on exactly the same level as profitability...just look how "wonderfully" that's worked out for them. Pretty sure the vast use of manpower and resources on excessive ESG obsession has to rate in the top 5 somewhere, maybe in the top 3.
Quote from: Basil on Apr 25, 2023, 01:04 PMGreat list but we can't forget too that Leon had the entire executive team working on the Certified B Corp process for months...you know the one where the entire culture of the company is changed such that people and planet are put on exactly the same level as profitability...just look how "wonderfully" that's worked out for them. Pretty sure the vast use of manpower and resources on excessive ESG obsession has to rate in the top 5 somewhere, maybe in the top 3.
Wondering what Leon is doing these days?
Synlait board said at his departure that he has been "a transformational leader".
Given that Synlait was before Leons arrival in amazing shape - as demonstrated by Leons own words:
Synlait announcement 26. June 2018:
Quote"The business is in fantastic shape and we will continue to target sustainable growth by leveraging the potential within our organisation, as well as the potential in the markets and customers we partner with," adds Mr Clement.
https://www.synlait.com/news/leon-clement-announced-as-synlait-milks-new-ceo/#:~:text=%E2%80%9CI'm%20passionate%20about%20New,incoming%20CEO%20of%20Synlait%20Milk.
... am I sort of wondering how he applied his transformational leadership?
Or - is the answer really that obvious?
I think investors (newbies) should take special note at what the TH ann referred to (that it may need to revise guidance) fairly confident what eventuates will be much greater than just that.
History shows us that when a company is having issues, management often spin stories so management appear to have a handle on things and are now steering the ship in the right direction. In these sort of instances it usually is up to individual investors own BS radar.
Reality is often for clarity one has to take a step back and first ask how the company got in this sort of trouble in the first place.
Best of luck to holders tomorrow.......for me this company has failed the sniff test for sometime
All a bit of a non-event this dramatic trading halt
F23 not going to be a good year but jeez watch out for F24 with double digit growth blah blah
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/410391/393130.pdf
Not quite the end of the world some were expecting, but doesn't exactly inspire me.
https://www.nzx.com/announcements/410391
Synlait is updating its FY23 net profit after tax (NPAT) guidance range to a net loss of ($5) million to a net profit of $5 million.
There are two components to today's guidance update:
1. Further Advanced Nutrition demand reductions, mostly from one of Synlait's customers, which impact consumer-packaged infant formula volumes and base powder production, are expected to have an NPAT impact of approximately $16.5 million in FY23.
2. The remainder of the NPAT impact (approximately $3.5 million) is attributable to less material factors, including higher financing and supply chain costs.
Quote from: Left Field on Apr 26, 2023, 08:43 AMNot quite the end of the world some were expecting, but doesn't exactly inspire me.
https://www.nzx.com/announcements/410391
Leftie ....I'm told this is how cyclical stocks work so no worries ..get inspired
No worries Winner....... my only exposure is via 5% of my portfolio in freehold ATM.
ps their update on the SML update is interesting.
Ha ha ....A2 seem 'surprised' as to the size of the downgrade
Think they a bit pissed off
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/ATM/410403/393144.pdf
If I was a SML holdder I'd be super pissed off.
Year ends 31 July
4 weeks ago with just 4 months of the year remaining they said "Synlait's full year 2023 (FY 23) net profit after tax (NPAT) guidance range is $15 million to $25 million."
Today, with just 3 months to go they say "Synlait is updating its FY23 net profit after tax (NPAT) guidance range to a net loss of ($5) million to a net profit of $5 million.
That is a change of $20m.
How can a 3 month change account for essentially 100% of expected full year NPAT.
Something is not right with their customer relationships to have an order book change to such a huge extent in such a short time.
So - how much is this going to change revenue? Very important from a cashflow perspective and then debt servicing.
And if its not A2M coming up with a surprise reduction in their orders (A2 say they have done nothing) then it seems to me they have lost a customer.
I still can't see how a capital raise isn't on the very near horizon.
Maybe the final result for FY23 is a loss of $20-40m after the next couple of downgrades?
Synlait say "As previously communicated, Synlait is currently reviewing its capital strategy to ensure it has the appropriate funding for FY24 and beyond. The focus of this review is primarily on its levels of debt. Synlait is not considering an equity capital raising as part of the capital strategy review."
I don't know how they can continue without a capital raise. So I can only conclude they are now such a poisoned chalice no broker would be prepared to underwrite it it and even if there was a cap raise there would be no appetite from major shareholders to participate.
So, in the absence of a cap raise, I'm going to presume their debt facilities are maxed out. This really only leaves a sale of family jewels and lease back arrangement.
They can't sell their Richard Pierce Drive, Auckland premises. Because this has already been flogged off.
So as far as I am aware the only three remaining assets that could be sold are Dairy work, Pokeno or Dunsandle.
Seems to me their would be some synergy if A2 milk used some of its cash to buy Dunsandel. Its a wee way from Mataura but their could be synergies from a port perspective.
Fresh with SAMR certification Dunsandel could be a good choice.
Passing through the cheese counter the other day I see Talbot Cheese is back on the shelves - I can't see that being sold off. Its not worth much and still may be a problem child.
I can't see Dairyworks being flogged. Apparently "Cashflow returned from Dairyworks to Synlait was outstanding" why would they flog off a "cash cow? And EBITDA was only $18m last year.
On a side note I see Westland are investing $70m in lactoferrin. SML have been a bit quiet about this lately.
And I see market has responded with an open today at $2.00 down 6.5%
Quote from: Minimoke on Apr 26, 2023, 09:43 AMThat is a change of $20m.
How can a 3 month change account for essentially 100% of expected full year NPAT.
Something is not right with their customer relationships to have an order book change to such a huge extent in such a short time.
"a2MC is in discussions with Synlait regarding the allocation of certain one-off production/supply chain and other related costs between the two companies"
It looks like neither of them have booked those costs because they think the other will pay for it.
" IMF deliveries from Synlait to a2MC over an extended period expected to be fulfilled in 4Q23 resulting in a material amount of inventory arriving within a relatively short period"
And then there will be nothing delivered for a long time, and Synlait's FY23 is 1 month after A2's
"Synlait is not considering an equity capital raising as part of the capital strategy review."
I interpret that to mean at this point in time we've had feedback from major shareholders that they are not prepared to support the company in this way.
Reading between the lines you can get an indication of that from the tone of ATM's announcement.
Quote from: Minimoke on Apr 26, 2023, 10:07 AMI can't see Dairyworks being flogged. Apparently "Cashflow returned from Dairyworks to Synlait was outstanding" why would they flog off a "cash cow?
Because they may have no choice in the matter. The end of the free money era means companies have to do what they have to do, or go bust. If the banks won't lend, and their major shareholders and institutions wont cough up more money in a cap raising, they will be forced to flog the crown jewels.
Dairyworks EBITDA was $18m. Synlait bought it back in 2019 for 7.5 x EBITDA. So lets start there as a valuation = $135m. Less a discount for being a distressed seller.
Shall we say they could get $80 - $100m for it.
That would be an "earnings decretive" transaction and could knock off around 30% of total EBITDA.
Net debt is $518m So I don't think $100m will be enough.
Which means Dunsandel has to be put on the block. Haven't figured out a value for that yet But with B Corp certification I reckon that will sell at a significant premium.
Australia woken up and we are now down 22.4% to NZ$1.65
Coming up to their 10 year anniversary of listing on 23 July 2013. Was floated nearly a decade ago @ $2.20 and this "growth" company has never paid a dividend since then.
WOW...that's quite a track record for the directors and management to be "proud" of.
I shudder to think how much they have scoffed out of the trough over the last ~ decade while delivering such "wonderful returns" to shareholders.
Quote from: Basil on Apr 26, 2023, 01:20 PMComing up to their 10 year anniversary of listing on 23 July 2013. Was floated nearly a decade ago @ $2.20 and this "growth" company has never paid a dividend since then.
WOW...that's quite a track record for the directors and management to be "proud" of.
I shudder to think how much they have scoffed out of the trough over the last ~ decade while delivering such "wonderful returns" to shareholders.
Blah, blah, blah. What do such trivialities like profit, dividend, increased share price mean when you can hold your head up high with your B Corp accreditation.
Take a day off to plant a tree, start your AGM's in Te Reo and colour your world pink. What more could an investor ask for.
A RainbowTick perhaps. Fonterra has Rainbow Tick and Synlaits new People and Culture manager came from there so I reckon investors can look forward to this in 2024!
Wonder if Director John Penno feeling rather sick as to what's happened over the last few months
Things really turned to custard since he stepped down from being Chairman a few months ago .....maybe he was inclined to be a little optimistic.
Must be hard seeing something he built up from scratch being close to bankruptcy
LOL, yeah what's the problem Minimoke ;D
Certified B Corp means that people and planet are on exactly the same level as shareholders so its really people and planet that are important. Synlait can legitimately trumpet that the significant majority of stakeholders are doing extremely well indeed and therefore they can be incredibly proud of their ESG achievements and I am sure they will continue to trumpet exactly that! Yeah, a Rainbow tick would be the icing on the cake to make this company a resounding success lol
Quote from: Minimoke on Apr 26, 2023, 01:36 PMBlah, blah, blah. What do such trivialities like profit, dividend, increased share price mean when you can hold your head up high with your B Corp accreditation.
Take a day off to plant a tree, start your AGM's in Te Reo and colour your world pink. What more could an investor ask for.
A RainbowTick perhaps. Fonterra has Rainbow Tick and Synlaits new People and Culture manager came from there so I reckon investors can look forward to this in 2024!
I don't know about you but I'm excited by the upcoming advertising campaign featuring a transgender man chestfeeding.
Quote from: KW on Apr 26, 2023, 03:38 PMI don't know about you but I'm excited by the upcoming advertising campaign featuring a transgender man chestfeeding.
It might be a good way of improving the uptake of their recyclable / swapable milk bottles
Youch.$1.60 trade. When was the last time we saw someone lose 25% in a day?
From the other side.
Quote from: winner69;984738Pink ASM preso for ASM hard on the eyes to read but I think I saw ambition to have more than $2.55 billion in revenues in F27 and a return on capital of 15% (F22 ROCE was 5%)
So planning 9% pa revenue growth but big jump in profits ... maybe as high as 30% pa
Share price recovered from that recent dip and at $3.18 back in that 310/350 trading range
With Customer S about to start buying and with what the 'new' team intends to do I reckon share price could be close to $5 by the time of next years ASM
Lot to like about Synlait
Posted early December ...not that many months ago. Such was the enthusiastic response share price shot up to $3.82
Maybe current problems just a hiccup along that path to those F27 targets.
They've had this to say about F23 profit
1 - reported $38m npat in F22 in September
2 - guidance given then was F23 profits will be returning to levels seen pre 2021 (about $75m).
3 - this guidance confirmed at ASM in early December
4 - at ASM pretty enthusiastic promotion of the F27 targets
5 - on December 22 full year guidance maintained but said first half profits will be less than pcp ...but no worries we'll catch up in second half
6 - March 17 and the the 'two your recovery now three years' bombshell with guidance cut to $15m - $25m
7 - March 26 H123 profit of $9m (adjusted) and the $15m-$25m full year guidance confirmed
8 - then month later break even will be an outstanding result.
That's some story they have told ....maybe not intentional but jeez one would have to say almost bordering on the irresponsible (and some might describe it in even worse terms)
I've asked NZRegco for their views of events
hope nobody on here got caught out after that spike up to $3.82 ......I feel guilty in being sucked in by their bull **** and saying things like 'a lot to like about Synlait' but don't worry about me cause I made a few bucks at the time
Quote from: winner (n) on Apr 27, 2023, 08:52 AMFrom the other side.
Posted early December ...not that many months ago. Such was the enthusiastic response share price shot up to $3.82
Maybe current problems just a hiccup along that path to those F27 targets.
They've had this to say about F23 profit
1 - reported $38m npat in F22 in September
2 - guidance given then was F23 profits will be returning to levels seen pre 2021 (about $75m).
3 - this guidance confirmed at ASM in early December
4 - at ASM pretty enthusiastic promotion of the F27 targets
5 - on December 22 full year guidance maintained but said first half profits will be less than pcp ...but no worries we'll catch up in second half
6 - March 17 and the the 'two your recovery now three years' bombshell with guidance cut to $15m - $25m
7 - March 26 H123 profit of $9m (adjusted) and the $15m-$25m full year guidance confirmed
8 - then month later break even will be an outstanding result.
That's some story they have told ....maybe not intentional but jeez one would have to say almost bordering on the irresponsible (and some might describe it in even worse terms)
I've asked NZRegco for their views of events
hope nobody on here got caught out after that spike up to $3.82 ......I feel guilty in being sucked in by their bull **** and saying things like 'a lot to like about Synlait' but don't worry about me cause I made a few bucks at the time
SML sure have some explaining to do. And they can't blame SAP implementation.
If people think ambulance chasers have a case against A2M for their reporting then I reckon they will have a much stronger case against SML - whose reporting appears to be so off the mark it is reckless. I wonder how the auditors are feeling.
Even today I don't think they are being honest. Seems to me a majors customer has pulled the plug. In the absence of other information I presume it is the "New International Customer" (rumored to be Abbot - why the secrecy. Though if it is Abbot I can see why they wouldn't want that train wreck highlighted) whom SML have invested $million in plant to meet future demand. Wil that investment be written off?
You guys make some very fair points and my goodness, this feels like a re-run of the ATM downgrade fiasco which we know is the subject of at least 2 class action lawsuits. Definitely a prima facie case to answer here. Another class action lawsuit coming ?
In this case the question appears to be, by the time any such potential action proceeded through the courts, would there be any funds left for SML to settle ?
These guys stating targets for FY27 is some kind of sick joke. They can't even see past the end of their own nose, let alone 4 years out.
If they don't spend a lot more time navigating around the icebergs directly in front of them, they'll end up hitting one for sure. Meanwhile all they appear to be doing is rearranging the deck chairs on the Titanic... Yesterday's share price reaction was people starting to run for what few lifeboats remain.
Lets have some fun and simply recklessly speculate.
A2M have approx. $800m in cash.
SML trading this morning at $1.52 with a market cap of $332m.
Lets say A2 make a takeover over.
A2 already own approx. 20%. So 80% of $332m is $266m. So they could offer all other shareholders this to allow them a safe exit at what could be a premium price (if you think this will continue to get worse - I do!) or a discount because things are going to get much better quicker (and for you I have a bridge to sell.)
Part of the deal would be a long term supply agreement via Bright Dairy to allow the Chinese to keep a stake in their nutrition supply plans.
And you put Pokeno on the block for say $100m. Yiili clearly have cash, Chinese are into long term investments so this could be a good buy for them.
So net A2M have to stump up with $166m. This would leave them $634m in cash. This will keep SML's current bankers very happy. Covenants would no longer be an issue.
A2 now get a SAMR certified factory producing product at zero margin. They can create business synergies (say through SAP) between dunsandell and Mataura, as well as logistic port efficiencies and power supply efficiencies.
Sml shareholders are happy because they exit the train wreck with no further loss of capital.
Chinese are happy because they have long term supply arrangements
A2 shareholders are happy because of efficiencies and no further degradation of their SML capital investment
A2 customers are happy because there is tons of potential and guaranteed supply
NZ government happy because a company stays on NZ hands
NZ Famers happy because they now have a stable manufacturer.
Banks are happy because interest earnt on A2 cash deposits pays the interest on their loans
Bond holders are happy because SML hasn't gone into receivership.
Could Bright be the buyer. I don't think the govt would allow another chinese company to take over a south island dairy manufacturer. Chinese already have various stakes down here.
Could other buyer being interested. They may well be, but none have shown an interest in A2, and A2/Bright may block their buy.
Hasnt Pokeno been set up to supply Abbott??
Quote from: mcdongle on Apr 28, 2023, 10:12 AMHasnt Pokeno been set up to supply Abbott??
No.
Pokeno was built in 2018 to manufacture - and this was done before the 5 November 2020 announcement of a new "new multinational customer" who was "an established, global category leader".
In that announcement they said they needed to spend another $70m over two years on processing and packaging customisation.
They also said "Commercial production is currently projected to start mid-2022"
Quote from: winner (n) on Apr 27, 2023, 08:52 AMFrom the other side.
Posted early December ...not that many months ago. Such was the enthusiastic response share price shot up to $3.82
Maybe current problems just a hiccup along that path to those F27 targets.
They've had this to say about F23 profit
1 - reported $38m npat in F22 in September
2 - guidance given then was F23 profits will be returning to levels seen pre 2021 (about $75m).
3 - this guidance confirmed at ASM in early December
4 - at ASM pretty enthusiastic promotion of the F27 targets
5 - on December 22 full year guidance maintained but said first half profits will be less than pcp ...but no worries we'll catch up in second half
6 - March 17 and the the 'two your recovery now three years' bombshell with guidance cut to $15m - $25m
7 - March 26 H123 profit of $9m (adjusted) and the $15m-$25m full year guidance confirmed
8 - then month later break even will be an outstanding result.
That's some story they have told ....maybe not intentional but jeez one would have to say almost bordering on the irresponsible (and some might describe it in even worse terms)
I've asked NZRegco for their views of events
hope nobody on here got caught out after that spike up to $3.82 ......I feel guilty in being sucked in by their bull **** and saying things like 'a lot to like about Synlait' but don't worry about me cause I made a few bucks at the time
Don't feel bad mate, they spun some VERY creative B.S.
I really appreciate you helping me see the light and get out when the shares were trading over $11.
You got sucked in by their B.S.. Nobody gets every call right, not me, not you and not anyone else.
Those Synlait bonds now shopping at 11% plus
Quote from: winner (n) on Apr 28, 2023, 01:03 PMThose Synlait bonds now shopping at 11% plus
That's still 90 cents on the dollar though for deeply subordinated unsecured debt that ranks behind more than $500m of bank debt.. I wouldn't pay anything like that. considering the shocking state of their balance sheet.
I see A2M have just appointed a new non executive director based in Christchurch. She will take over the Risk Management and Audit committees. Is it just coincidental she is just half an hour drive from Dunsandel?
Synlait bonds on offer with wholesale level's of selling at 11.20%.
I reckon if you bid large at even 15% you'd get your boots well and truly filled.
My old boss a lifetime ago used to say, "The return OF one's investment is more important than the return ON it". Very good saying for anyone considering Synlait bonds.
Quote from: Basil on May 02, 2023, 10:51 AMSynlait bonds on offer with wholesale level's of selling at 11.20%.
I reckon if you bid large at even 15% you'd get your boots well and truly filled.
My old boss a lifetime ago used to say, "The return OF one's investment is more important than the return ON it". Very good saying for anyone considering Synlait bonds.
Next Monday 8 May next Investor Update day. Will be interesting to see what they say this time around. And impact on SP and bonds.
Quote from: Minimoke on May 02, 2023, 11:25 AMNext Monday 8 May next Investor Update day. Will be interesting to see what they say this time around. And impact on SP and bonds.
Down to another all time low of $1.44 I think institutions and other shareholders are running out of patience with Synlait and losing confidence in the board and management. Can't help wondering if there will be many who will even bother making the time to attend the investor day at Pokeno on Monday? I know if I had the email invite it would have gone straight into the junk file, why waste a day listening to their latest spin and endless ESG propaganda? One good look at the balance sheet and notes is all that's required...
Quote from: Basil on May 05, 2023, 02:14 PMDown to another all time low of $1.44 I think institutions and other shareholders are running out of patience with Synlait and losing confidence in the board and management. Can't help wondering if there will be many who will even bother making the time to attend the investor day at Pokeno on Monday? I know if I had the email invite it would have gone straight into the junk file, why waste a day listening to their latest spin and endless ESG propaganda? One good look at the balance sheet and notes is all that's required...
Just checked and closed at $1.43
Agree its not worth the time or the cost of the petrol to go to Pokene. What would the say.
"We are in the poo. We are going to sell something because we have to. What do you reckon - how about this site here? But don't worry our b Corp certification is about to start paying dividends from lots of like minded customers. Oh and SAMR is trucking on just fine. Any questions - as long as its not about bankers or covenants.
Quote from: Minimoke on May 05, 2023, 05:37 PMAny questions - as long as its not about bankers or covenants.[/i]
Didn't they just announce the revisions to their banking covenants? Are they no good or something?
Bankers have them on a very tight leash with a chocker chain around their neck. Less restrictive covenants only apply for a few months and then revert back to what they were. They will want to see results, not pink fantasy fairy tales, when it comes to getting their chronic debt down.
For all intents and purposes, I would say Synlait are forced sellers of a major asset unless one of their large shareholders throws them a huge bone in terms of a large share placement.
Quote from: Basil on May 07, 2023, 12:39 PMBankers have them on a very tight leash with a chocker chain around their neck. Less restrictive covenants only apply for a few months and then revert back to what they were. They will want to see results, not pink fantasy fairy tales, when it comes to getting their chronic debt down.
For all intents and purposes, I would say Synlait are forced sellers of a major asset unless one of their large shareholders throws them a huge bone in terms of a large share placement.
pokeno or dunsandel. I reckon it has to be one or the other
Quote from: Basil on May 07, 2023, 12:39 PMBankers have them on a very tight leash with a chocker chain around their neck. Less restrictive covenants only apply for a few months and then revert back to what they were. They will want to see results, not pink fantasy fairy tales, when it comes to getting their chronic debt down.
For all intents and purposes, I would say Synlait are forced sellers of a major asset unless one of their large shareholders throws them a huge bone in terms of a large share placement.
So you seem to be saying that the revised covenants are just buying time for SML to sell something, or raise capital? Are you convinced that they can't trade through this, if so why?
In a nutshell, their very high debt level and current interest rates is killing profitability.
The shares were more than $3.50 as recently as mid February 2023 !..before their bombshell disaster half year report and then the bombshells just keep on coming... Pretty rare you ever get to see an NZX50 constituent company lose ~ 60% of its value in less than 3 months.
If you want to catch a falling knife buzz, be my guest and fill your boots, and good luck to ya (I prefer all my fingers to remain intact and not be sliced to bits).
Quote from: Minimoke on May 07, 2023, 01:32 PMpokeno or dunsandel. I reckon it has to be one or the other
I would be surprised if they sell Dunsandel.
Dunsandel is their HQ, but still more important: Chinese import licence for A2 Platinum Milk Formula linked to the physical factory in Dunsandel as well as to the owner of the factory (being Synlait). On top of that: Synlait owns the IP for the A2 Platinum Milk Formula.
This means, if Synlait sells Dunsandel neither them nor ATM would be allowed to continue selling A2 Platinum (given that A2 owns the brand). How do you call the opposite of win-win?
Quote from: Basil on May 07, 2023, 02:09 PMIn a nutshell, their very high debt level and current interest rates is killing profitability.
The shares were more than $3.50 as recently as mid February 2023 !..before their bombshell disaster half year report and then the bombshells just keep on coming... Pretty rare you ever get to see an NZX50 constituent company lose ~ 60% of its value in less than 3 months.
If you want to catch a falling knife buzz, be my guest and fill your boots, and good luck to ya (I prefer all my fingers to remain intact and not be sliced to bits).
Thanks for your thoughts, though there's no way I'd be buying this while the TA is so bad, but interested to keep monitoring its business performance and when (if) the TA comes right, it could be worth a small % of portfolio. Might be a long wait though.
"Customer S" will be the saviour
In a years time we'll be saying 'what was all the fuss about?"
Quote from: winner (n) on May 07, 2023, 02:58 PM"Customer S" will be the saviour
In a years time we'll be saying 'what was all the fuss about?"
Are you "punting" real money on that mate ? If so you should get a dawn flight up and go and do the Pokeno investor day tomorrow.
If you're really lucky they might throw in some pink muffins for morning tea...😉
Quote from: Basil on May 07, 2023, 04:59 PMAre you "punting" real money on that mate ? If so you should get a dawn flight up and go and do the Pokeno investor day tomorrow.
If you're really lucky they might throw in some pink muffins for morning tea...😉
Pokeno site visit tomorrow .......Grant points to some stainless steel 'And this is where Abbots stuff is formulated ...24 hours a day" and then later on in another big room "this is where the Abbots stuff is packaged. 24 hours a day" .........."and we started all this last week"
Don't need to fly up
But that means you'll miss the powhiri and the pink muffins served on biodegradable paper plates.
That's a money can't buy experience mate ;)
Speaking of TA, this would have to be the worst chart on the NZX. No analysis required, it speaks for itself. https://invst.ly/-z8at
:o
LOL nice choice of colour. That's a very scary looking chart.
Quote from: Basil on May 07, 2023, 06:33 PMLOL nice choice of colour. That's a very scary looking chart.
Like the rainbow MA's as well? Thoughtful TA, it makes all the difference. This is a weekly chart, log scale, so it tends to make those falls look even more dramatic, although they are dramatic, especially collapsing down from the trading range back to March 2021. The market is abandoning SML, for good reason. This is not a falling knife, it is a guillotine. I'd not touch it until I saw a profound fundamental turnaround and a market price sentiment reflecting that. Currently, it looks like a business going out of business, but even I doubt that will happen, there is too much vested interest to let this fail. So, there's an opportunity, albeit for the patient.
Have you noticed that quite a few Directors are only 1-2 years into their roles, I reckon they probably got their jobs to turn around this basket case. It was looking like they might have stabilised, if not recovered, since March 2021, but now, I'll be thinking they're feeling rather squeamish and vulnerable.
Quote from: Buzz on May 07, 2023, 08:13 PMLike the rainbow MA's as well? Thoughtful TA, it makes all the difference. This is a weekly chart, log scale, so it tends to make those falls look even more dramatic, although they are dramatic, especially collapsing down from the trading range back to March 2021. The market is abandoning SML, for good reason. This is not a falling knife, it is a guillotine. I'd not touch it until I saw a profound fundamental turnaround and a market price sentiment reflecting that. Currently, it looks like a business going out of business, but even I doubt that will happen, there is too much vested interest to let this fail. So, there's an opportunity, albeit for the patient.
Things like AirNZ are too big too fail because their is significant government interest. No such interest in SML. At some point the bankers will look to recover whatever is left of their loans.
SML's payables far exceeded receivables. So debters will be very nervous and fighting for cash as it becomes available. The banks also fighting for the cash too - even if it is just to pay the interest on their loans. Bond holders would like to fight for the cash but are stymied unless they can flick the bond off.
SML need a recovery plan. SAMR registration is not part of it.
The new International customer won't be part of it either. Remember how quickly SML bought Pokeno land (very odd) and how very quickly they managed to design and build Pokeno. Even with the main contractor going bust. It went up at lightening speed. All they had to do was add in a bit of cannning and rejig manufacturing for this new customer and its taken years and years and years.
And now a customer has wound back orders. Wasn't A2 - so who was it?
Hope they don't default on what's due to supplier farmers
That would be bad
The yahoo version of SML rainbow moving averages
I think I can see where Basil sold out .....cool
41992377-46FC-48C6-A8C4-CEF34F357584.jpeg
Quote from: Buzz on May 07, 2023, 08:13 PMLike the rainbow MA's as well? Thoughtful TA, it makes all the difference. This is a weekly chart, log scale, so it tends to make those falls look even more dramatic, although they are dramatic, especially collapsing down from the trading range back to March 2021. The market is abandoning SML, for good reason. This is not a falling knife, it is a guillotine. I'd not touch it until I saw a profound fundamental turnaround and a market price sentiment reflecting that. Currently, it looks like a business going out of business, but even I doubt that will happen, there is too much vested interest to let this fail. So, there's an opportunity, albeit for the patient.
Great skills there, reminds me of the TA and charting skills Baa Baa has on the other site ;)
Hope they give the institutional shareholders a full flavor taste of what Synlait is all about today.
Shouldn't be that hard to find a few staff of various races that are Gay, Lesbian or Transgender to not only hand out pink muffins at morning tea but to spend a lot of the day leading the proceedings talking about Synlait's fabulous achievements with all things B Corp, diversity and inclusion and how people and the planet are just as important as profit.
Nice chart there too Winner. Looks like the outline of one of the steepest and most colorful mountains in the world.
Quote from: Basil on May 08, 2023, 08:37 AMGreat skills there, reminds me of the TA and charting skills Baa Baa has on the other site ;)
Hope they give the institutional shareholders a full flavor taste of what Synlait is all about today.
Shouldn't be that hard to find a few staff of various races that are Gay, Lesbian or Transgender to not only hand out pink muffins at morning tea but to spend a lot of the day leading the proceedings talking about Synlait's fabulous achievements with all things B Corp, diversity and inclusion and how people and the planet are just as important as profit.
Nice chart there too Winner. Looks like the outline of one of the steepest and most colorful mountains in the world.
I'm terribly disappointed to see B Corp has a lead team of 12 people. 2 men, 10 women. Doesnt seem very diverse or representative of our community to me.
And also disappointing to not their incorrect interpretation when they say
"In Aotearoa, we pay our respects to ngā Iwi taketake, and honour the principles of Te Tiriti o Waitangi: protection, participation, and partnership." No wonder Synlait is a bit muddled.
And as a final word of warning to those thinking about investing in SML
"B Lab is a nonprofit network transforming the global economy to benefit all people, communities, and the planet. We certify companies — B Corps — who lead the way. But more than that, we're building a movement to change our economic system". How is that change in the economic system working out for shareholders. That "change" I reckon = destruction of shareholder wealth.
Never mind, Synlait seems to be sharing company with some great compannies
- Almighy Beverages Ltd "Conscious, clean, delicious drinks made by nature for those with a thirst for life."
- AWWA "Our products help people all around the globe to manage their monthly cycles with confidence and connection without the negative impact associated with single use period products."
- Banquer "Banqer was founded by an an ex-accountant, an educator, a designer & a developer."
And the list goes on and I suspect most companies dont employ more than 10 people. So all well and good if they go bust (which I reckon most will) then its only their own personal money they are taking down with them.
And a bit more on B Corp
"But we do much more than that. We're building the B Corp movement to change our economic system — and to do so, we must change the rules of the game. B Lab creates standards, policies, tools, and programs that shift the behavior, culture, and structural underpinnings of capitalism. We mobilize the B Corp community towards collective action to address society's most critical challenges."
Lets be very clear - Synlait is committed to changing the structural underpinnings of capitalism. They really need to de-list and strive towards this ambition on their own coin. Not on the coin held by capitalist banks or investors.
For their survival I expect Synlait to announce today at the Investors Update that they are withdrawing from B Corp and will instead focus on, not the principles of the treaty, but the principles of capitalism. And the main underlying feature of capitalism is the motivation to make a profit.
-
Quote from: Buzz on May 07, 2023, 06:15 PMSpeaking of TA, this would have to be the worst chart on the NZX. No analysis required, it speaks for itself. https://invst.ly/-z8at
:o
I can remember over the years a number of worse looking charts :) - and I guess for SML the question is still open, whether it will end like a Greek tragedy or whether it will have a happy ending.
They do have a lot of stainless steel, they have some quite modern manufacturing facilities, and I assume that in the meantime they learned as well how to use them. When I saw the canning line in Dunsandel some years ago, it was still trial and error ... with interesting charts at the walls showing the begin of a learning curve, but given the huge margins they had at that time with every can of A2 Platinum, nobody cared.
What I am saying is - I think they well should be able to favourably compete with Fonterra, if they get rid of a quite inept board and management team. As a starter, they need a board where everybody understands the industry (too many political assignments, some of them quite colourful, but its not about entertainment) and where everybody is able to command the same language. Some of them are quite proficient in Chinese, but speak only quite limited English, and I recon half of them don't speak any Chinese at all. Makes in depth discussions around the board table quite difficult.
Chinese corner stone holder (some 40%) basically controls the board ... and add to that the NZ political bird - I recon they need to stop this nonsense - they need more people with both feet on the ground and understanding the industry to run the company.
And obviously - they need to learn some basic recruitment skills - unbelievable they did fall for this pink loving Fonterra dropout as CEO.
It won't be a growth industry, but I think they should be able to turn this company profitable again. The world does need quality food. Question is - how much money can they make if things go well, and - do they have what it takes to get the company back on track?
QuoteFor their survival I expect Synlait to announce today at the Investors Update that they are withdrawing from B Corp and will instead focus on, not the principles of the treaty, but the principles of capitalism. And the main underlying feature of capitalism is the motivation to make a profit.
-
Good luck with that! Most of us on here know that's exactly what needs to happen, but I think that encapsulates the nub of the culture problem with Synlait.
I doubt their culture will ever change and to me that makes them un-investable.
In my experience even if the directors and senior management wanted to affect a "radical change" such that profit does come first, that can take a very very long time to be embraced by the whole team. Often the culture is so deeply embedded with the company it cannot be changed even if there was a will at the top to do so, which I suspect is the case here. Part of me thinks that if this company does fail, that's a good thing as it serves a serious warning to all other companies listed on the NZX that if you want to be the poster child for all things ESG extremism, this is what happens.
That Investor Day is today isn't it?
Suppose you had to be an insto big investor to get an invite ....wouldn't want ordinary people to attend eh
And maybe discussions are secret squirrel stuff ......seems that way as no announcement yet ...unless DAY means starts at 3pm
Probably still holding the pōwhiri...or maybe the investor day was cancelled because nobody wanted to attend ;D
Quote from: Basil on May 08, 2023, 01:07 PMProbably still holding the pōwhiri...or maybe the investor day was cancelled because nobody wanted to attend ;D
I've just called for an update. Pleased to announce powhiri is over. All participant's are now reciting their mihi.
Now the hard mahi starts where what few attendees that are present, try and decipher the truth from all the dross presented.
Obviously just a look around ......nothing of interest said or discussed ....and no doubt handed out a lot of warm fuzzies to show it's all hunky dory in Pokeno land.
Back in the day they used to publish the Investor Day presentation. Early in the day. So what is up today?
Quote from: Minimoke on May 08, 2023, 04:10 PMBack in the day they used to publish the Investor Day presentation. Early in the day. So what is up today?
Nothing to say to us ...only a week or so since the bad news
Maybe the visit was called off
I would be very surprised if there was much interest at all from institutional investors in wasting a day listening to their ESG dribble.
Just fix your balance sheet and then I'll come and have one of your pink muffins, is what I would have said if I got an invite to attend.
Quote from: Basil on May 08, 2023, 04:53 PMI would be very surprised if there was much interest at all from institutional investors in wasting a day listening to their ESG dribble.
Just fix your balance sheet and then I'll come and have one of your pink muffins, is what I would have said if I got an invite to attend.
Maybe it was only real estate agents showing an interest
Appears nobody was interested in attending so they quietly cancelled it and hoped nobody would notice.
I see the insto's snubbing this investor day as an ominous warning for Synlait.
They have had enough B.S. and broken promises and the only way out of this mess is selling something huge or a massive share placement at a fire sale rock bottom share price to the Chinese or ATM or maybe a takeover by one of those parties and clear out all the useless dead wood and idiotic ESG extremists.
Quote from: winner (n) on May 08, 2023, 07:53 AMHope they don't default on what's due to supplier farmers
That would be bad
Need to confirm, but farmers may be preferred over bond holders. If I was a supplier I certainly would be tightening up my terms of trade
Gee - got down to $1.38 today. All time modern day low. Closed at $1.41. SAMR Certification announcement cant be far away.
Best bid on the bonds is 15.25% and they have traded as high as 15% in recent days.
That's still 85 cents on the dollar though which, for what it's worth, is a lot more than I would pay for them.
Be careful though mate. Not all bonds are created equal. These are unsecured subordinated bonds and rank behind all the vast amount of bank debt Synlait have.
Balance sheet is an absolute shocker though mate with not as steady regular monthly subscription income as SKY. Could be worth a punt at 50 cents on the dollar. Binary outcome though, they go into receivership you lose, they execute a major transaction or get recapitalized you win. Just a thought regarding this sort of punt. You get a quicker outcome on the roulette wheel at Sky City though, although their "brokerage rate" is a bit higher ;D
Bonds - ARV010 trading at 82 cents on the dollar, yields to maturity 7.2% look a MUCH safer bet to me.
Some wee odd things in accounts.
$69,000 loss on livestock sales. I didn't know SML were in the cattle business.
Inventory at 31 July 2022 = $233m. Inventory six months later at 31 Jan 2023 = $468m
Current liabilities at 31 July 2022 = $59m. Six months later at 31 Jan 2023 = $351m
Net cash flow out 31 Jan 2023 = $125m. Net cash flow in 31 Jan 2022 = $117m
Cash on hand at 31 Jan 2023 = $12.4m. Accounts Payable = $423m. Accounts receivable = $140m
Employee and contractor cost for 6 months = $74.7m. = $12.45m a month. See cash on hand above.
On 21 February 2023 the Group's SAMR license, which allows it to produce China label infant formula for sale by
The A2 Milk Company, expired. Re-registration a production due to recommence Q4 2023
Someone is shopping. 5,842,690 crossed at $1.40 then followed by another 300,000 at $1.40 That's 2.8% of the company
Quote from: Crackity on May 15, 2023, 10:00 PMA2M can't let SML fail coz of the Chinese SAMR registration
Everyone assumes that A2M will step up to bail out SML. But what if it can't? What if SML takes A2M down with it? What would A2M look like without an infant formula business?
Quote from: KW on May 16, 2023, 06:30 PMEveryone assumes that A2M will step up to bail out SML. But what if it can't? What if SML takes A2M down with it? What would A2M look like without an infant formula business?
Bright Diary are the major shareholder at 39%, with A2 Milk about 19%, combined they have about 58%. The next largest shareholder is about 3%. A2 would probably fail if Synlait failed, as they have no other large supplier yet. Notwithstanding the SAMR, it would seem reasonable that neither Bright Diary nor A2 Milk have any vested interest in Synlait failing. In fact one might suggest that they have a strong vested interest in ensuring it doesn't fail, even if that meant shoring up the balance sheet and taking a larger stake in the company, potentially even a combined takeover. A2 has plenty of cash on hand, they could do it by themselves at current market cap, whereas Bright Diary has unlimited money, if you look at who owns them. So it comes down to vested interest. All this though, is on an assumption that Synlait might fail without a benevolent benefactor, and that's not certain by any means.
Quote from: Buzz on May 16, 2023, 06:52 PMBright Diary are the major shareholder at 39%, with A2 Milk about 19%, combined they have about 58%. The next largest shareholder is about 3%. A2 would probably fail if Synlait failed, as they have no other large supplier yet. Notwithstanding the SAMR, it would seem reasonable that neither Bright Diary nor A2 Milk have any vested interest in Synlait failing. In fact one might suggest that they have a strong vested interest in ensuring it doesn't fail, even if that meant shoring up the balance sheet and taking a larger stake in the company, potentially even a combined takeover. A2 has plenty of cash on hand, they could do it by themselves at current market cap, whereas Bright Diary has unlimited money, if you look at who owns them. So it comes down to vested interest. All this though, is on an assumption that Synlait might fail without a benevolent benefactor, and that's not certain by any means.
Thanks for your sensible post, lots of scaremongering on here.
Quote from: Buzz on May 16, 2023, 06:52 PMBright Diary are the major shareholder at 39%, with A2 Milk about 19%, combined they have about 58%. The next largest shareholder is about 3%. A2 would probably fail if Synlait failed, as they have no other large supplier yet. Notwithstanding the SAMR, it would seem reasonable that neither Bright Diary nor A2 Milk have any vested interest in Synlait failing. In fact one might suggest that they have a strong vested interest in ensuring it doesn't fail, even if that meant shoring up the balance sheet and taking a larger stake in the company, potentially even a combined takeover. A2 has plenty of cash on hand, they could do it by themselves at current market cap, whereas Bright Diary has unlimited money, if you look at who owns them. So it comes down to vested interest. All this though, is on an assumption that Synlait might fail without a benevolent benefactor, and that's not certain by any means.
Excellent post thank you
Quote from: Buzz on May 16, 2023, 06:52 PMBright Diary are the major shareholder at 39%, with A2 Milk about 19%, combined they have about 58%. The next largest shareholder is about 3%. A2 would probably fail if Synlait failed, as they have no other large supplier yet. Notwithstanding the SAMR, it would seem reasonable that neither Bright Diary nor A2 Milk have any vested interest in Synlait failing. In fact one might suggest that they have a strong vested interest in ensuring it doesn't fail, even if that meant shoring up the balance sheet and taking a larger stake in the company, potentially even a combined takeover. A2 has plenty of cash on hand, they could do it by themselves at current market cap, whereas Bright Diary has unlimited money, if you look at who owns them. So it comes down to vested interest. All this though, is on an assumption that Synlait might fail without a benevolent benefactor, and that's not certain by any means.
Any company that only has enough cash to pay next months wages surely has to be on the brink?
Quote from: Minimoke on May 16, 2023, 07:13 PMAny company that only has enough cash to pay next months wages surely has to be on the brink?
But they have debt headroom as well. I'm not defending Synlait, just saying that it's not in bright's or a2 interest to see them fail. Quite the contrary.
Quote from: Buzz on May 16, 2023, 07:45 PMBut they have debt headroom as well. I'm not defending Synlait, just saying that it's not in bright's or a2 interest to see them fail. Quite the contrary.
Yes exactly, it won't fail, it will get bailed by one or two parties if it comes to the crunch.
Quote from: Crackity on May 16, 2023, 08:29 PMLet's revisit that debt headroom comment about 1 Aug shall we?
For sure, let's revisit it then, it's not like I'm queueing up to buy Synlait right now, it looks like a mutt, but to ignore A2 and Bright's interests in not letting Synlait fail, might be missing an opportunity.
Quote from: Buzz on May 16, 2023, 08:47 PMFor sure, let's revisit it then, it's not like I'm queueing up to buy Synlait right now, it looks like a mutt, but to ignore A2 and Bright's interests in not letting Synlait fail, might be missing an opportunity.
True.
On the plus side - they have one (or two, or three) well equipped and quite modern milk powder factories. I assume as well that by now they know how to handle the canning line :) ;
They do have as well a loyal group of A2 milk suppliers (for what this is worth), and I think some of their farm management programs improve not just the environment but as well the worth of their brand.
On the not so positive side - they have clearly balance sheet issues - all this stainless steel is expensive, and they funded too much of it with debts. Interest rates start to bite.
Their board proved more than once that they are not fit to govern the company - terrible risk management (all eggs into one basket), terrible recruitment decisions (do you want pink with that), funny governance priorities (ESG needs to go with profitability, not against) and allowing debts to be pushed to the hilt again and again provide plenty of evidence for that.
So - clearly, they should be salvable, even if I am currently not sure what the value would be for another non growth milk powder producer in NZ - but, it will have a positive value.
What I am not sure is - given that Bright Dairy and ATM together can control the board at any stage they want (holding together nearly 60% of the shares - i.e. AGM votes) and could do so already for many years, and given that Bright dairy alone is in practical terms controlling the board, why didn't they fix the company a long time ago?
I guess either they are not as smart as they look, or they (Bright) might have an hidden agenda which might not be aligned with the agenda of ordinary retail investors.
Whatever it is - I am sure we can't rule out a white knight yet, but I am not sure I would count on him appearing in time.
I disagree that they have debt head room. Heres my numbers - please feel free to correct me
Seems to me they have debt facilities of $676.7m today. And this reduces to $596.7m on 30 June 2023
From this they have taken up $531m.
So head room is feasibly +$65.7m
However, they also currently have $423m in accounts payable. Lets say they are on 60 day terms ie have to be paid by end of June.
They can counter this with $140m in receivables and lets say these should all be received by 30 June.
That head room, at end of June now appears to me to be -$325m.
And of the $596.7m $416m is secured. The $180m bond holders isn't.
So, seems to me they need at least another $325m. And pretty jolly quickly. And even if I won lotto I would not be putting it into the bonds.
sm1.png
Quote from: Buzz on May 16, 2023, 08:47 PMFor sure, let's revisit it then, it's not like I'm queueing up to buy Synlait right now, it looks like a mutt, but to ignore A2 and Bright's interests in not letting Synlait fail, might be missing an opportunity.
Howabout if they let it fail. Clear the debts. And then A2m write off their current investment (got to be some tax benefits there) and then come in and buy some shiny stainless steel and SAMR license at bargain prices. And come up with some supply agreement for Bright Dairy interests.
Quote from: Minimoke on May 16, 2023, 12:49 PMSomeone is shopping. 5,842,690 crossed at $1.40 then followed by another 300,000 at $1.40 That's 2.8% of the company
So. Who has sold out?
Bright 39.01%
A2Milk 20.19%
Unknown 3.36%
ACC 2.68%John Penno 2.34%
Rats and mice after that
Quote from: Minimoke on May 17, 2023, 09:45 AMI disagree that they have debt head room. Heres my numbers - please feel free to correct me
With whom do you disagree? Sounds like we are all in vehement agreement :) :D ;
Quote from: BlackPeter on May 17, 2023, 10:35 AMWith whom do you disagree? Sounds like we are all in vehement agreement :) :D ;
Post #294.
(I don't know how to reply to a post and insert a picture at the same time!)
Quote from: Minimoke on May 17, 2023, 10:43 AMPost #294.
(I don't know how to reply to a post and insert a picture at the same time!)
Fair enough ... shows just my short attention span :);
However - if you want to learn how to reply to a post and insert a picture at the same time, try the following:
Press "quote" under the post you want to quote.
Highlight the complete post (including all this html stuff)
Copy it.
Leave the post you just started (like press the arrow left top on the screen) and go back to the post you want to reply to (and quote)
Press this time "reply" instead
Use your mouse - right click and paste the html you copied before.
You have now the quote you wanted in your post and still have the insert functionality.
Well, something like that (all from memory, but try - I am sure you will get it, its just software ...)
I know, some software does have a funny approach of enriching the users life ...
Anyway - have fun.
If anybody (admin?) has an easier method, I would be interested as well ...
Quote from: BlackPeter on May 17, 2023, 12:41 PMFair enough ... shows just my short attention span :);
However - if you want to learn how to reply to a post and insert a picture at the same time, try the following:
Press "quote" under the post you want to quote.
Highlight the complete post (including all this html stuff)
Copy it.
Leave the post you just started (like press the arrow left top on the screen) and go back to the post you want to reply to (and quote)
Press this time "reply" instead
Use your mouse - right click and paste the html you copied before.
You have now the quote you wanted in your post and still have the insert functionality.
Well, something like that (all from memory, but try - I am sure you will get it, its just software ...)
I know, some software does have a funny approach of enriching the users life ...
Anyway - have fun.
If anybody (admin?) has an easier method, I would be interested as well ...
Testing ....
Reply to post using Quote. Write text. Click on Preview. Then click on Attachments and other options. Add picture, upload and/or insert . Then Post.
milk bottles.jpg
Quote from: Buzz on May 16, 2023, 07:45 PMBut they have debt headroom as well. I'm not defending Synlait, just saying that it's not in bright's or a2 interest to see them fail. Quite the contrary.
That depends on how big a financial basket case SML is. If you were an A2 shareholder, would you prefer to own a smaller but more profitable company, or a larger but unprofitable one? If SML is a financial drain on A2's cash resources, it will eventually suck it dry. Some hard decisions might have to be made.
A wide range of possible future scenario's here. I follow this train wreck out of morbid fascination for how things play out for the poster child of all things B Corp, ESG and LGTBQ. When you start making these other things more important than earnings, trouble comes as sure as night follows day, in my opinion.
What's not in dispute is their balance sheet is now in a truly appalling state and they are struggling to break even in the current year against a series of promises and forecasts that make management look like they have no forward visibility in the business whatsoever.
It's also clear the banks have them on a very tight leash with a very limited timeframe wherein banking covenants have been relaxed a little before reverting back to where they were. Tick Tock, the clock is ticking and Synlait need to deliver answers, (not more excuses, more ESG crap and or plans and stories) to the banks.
I won't buy a share in business that the directors and management have allowed to get into such an appalling state on the presumption that some White Knight is going to come riding to my rescue if / when the custard hits the fan. Un-investable at this point is how I see it. Clearly, I am not alone in holding that view as I think it's clear the investment community shunned their investor day.
Quote from: Basil on May 17, 2023, 07:33 PMA wide range of possible future scenario's here. I follow this train wreck out of morbid fascination for how things play out for the poster child of all things B Corp, ESG and LGTBQ. When you start making these other things more important than earnings, trouble comes as sure as night follows day, in my opinion.
What's not in dispute is their balance sheet is now in a truly appalling state and they are struggling to break even in the current year against a series of promises and forecasts that make management look like they have no forward visibility in the business whatsoever.
It's also clear the banks have them on a very tight leash with a very limited timeframe wherein banking covenants have been relaxed a little before reverting back to where they were. Tick Tock, the clock is ticking and Synlait need to deliver answers, (not more excuses, more ESG crap and or plans and stories) to the banks.
I won't buy a share in business that the directors and management have allowed to get into such an appalling state on the presumption that some White Knight is going to come riding to my rescue if / when the custard hits the fan. Un-investable at this point is how I see it. Clearly, I am not alone in holding that view as I think it's clear the investment community shunned their investor day.
One day a text book is going to be written. And Synlait will be the prime case study.
It will start with how to set up and grow a successful "family run" business and then to have it destroyed by ESG principles.
It will prove the old saying a fish rots from the head.
And it will give real life examples of investor red flags.
So far I don't see the book having a happy ending for the "family"
Acting Director of Operations showing some real confidence. Just picked up 341 shares for a cool $491.00
Selling off some parts of the business but what are the earnings from these divisions, if any, and what are they realistically worth. Thoughts ?
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/412456/395786.pdf
Talbot forest is realistically worth next to nothing given issues and what one would assume are losses, might be able to get a few mil for the $9m suit they are bringing against the sellers though :)
Dairyworks seems to be an ok business but naturally there is a tradeoff, more earnings = higher price = less earnings for Synlait or bigger losses in the future.
The announcement seems a little desperate, saying you intend to sell assets before even getting offers or expressions of interest would indicate you are a forced seller and happy to take any price you can get.
Dairyworks was an exciting growth opportunity in 2020 when they forked out $112 million for it. They said it was 7.5 x EBITDA back then
Invested more into the business since
Pretty cool website https://www.dairyworks.co.nz/
Didn't realise the brand included Rolling Meadown and Alpine.
Often see their products at the supermarket at not completely unreasonable sort of prices.
Should get a decent price for that but will it be enough to assuage concerns over their level of indebtedness?
Quote from: Basil on Jun 02, 2023, 10:43 AMPretty cool website https://www.dairyworks.co.nz/
Didn't realise the brand included Rolling Meadown and Alpine.
Often see their products at the supermarket at not completely unreasonable sort of prices.
Should get a decent price for that but will it be enough to assuage concerns over their level of indebtedness?
If they can sell for anywhere above $100m, their level of indebtness should be okay as inventories were built up to tide ATM over the SAMR approval period.
Quote from: Minimoke on Apr 26, 2023, 11:25 AMDairyworks EBITDA was $18m. Synlait bought it back in 2019 for 7.5 x EBITDA. So lets start there as a valuation = $135m. Less a discount for being a distressed seller.
Shall we say they could get $80 - $100m for it.
That would be an "earnings decretive" transaction and could knock off around 30% of total EBITDA.
Net debt is $518m So I don't think $100m will be enough.
Which means Dunsandel has to be put on the block. Haven't figured out a value for that yet But with B Corp certification I reckon that will sell at a significant premium.
Heres my comment back in April. Can't see much reason to change it.
Quote from: Gerald on Jun 02, 2023, 10:10 AMThe announcement seems a little desperate, saying you intend to sell assets before even getting offers or expressions of interest would indicate you are a forced seller and happy to take any price you can get.
They are a forced seller. That's what you become when you run out of money lol.
Meanwhile, they are taking on more leasing obligations
A company controlled by New Zealand's wealthiest man has completed this year's biggest leasing transaction on a new $100 million Auckland building.
NZX-listed Synlait Milk has leased a huge new Wiri warehouse (https://www.textise.net/showText.aspx?strURL=https%3A%2F%2Fwww.nzherald.co.nz%2Fbusiness%2Fbillionaire-graeme-hart-inside-expanding-warehouse-empire-155m-of-new-buildings%2FUEICCX5N3VHVLA5A3PWG7WXQKQ%2F) storage and office building from billionaire Graeme Hart for its new southeast Asia plant-based export operation.
But Synlait won't use the entire building right away. It has sublet "a significant portion" of the space it is renting, planning to grow into it over time, the spokeswoman said.
The new venture is being viewed as a major diversification for the business (https://www.textise.net/showText.aspx?strURL=https%3A%2F%2Fwww.nzherald.co.nz%2Fbusiness%2Fsynlait-emerges-from-covids-long-shadow%2F7GS53ZSZC5CBDBN7EBSMBBDTYI%2F).
Other agents said the warehouse contract is 2023′s largest leasing deal, expected to net Hart's company around $5 million/year in rent but none of those details can be confirmed directly with Hart who rarely engages with the media.
Quote from: KW on Jun 02, 2023, 03:06 PMMeanwhile, they are taking on more leasing obligations
A company controlled by New Zealand's wealthiest man has completed this year's biggest leasing transaction on a new $100 million Auckland building.
NZX-listed Synlait Milk has leased a huge new Wiri warehouse (https://www.textise.net/showText.aspx?strURL=https%3A%2F%2Fwww.nzherald.co.nz%2Fbusiness%2Fbillionaire-graeme-hart-inside-expanding-warehouse-empire-155m-of-new-buildings%2FUEICCX5N3VHVLA5A3PWG7WXQKQ%2F) storage and office building from billionaire Graeme Hart for its new southeast Asia plant-based export operation.
But Synlait won't use the entire building right away. It has sublet "a significant portion" of the space it is renting, planning to grow into it over time, the spokeswoman said.
The new venture is being viewed as a major diversification for the business (https://www.textise.net/showText.aspx?strURL=https%3A%2F%2Fwww.nzherald.co.nz%2Fbusiness%2Fsynlait-emerges-from-covids-long-shadow%2F7GS53ZSZC5CBDBN7EBSMBBDTYI%2F).
Other agents said the warehouse contract is 2023′s largest leasing deal, expected to net Hart's company around $5 million/year in rent but none of those details can be confirmed directly with Hart who rarely engages with the media.
It was only back in 2021 when they sold and leased back there Auckland William Pearce Drive property. This was done to pay down debt. And lease is for 10 years. I thought that place had offices - how many offices do they need?
Quote from: Minimoke on Jun 02, 2023, 04:03 PMIt was only back in 2021 when they sold and leased back there Auckland William Pearce Drive property. This was done to pay down debt. And lease is for 10 years. I thought that place had offices - how many offices do they need?
Perfectly obvious mate that fancy new office is to handle the very strong growth they have....
in their PINK and ESG team member numbers.
Quote from: Basil on Jun 02, 2023, 04:23 PMPerfectly obvious mate that fancy new office is to handle the very strong growth they have....in their PINK and ESG team member numbers.
Hey Mr Accountant - considering the new requirement to treat lease obligations as a balance sheet liability, what does this do to their bank covenants?
Quote from: KW on Jun 02, 2023, 04:47 PMHey Mr Accountant - considering the new requirement to treat lease obligations as a balance sheet liability, what does this do to their bank covenants?
There are quite a few covenants there...all coming up for review in the next few months.
They probably look through the IFRS16 lease B.S...its too late in the day to be bothered looking into that, sorry. We will have to wait and see but I think it's fair to say at this stage the clock is ticking quite loudly on getting a sale concluded on Dairyworks.
You're absolutely right they are forced sellers but forced sellers with a twist, within a very tight timeframe.
Quote from: KW on Jun 02, 2023, 03:06 PMNZX-listed Synlait Milk has leased a huge new Wiri warehouse (https://www.textise.net/showText.aspx?strURL=https%3A%2F%2Fwww.nzherald.co.nz%2Fbusiness%2Fbillionaire-graeme-hart-inside-expanding-warehouse-empire-155m-of-new-buildings%2FUEICCX5N3VHVLA5A3PWG7WXQKQ%2F) storage and office building from billionaire Graeme Hart for its new southeast Asia plant-based export operation.
To be fair when the competition are doing so well, who wouldn't want to find some plant based cows to get in on the action ;)
plants.png
Value of Dunsandel plant just went up today with announcement of SAMR approval.
"Synlait Milk Limited (Synlait) is extremely pleased to announce that the
State Administration for Market Regulation (SAMR) has notified it of the
successful re-registration of The a2 Milk Company's Chinese labelled ??(R)
Infant Formula (stages one, two and three) at its Dunsandel facility, which
will allow it to manufacture and export this product for the China market
until September 2027.
As the manufacturer of those products, the SAMR registration is held by
Synlait and attached to its Dunsandel facility. The re-registration is
pivotal for the ongoing success of the manufacturing and supply agreement
that Synlait and The a2 Milk Company have."
I guess by selling off the cheese business at least they are being true to form ;D
If you don't laugh, you cry right?
https://www.interest.co.nz/rural-news/122396/westpac-economists-bemoan-our-inability-export-enough-cheese-time-soaring-global
"Westpac economists bemoan our inability to export enough cheese at a time of soaring global prices and have downgraded their forecast for Fonterra's milk price this season
The world's gone super-cheesy but we can't quite produce enough cheese to take advantage - and that could cost us with lower milk prices to farmers this season than might have been the case.
This is according to Westpac senior agri economist Nathan Penny, who has reduced his pick of the farmgate milk price for the season that just started this month to $8.90 per kilogram of milk solids from a previous high-flying pick of $10. He has maintained a "positive" dairy outlook, however.
Penny, who has a good track record among economists when it comes to picking the milk price, says in a Westpac Dairy Update (https://library.westpaciq.com.au/content/dam/public/westpaciq/secure/economics/documents/nz/2023/06/Agri_Dairy-Update_report_07Jun23.pdf) that global dairy consumers "have fallen in love" with cheese, with cheese prices "sizzling at or near record highs since late 2021".
"Unfortunately, New Zealand is not well placed (relatively) to take advantage of this trend and total dairy farmer incomes will be lower than they would ordinarily be," he says.
Quote from: KW on Jun 07, 2023, 07:10 PMI guess by selling off the cheese business at least they are being true to form ;D
If you don't laugh, you cry right?
https://www.interest.co.nz/rural-news/122396/westpac-economists-bemoan-our-inability-export-enough-cheese-time-soaring-global
"Westpac economists bemoan our inability to export enough cheese at a time of soaring global prices and have downgraded their forecast for Fonterra's milk price this season
The world's gone super-cheesy but we can't quite produce enough cheese to take advantage - and that could cost us with lower milk prices to farmers this season than might have been the case.
This is according to Westpac senior agri economist Nathan Penny, who has reduced his pick of the farmgate milk price for the season that just started this month to $8.90 per kilogram of milk solids from a previous high-flying pick of $10. He has maintained a "positive" dairy outlook, however.
Penny, who has a good track record among economists when it comes to picking the milk price, says in a Westpac Dairy Update (https://library.westpaciq.com.au/content/dam/public/westpaciq/secure/economics/documents/nz/2023/06/Agri_Dairy-Update_report_07Jun23.pdf) that global dairy consumers "have fallen in love" with cheese, with cheese prices "sizzling at or near record highs since late 2021".
"Unfortunately, New Zealand is not well placed (relatively) to take advantage of this trend and total dairy farmer incomes will be lower than they would ordinarily be," he says.
Yeah, I guess its quite said - there are so many fantastic products you can make out of milk ... and the only thing NZ seems to be able to produce is milk powder.
But yes, this is not Synlait's fault. I guess we just didn't learn to make great cheese using No 8 wire, and who would care about learning how to do it anyway?
Quote from: BlackPeter on Jun 08, 2023, 10:57 AMYeah, I guess its quite said - there are so many fantastic products you can make out of milk ... and the only thing NZ seems to be able to produce is milk powder.
But yes, this is not Synlait's fault. I guess we just didn't learn to make great cheese using No 8 wire, and who would care about learning how to do it anyway?
Actually NZ makes some world class cheeses.
I have had well-heeled visitors from the UK, China, Canada, Singapore and HK asking to be taken to the supermarkets or better still for them, the Kapiti Fine Foods/Cheese shop to load up on cheeses to take back overseas.
$500 is kinda what they spend each time.
Quote from: Teitei on Jun 08, 2023, 11:13 AMActually NZ makes some world class cheeses.
I have had well-heeled visitors from the UK, China, Canada, Singapore and HK asking to be taken to the supermarkets or better still for them, the Kapiti Fine Foods/Cheese shop to load up on cheeses to take back overseas.
$500 is kinda what they spend each time.
To be fair - none of the countries your visitors came from are well known for a great (or any) cheese culture :P . I suppose they are used to very low quality cheese (or none at all - HK). Just a case of "in the land of the blind the one-eyed is king ..."
You need to invite some visitors from Europe (like e.g. France, the Netherlands and Germany) to get a meaningful verdict on the quality of NZ cheese.
Quote from: Teitei on Jun 08, 2023, 11:13 AMActually NZ makes some world class cheeses.
We probably do. And if we don't we probably could. But instead our dairy "innovation" is focused on making fake cheeses.
Then they act surprised when nobody wants to buy it.
https://thespinoff.co.nz/business/04-10-2019/fonterra-factory-built-to-make-secret-recipe-mozzarella-sitting-all-but-idle
Fonterra once called it "the single largest foodservice investment in New Zealand's dairy industry".Now its $240 million mozzarella cheese plant at Clandeboye near Temuka is sitting close to idle thanks to lack of demand.Fonterra has described the cheese as "the jewel in its foodservice crown". Scientists at its Palmerston North Research and Development Centre found a way to make mozzarella in hours, rather than the months it takes to make the cheese traditionally. The cheese was already topping half of the pizzas in the fast-growing Chinese market, and the new Clandeboye plant had been constructed to meet demand, the co-operative said last year.But this week Fonterra conceded 'Mozz 3', as it's known, has been running at just 25% capacity since the start of the milk season on June 1 because demand for the mozzarella has not been as high as initially forecast.
You need to invite some visitors from Europe (like e.g. France, the Netherlands and Germany) to get a meaningful verdict on the quality of NZ cheese.
[/quote]
Yep, amazing what the Europeans can produce from raw milk that has been subsidised by the EU to the tune of 30%. Cheap milk to make expensive cheeses.
Quote from: BlackPeter on Jun 08, 2023, 11:25 AMTo be fair - none of the countries your visitors came from are well known for a great (or any) cheese culture :P . I suppose they are used to very low quality cheese (or none at all - HK). Just a case of "in the land of the blind the one-eyed is king ..."
You need to invite some visitors from Europe (like e.g. France, the Netherlands and Germany) to get a meaningful verdict on the quality of NZ cheese.
The visitors don't just eat NZ cheeses. The ones from the UK, Singapore and HK can get cheeses from any country in the world! To put you in the picture, they only eat at Michelin class or equivalent restaurants where ever they are. In NZ, they dine only at The French Cafe, The Grove & the now closed SidArt to give you an idea.
Point is that NZ does produce some great cheeses but ultimately, does come down to in dividual tastes as well.
https://www.interest.co.nz/rural-news/122408/guy-trafford-reviews-ups-and-downs-a2-milk-processor-synlait-tracking-mistakes
https://www.nzx.com/announcements/413231
Bright Dairy must be seriously worried, bringing in the top brass to try and clean up this horrendous mess.
Wonder what happens in China to directors who have proven over many years they are incompetent.
Quote from: Basil on Jun 19, 2023, 09:44 AMhttps://www.nzx.com/announcements/413231
Bright Dairy must be seriously worried, bringing in the top brass to try and clean up this horrendous mess.
Wonder what happens in China to directors who have proven over many years they are incompetent.
Don't think incompetence is a problem in the Chinese bureaucracy as long as they keep praising the dear secretary with all their voice and stay politically in line.
I suppose they consider the board job at Synlait anyway more as an opportunity to improve their English ... and maybe to learn a bit more about the next country the dragon might want to swallow.
Quote from: BlackPeter on Jun 19, 2023, 10:20 AMDon't think incompetence is a problem in the Chinese bureaucracy as long as they keep praising the dear secretary with all their voice and stay politically in line.
I suppose they consider the board job at Synlait anyway more as an opportunity to improve their English ... and maybe to learn a bit more about the next country the dragon might want to swallow.
Thanks, feel better now, was worried with their woeful performance over the years they would be taken out the back of the milking shed and....
Quote from: BlackPeter on Jun 19, 2023, 10:20 AMDon't think incompetence is a problem in the Chinese bureaucracy as long as they keep praising the dear secretary with all their voice and stay politically in line.
I suppose they consider the board job at Synlait anyway more as an opportunity to improve their English ... and maybe to learn a bit more about the next country the dragon might want to swallow.
The new directors are going to be tough out of luck. Synlait more into offering te reo lessons
https://www.facebook.com/Synlait/posts/1861775100569178/
Quote from: Minimoke on Jun 20, 2023, 12:54 PMThe new directors are going to be tough out of luck. Synlait more into offering te reo lessons
https://www.facebook.com/Synlait/posts/1861775100569178/
I see that post is from September 2018 when the share price was at the peak and about $13 and they really started to turbocharge their endless ESG, diversity and inclusion programs. Bring up 5-year share price chart and you'll see what I mean. It's basically been all downhill since then! Spooky coincidence or real-world lesson that when you take your eye off the real business objectives you start to lose the plot. I think the lesson here, in English, not Te Reo, is be VERY careful with companies that go to extreme lengths with all things ESG as its clear there's far too many senior staff with not enough to do. My contention is the whole B Corp thing is nothing but a load of anti-capitalist garbage and any company that adopts this has completely lost the plot.
I wonder how sale of Dairyworks is going. Bought it for $112m, selling it for ???
I'm wondering about the silence.
Back in April they said they had revised covenants that would apply to 31 July
1. Total shareholder funds of greater than $600m at all times (unchanged).
2. Working capital ratio of greater than 1.5x at all times (unchanged).
3. Interest cover ratio of no less than 2.25x as at 30 April 2023 and 31 July 2023 test dates (previously 3.0x).
4. Leverage ratio of no greater than 5.5x as at 31 July 2023 test date (previously 4.0x)
5. Senior leverage ratio of no greater than 3.5x at as 31 July 2023 test date (previously 3.0x).
Now that 31st July has passed these covenats must be
1. Total shareholder funds of greater than $600m at all times
2. Working capital ratio of greater than 1.5x at all times
3. Interest cover ratio of no less than 3.0
4. Leverage ratio of no greater than 4.0
5. Senior leverage ratio of no greater than 3.0x.
The reversion back to these covenats would imply SML have improved their balance sheet. But I don't see how this could have happened.
There has been silence on the sale of Dairy Wortks and Talbot. So there can't have been a cash injection.
There has been silence on the Mystery Overseas customer starting up production. So there can't be ant increase in revenue
It has been widely reported that demand for milk powder into china has dropped. So presumably revenue has dropped.
Of well. I suppose we just have to wait until the next market update.
Hey minimoke — last week they did say they were going to pay the farmers less for their milk
That's good ...for Synlait anyway
I think the chances of them selling assets at a good price in the current environment are slim. Not only the demand environment you mentioned Minimoke but also the cost of capital is at multiyear highs with the 10-year Govt stock rate over 5% now. It'll be interesting to see them report on 25 September. As far as I know all their debt covenants are up for review again in mid-October.
Gosh, you'd need to be very brave to be a holder of this one with their weak demand outlook and seriously stretched balance sheet but I suppose if they use an even brighter shade of pink with bigger and bolder font in their report everything will be alright...or will it?
Also worth noting that getting excluded from the NZX50 in due course, perhaps as early as the next quarterly review next month is now almost a foregone conclusion so that's further downward pressure on the share price, especially given the lack of liquidity.
Quote from: Minimoke on Aug 18, 2023, 08:53 AMI'm wondering about the silence.
Back in April they said they had revised covenants that would apply to 31 July
1. Total shareholder funds of greater than $600m at all times (unchanged).
2. Working capital ratio of greater than 1.5x at all times (unchanged).
3. Interest cover ratio of no less than 2.25x as at 30 April 2023 and 31 July 2023 test dates (previously 3.0x).
4. Leverage ratio of no greater than 5.5x as at 31 July 2023 test date (previously 4.0x)
5. Senior leverage ratio of no greater than 3.5x at as 31 July 2023 test date (previously 3.0x).
Now that 31st July has passed these covenats must be
1. Total shareholder funds of greater than $600m at all times
2. Working capital ratio of greater than 1.5x at all times
3. Interest cover ratio of no less than 3.0
4. Leverage ratio of no greater than 4.0
5. Senior leverage ratio of no greater than 3.0x.
The reversion back to these covenats would imply SML have improved their balance sheet. But I don't see how this could have happened.
There has been silence on the sale of Dairy Wortks and Talbot. So there can't have been a cash injection.
There has been silence on the Mystery Overseas customer starting up production. So there can't be ant increase in revenue
It has been widely reported that demand for milk powder into china has dropped. So presumably revenue has dropped.
Of well. I suppose we just have to wait until the next market update.
You do know the mystery overseas customer has been outed???
No I didn't know they had been outed. Who are they?
Quote from: winner (n) on Aug 18, 2023, 09:42 AMHey minimoke — last week they did say they were going to pay the farmers less for their milk
That's good ...for Synlait anyway
And Fonterra have today said they will pay even less. Looks like a race to see who can pay farmers the least.
Same name given to me by someone who works at Synlait..
Also see post no, 99 of this thread.
https://www.afr.com/companies/retail/tensions-rise-as-a2-milk-cranky-over-synlait-downgrade-20230426-p5d3al
Synlait will now have a very good idea of how there books look and ready for finalt result coming out on 25 September.
Their last guidance range was -$5m to $5m.
I reckon they will fall at the lower end of this range. But not past it as there has been no market update.
But of major concern will be the guidance.
A2M is holding a large inventory with long use by dates.
A2M is forecasting low single digit growth.
Whole milk powder demand is way down - so their new international partner may not be placing as many orders on Pokeno as they had anticipated.
Still no news of Dairyworks / Talbot divestment so balance sheet may still remain very stressed.
Synlait back at $1.38. All time low again. And time to go until results announcement
Quote from: Minimoke on Aug 29, 2023, 04:20 PMSynlait back at $1.38. All time low again. And time to go until results announcement
Don't think its the next (backward looking) results which might make the difference - more important for them is the future business.
I see two scenarios:
1) They find a customer who needs a product utilizing all this stainless steel they have, and in this case their shares are currently very cheap ... just look at the amazing NTA per share - or
2) They don't.
Not sure however, which of the two scenarios will play out, nor what the odds are.
And yes, I don't like to invest into scenarios where I don't know the odds, particularly if there are others who might do or even be able to influence the odds ...
Quote from: BlackPeter on Aug 30, 2023, 10:59 AMDon't think its the next (backward looking) results which might make the difference - more important for them is the future business.
I see two scenarios:
1) They find a customer who needs a product utilizing all this stainless steel they have, and in this case their shares are currently very cheap ... just look at the amazing NTA per share - or
2) They don't.
Not sure however, which of the two scenarios will play out, nor what the odds are.
And yes, I don't like to invest into scenarios where I don't know the odds, particularly if there are others who might do or even be able to influence the odds ...
Apparently global demand for bog standard milk powder is down and likely to remain down for some time yet.
And one close potential customer has gone and bought their own milk processing plant.
My scenario is reduced demand, increased interest costs, depreciation on all the stainless steel biting, demand from new exciting secret international customer not as high as anticipated, banks looking very closely at accounts.
I hope they have a good captain at the helm. Now sailed into previously uncharted territory - $1.35
Quote from: Minimoke on Aug 30, 2023, 04:15 PMI hope they have a good captain at the helm. Now sailed into previously uncharted territory - $1.35
Hopefully the uncharted territory and sailing involve clearing the excess stock seen in their last report. One would also hope SML is not trading while insolvent, otherwise the 'captain' and his mates may end up like Jenny Shipley.
Re-reading the 26 April market update announcement here:
https://www.nzx.com/announcements/410391
I only just noticed the previously reported massive build up of inventory was
NOT for the new client.
Quote"Demand coming from Synlait Pokeno's new multinational customer, once commercial production commences, will assist in delivering strong double-digit growth..."
Whiskey tango foxtrot....?
Disclosure: no longer hold, morbidly curious, thank you stop losses....
Quote from: Ferg on Aug 30, 2023, 08:53 PMHopefully the uncharted territory and sailing involve clearing the excess stock seen in their last report. One would also hope SML is not trading while insolvent, otherwise the 'captain' and his mates may end up like Jenny Shipley.
Re-reading the 26 April market update announcement here:
https://www.nzx.com/announcements/410391
I only just noticed the previously reported massive build up of inventory was NOT for the new client.
Whiskey tango foxtrot....?
Disclosure: no longer hold, morbidly curious, thank you stop losses....
Time for a history lesson.
5 November 2020. Synlait announce "
new multinational customer agreement" with "
Commercial production is currently projected to start mid-2022." and
"Expected to have a positive impact on earnings from FY23"And to do this
"Processing and packaging customization will be required at Synlait Pokeno and Synlait Auckland, with expected capital expenditure of $70 million spread over two years."As you point out. On 26 April 2023 Synlait say "
In addition to the demand reductions and financing and supply chain costs cited above, as previously communicated, Synlait continues to manage several material risks which could impact its year-end performance, including, but not limited to, ........the onboarding timeline for Synlait Pokeno's new multinational customer,...."And then, as you point out
"Demand coming from Synlait Pokeno's new multinational customer, once commercial
production commences..."So quite clearly this is yet another totally mismanaged project. With well over $70m (I bet they didn't do it on budget) spent, for a mystery multi national client that is at least 1 year, maybe 1 1/2 years behind production schedule. During which time Synlait has carried the development costs and will now be carrying the depreciation for zero revenue.
When the banks did their covenants they were no doubt expecting this new customer to be adding to the bottom line mid 2023 (Synlait did say
"Expected to have a positive impact on earnings from FY23") and profitably by end of FY23. This clearly hasn't happened. With no sign of revenue ley alone a positive contribution.
And in the mean time global demand for milk has dropped. In April 2020 it was rosy times with massive increase in demand forecast - heres the chart on prices.
So I reckon they are now in a position where they have spent tons of money for no production and significantly less demand than anticipated.
And the inventory reporting will be interesting. In HY2023 it was value at $467.7m compared with $335.6m prior half year. YE2022 it was $232.9m
Oops - heres the chart
SML.png
It's truly sobering to reflect that not that many years ago this was a ~ $13 stock, now all these years later without a single dividend in the meantime its now only ~ one tenth of that.
Quote from: Basil on Aug 31, 2023, 09:42 AMIt's truly sobering to reflect that not that many years ago this was a ~ $13 stock, now all these years later without a single dividend in the meantime its now only ~ one tenth of that.
And things were going so good that the Board got a standing ovation at the ASM ....everybody was so happy
But even back then cash flows didn't support the hype eh.
Quite right, as you very astutely pointed out.
Quote from: Minimoke on Aug 31, 2023, 09:10 AMTime for a history lesson.
Nicely done thanks.
Quote from: Minimoke on Aug 31, 2023, 09:10 AMSo quite clearly this is yet another totally mismanaged project.
Agreed.
Quote from: Minimoke on Aug 31, 2023, 09:10 AM...Synlait has carried the development costs and will now be carrying the depreciation for zero revenue.
Yep although they could argue with the auditors the capex is still a work in progress and delay the depreciation start date.
Quote from: Minimoke on Aug 31, 2023, 09:10 AMSo I reckon they are now in a position where they have spent tons of money for no production and significantly less demand than anticipated
Yep. "What's the worst that can happen?"
Quote from: Minimoke on Aug 31, 2023, 09:10 AMAnd the inventory reporting will be interesting. In HY2023 it was value at $467.7m compared with $335.6m prior half year. YE2022 it was $232.9m
For sure. I am waiting for the 'other shoe to drop' with inventory impairments. IMO this next report is all about inventory*. But that does raise an issue I mentioned previously: how to stop production while stocks are cleared without destroying the capacity to ramp back up again when needed? Maybe the impending job shortage might ease that. Silver lining and all that....or maybe they carry the cost of production staff standing idle or sweeping floors all day.
[edit] *and covenants / cash flow.
At current @1.30 market cap is $284m. Which for a mere $227m A2M could take a 100% stake and still have $573m cash left over.
Quote from: Ferg on Aug 31, 2023, 10:07 AMNicely done thanks.
Agreed.
Yep although they could argue with the auditors the capex is still a work in progress and delay the depreciation start date.
Yep. "What's the worst that can happen?"
For sure. I am waiting for the 'other shoe to drop' with inventory impairments. IMO this next report is all about inventory*. But that does raise an issue I mentioned previously: how to stop production while stocks are cleared without destroying the capacity to ramp back up again when needed? Maybe the impending job shortage might ease that. Silver lining and all that....or maybe they carry the cost of production staff standing idle or sweeping floors all day.
[edit] *and covenants / cash flow.
and don't forget the inventory must be sold while its still good food-grade. Buyers don't like WMP older than 6 months of age at time of shipment and SMP 12 months. Quality/flavour issues.
Quote from: Nizzy on Sep 03, 2023, 12:00 PMand don't forget the inventory must be sold while its still good food-grade. Buyers don't like WMP older than 6 months of age at time of shipment and SMP 12 months. Quality/flavour issues.
Yep - that is the "inventory impairments" I mentioned earlier. We saw this exact issue with ATM when daigou trade collapsed and some sales channels were chock full of old stock.
I remember Fonterra having a very similar inventory issue a few years back, I am not sure how they fixes it but more than likely they found new markets for there products.
The problem with inventory build is cows keep producing milk so you can not turn off the supply of raw product.
SML will want to keep as many raw milk suppliers as possible and probably took on more raw supply to fulfil demand for the somewhat mythical "new international customer".
Hells bells. It appear synlait have not been manufacturing A2's stages 1 to 3 of a2MC's current infant milk
formula (IMF) products fro China, Australia and NZ Delivery In Full On Time.
How on earth is this possible. Synlait have the farmers, they have the milk, they have the plant, and as I recall they have an excess of inventory.
What the heck have they been doing?
See today's A2M market announcement - SML yet to respond
And Synlait in to yet another trading halt while it digests A2 cancellation.
Quote from: Minimoke on Sep 18, 2023, 08:53 AMHells bells. It appear synlait have not been manufacturing A2's stages 1 to 3 of a2MC's current infant milk
formula (IMF) products fro China, Australia and NZ Delivery In Full On Time.
How on earth is this possible. Synlait have the farmers, they have the milk, they have the plant, and as I recall they have an excess of inventory.
What the heck have they been doing?
See today's A2M market announcement - SML yet to respond
Beggars belief.
You have to wonder if their culture with a totally obsessive focus on all things ESG has played a part in this fiasco? One thing is for sure, the banks will not like this and Synlait's covenants are up for review in mid-October and they have a very weak balance sheet, somewhere about break-even earnings forecasted, to be announced later this month and huge levels of debt. Gosh you'd have to be very, very brave to be holding SML shares now....
Quote from: Basil on Sep 18, 2023, 10:05 AMBeggars belief. Its not like they have been busy suppling the new customer either.
You have to wonder if their culture with a totally obsessive focus on all things ESG has played a part in this fiasco? One thing is for sure, the banks will not like this and Synlait's covenants are up for review in mid-October and they have a very weak balance sheet, somewhere about break-even earnings forecasted, to be announced later this month and huge levels of debt. Gosh you'd have to be very, very brave to be holding SML shares now....
At half year SML had $350,000,000 in loans and borrowings. And this excludes all other liabilities.
With an exclusive supply agreement in place they made a net profit of $4.8m
So I reckon it is fair to say they have zero chance of paying down debt to a decent level in the short medium term. Certainly not by 2025
We have had no news on the asset sales of Talbot and Dairy Works. So no relief there.
And if SML haven't been supplying A2M to the required DIFOT levels this clearly has to have an impact on SML's income - which must be down.
I reckon they are treading water. Just. And the water on Friday was up to their nostrils and today its up to their eyebrows.
I cannot see there being anything other than very real concern coming from the banks with this announcement.
And what does this potentially do for Bond holders?
Quote from: Minimoke on Sep 18, 2023, 08:53 AMHells bells. It appear synlait have not been manufacturing A2's stages 1 to 3 of a2MC's current infant milk
formula (IMF) products fro China, Australia and NZ Delivery In Full On Time.
How on earth is this possible. Synlait have the farmers, they have the milk, they have the plant, and as I recall they have an excess of inventory.
What the heck have they been doing?
Apparently they have been struggling with supplies and taking on more farmers since they got this new mystery customer trying to keep both customers happy ,and a2 and synlait have been seeing this coming with a2 going in to production on their own shiny new plant.
Hopefully we will get more clarity on this new customer now & their expectations
Quote from: Auto Rower on Sep 18, 2023, 10:44 AMQuote from: Minimoke on Sep 18, 2023, 08:53 AMApparently they have been struggling with supplies and taking on more farmers since they got this new mystery customer trying to keep both customers happy ,and a2 and synlait have been seeing this coming with a2 going in to production on their own shiny new plant.
Hopefully we will get more clarity on this new customer now & their expectations
Given the slowdown in dairy conversions I assume they are trying to nick Fonterror suppliers. If so - what extra margin are they having to pay these suppliers?
No worries. ....finances all sorted for now .....business as usual
A2 and Synlait still not getting on
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/418412/403201.pdf
Quote from: winner (n) on Sep 18, 2023, 03:02 PMNo worries. ....finances all sorted for now .....business as usual
A2 and Synlait still not getting on
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/418412/403201.pdf
Holey Smoke
Bankers increasing debt facilty from $350m to $470m.
Where on earth are they going to find $130m by March next year. That can only mean they remain confident on extracting top dollar for Dairy Works and Talbot - which doesn't seem realistic.
Edit. I see Synlait has a market cap of $262m today. And banks will chuck in $470m. Doesnt make sense to me.
And still no news on the international mystery customer.
Quote from: Minimoke on Sep 18, 2023, 03:11 PMHoley Smoke
Bankers increasing debt facilty from $350m to $470m.
Where on earth are they going to find $130m by March next year. That can only mean they remain confident on extracting top dollar for Dairy Works and Talbot - which doesn't seem realistic.
Edit. I see Synlait has a market cap of $262m today. And banks will chuck in $470m. Doesnt make sense to me.
And still no news on the international mystery customer.
Guidance unchanged ...that's good ha ha
A strong response from Synlait. Their balance sheet looks awfully stretched to me and don't forget its almost certain they get booted out of the NZX50 in the December rebalance. Holding their shares or bonds is not for the faint hearted that's for sure!
Quote from: winner (n) on Sep 18, 2023, 03:14 PMGuidance unchanged ...that's good ha ha
Why do they even bother telling us that. Its one week out from results day. Off course the guidance is unchanged. What a bunch of muppets.
Quote from: Basil on Sep 18, 2023, 03:20 PMA strong response from Synlait. Their balance sheet looks awfully stretched to me and don't forget its almost certain they get booted out of the NZX50 in the December rebalance. Holding their shares or bonds is not for the faint hearted that's for sure!
You are going to have to help me here. All I see is a potential 35% increase in debt. With debt being twice market cap.
Quote from: Minimoke on Sep 18, 2023, 03:37 PMYou are going to have to help me here. All I see is a potential 35% increase in debt. With debt being twice market cap.
No argument their balance sheet is VERY badly stretched. All I am saying is that the way they responded to this morning's earlier announcement by ATM is the strongest response possible. They have refuted the allegations levelled by ATM, confirmed no change to current guidance and no impact from any potential change to arrangements with ATM in terms of guidance in FY24 and announced new banking facilities. In regard to the latter matter, I don't think anyone expected confirmation of banking facilities today, certainly I didn't and thought they were a real chance of receivership in the near future.
For the sake of complete clarity, for all the reasons we have discussed before I would not touch the bonds at any price and the shares would need to be well and truly in penny dreadful territory (well under 50 cents), for me to consider a small stake as a highly speculative punt. I see both the shares and bonds as extremely risky and highly speculative, and I have no respect for the way management and the board have conducted themselves in recent years. It would be a cheap, nasty and highly speculative very small punt if I ever bother with this company again, (highly unlikely). Trust that makes my opinion clear for you mate :)
Quote from: Basil on Sep 18, 2023, 03:48 PMNo argument their balance sheet is VERY badly stretched. All I am saying is that the way they responded to this morning's earlier announcement by ATM is the strongest response possible. They have refuted the allegations levelled by ATM, confirmed no change to current guidance and no impact from any potential change to arrangements with ATM in terms of guidance in FY24 and announced new banking facilities. In regard to the latter matter, I don't think anyone expected confirmation of banking facilities today, certainly I didn't and thought they were a real chance of receivership in the near future.
For the sake of complete clarity, for all the reasons we have discussed before I would not touch the bonds at any price and the shares would need to be well and truly in penny dreadful territory (well under 50 cents), for me to consider a small stake as a highly speculative punt. I see both the shares and bonds as extremely risky and highly speculative, and I have no respect for the way management and the board have conducted themselves in recent years. It would be a cheap, nasty and highly speculative very small punt if I ever bother with this company again, (highly unlikely). Trust that makes my opinion clear for you mate :)
Nothing new in today's announcement.
Banking covenants had to be ported by end of July. Since there was no announcement I assumed they had been,
Of course year end results wern't affected. The year ended 30 July and they are reporting next week. And there had been no market announcement on change to guidance. So no news there.
And even reading A2M's announcement its obvious YE24 isn't going to be impacted. So no news there.
The only surprise was the increase int eh debt facility - and that is totally unrelated to today's A2M announcement.
I guess they had to say something. And I'm not sure what else they could have said.
I can't think of any level that would entice me into the bonds or shares at the moment
Market reaction today. Down 9.4 % to $1.16
Quote from: Minimoke on Sep 18, 2023, 05:04 PMMarket reaction today. Down 9.4 % to $1.16
Dismal volumes though
Quote from: winner (n) on Sep 18, 2023, 05:52 PMDismal volumes though
That it was. It will be an interesting week coming up to results day.
But back to the news. Heard on the radio tonight its Abbott who is the mystery international customer. I wonder why SML are so reticent about letting the name out?
Quote from: Minimoke on Sep 18, 2023, 07:26 PMThat it was. It will be an interesting week coming up to results day.
But back to the news. Heard on the radio tonight its Abbott who is the mystery international customer. I wonder why SML are so reticent about letting the name out?
That's the AFR I think, reporting that Abbott is possibly the new customer, but they don't/can't substantiate that. No way SML should communicate that if they don't have a signed contract, so that suggests ... they don't, yet.
SML have been to-date rightly rogered good and proper, one could suggest a short term trade may be emerging leading into the results, they've covered the debt situation for the meantime and slammed ATM's contention around supply which will take at least a year or so to resolve, so if they say bingo a new customer, well. They also hold the coveted and extremely important SAMR that ATM relies on. SML aren't going away anytime soon, if they did, both would be farked.
It's technically massively oversold on sustained market pessimism. For the gamblers, this is looking more and more like a nice setup to coin some upside on even a skerrick of good news. Maybe worth a small punt with a tight stop loss.
Pity that we can't even do trailing stop losses on our primitive broker platforms. Let alone any more sophisticated trading strategies.
At best a VERY high risk short term trade only, (maybe you are better off at the Casino on red or black on the roulette wheel even if SKC couldn't care less about problem gamblers), because we have NZX50 exit coming up in December and it will be interesting to see the impact on the share price as this is illiquid at the best of times and index tracking funds dumping significant amounts of stock in the lead-up to the index exit on 15 December, (I expect confirmation of exit by Dow Jones Indices on Saturday 2 December our time and intense selling pressure to build in the following 2 weeks trading leading up to match price close on exit day).
I'm not sure I agree it's been "rogered enough" Fully deserving of penny dreadful status (under 50 cents) in my opinion. In terms of bringing trouble on themselves it seems the Synlait team simply don't know how to get out of their own way. I think comms between ATM and SML are very strained at best, probably more accurate to call the parties, now 'hostile"
With no formal announcement yet to this so called major new customer, no announcement on the divestment of assets, approx break even operationally, a very heavily geared balance sheet and tensions in the boardroom at record level's, you'd be a very brave man indeed to be wading in there in any volume at this point in time. Good luck if you do, I won't be joining in at this stage.
Quote from: Buzz on Sep 18, 2023, 08:08 PMThat's the AFR I think, reporting that Abbott is possibly the new customer, but they don't/can't substantiate that. No way SML should communicate that if they don't have a signed contract, so that suggests ... they don't, yet.
SML have been to-date rightly rogered good and proper, one could suggest a short term trade may be emerging leading into the results, they've covered the debt situation for the meantime and slammed ATM's contention around supply which will take at least a year or so to resolve, so if they say bingo a new customer, well. They also hold the coveted and extremely important SAMR that ATM relies on. SML aren't going away anytime soon, if they did, both would be farked.
It's technically massively oversold on sustained market pessimism. For the gamblers, this is looking more and more like a nice setup to coin some upside on even a skerrick of good news. Maybe worth a small punt with a tight stop loss.
Pity that we can't even do trailing stop losses on our primitive broker platforms. Let alone any more sophisticated trading strategies.
Interesting to ponder whether Pumpkin Patch or Feltex ever looked massively oversold on their charts too?
Hmmmm.....
Games being played behind the scenes imo.
Market cap currently at $255m which is less than the $280m paid by ATM for 20% of the company.
I have not worked out what Bright Food paid for their 40% but it will be a lot more than $500m.
Now why would ATM deliberately spike their strategic investment in SML?
Quote from: Teitei on Sep 19, 2023, 10:23 AMGames being played behind the scenes imo.
Market cap currently at $255m which is less than the $280m paid by ATM for 20% of the company.
I have not worked out what Bright Food paid for their 40% but it will be a lot more than $500m.
Now why would ATM deliberately spike their strategic investment in SML?
Fun and games eh
How does a mere mortal make money out of this?
Buy Synlait and hope for a $2 takeover?
Other ideas
Quote from: winner (n) on Sep 19, 2023, 10:35 AMFun and games eh
How does a mere mortal make money out of this?
Buy Synlait and hope for a $2 takeover?
Other ideas
One way or the other, SML will be fixed by Bright Foods/ATM as there is too much at stake for both.
The issue for me is one of timing as to when to get in.
At this stage, the big unknown is how much they will get for the asset sales (will get rather than may get imo).
For sure - you would expect people to park their egos in their pursuit of $$$. Why pay $2 for something when you can buy it for $1? I hope for holders sakes this not about egos.
Quote from: Ferg on Sep 19, 2023, 12:15 PMFor sure - you would expect people to park their egos in their pursuit of $$$. Why pay $2 for something when you can buy it for $1? I hope for holders sakes this not about egos.
There is such a thing as 'saving face' with the Chinese. Something to watch out for.
Could be worth a cheap, nasty and risky punt when it gets booted out of the NZX50 in Dec. Would need to be very cheap to get my interest.
Too much debt for me.
As expected a $4.3m loss from a profit of $38.5 last year.
But what of the state they are currently in? So I first head to the asset / liabilities section and I am wondering how they are a going concern.
Cash on hand $9.3m down from $14.5 last year.
And from that they have to pay Account payables which are $281m.
Maybe they are relying on account receivables which are $83m
So on day to day trading they are short $188.7m
And lets just have a look at wages. About $6.7m a month. So cash on hand means they can meet this months payroll.
So, to start it looks like they only have enough cash to pay this months wages without worrying about amounts due to suppliers.
But lets look at the debt. Current loans and borrowings $243.7m. Up from $58.8 last year. Add on long term loans and borrowing s of $179m (bonds) I get $422.7m Up from $354.4m last year.
In the last update Synlait said they had new debt facilities of $480m. But they are now carry $422.7 in debt and stil need to find $188.7 to pay net payables. Which gives me a short fall of $131m (which excludes paying wages)
If we take the bonds out there is only $48.3m in debt head room
And if we look at current liabilities vs current assets theres a gap of $62m. Which can't be filled by the debt head room
They really, really need to sell Dairy works / Talbot or there's a capital raise on the horizon.
I was looking for the forwarward guidance statement. Found it. There is none. So company and shareholders are flying blind.
Is the new "International customer" SAVENCAI group? JOYHANA branded UHT cream sold to them for margin attainment of approx ($0.2 million). Other than that no mention of the new International Customer.
They say Operating Cash Flow $39m ....but take interest and lease payments off it goes NEGATIVE
Not good
You guys are right, its uninvestable at any price.
So many lessons already from studying this slow-motion train wreck over recent years.
I suspect Bright Dairy are quite happy to let this fall into receivership in due course and pick up the pieces for cents on the dollar.
I predict this. On Saturday 2 December our time, S&P Global will announce their exit from the NZX50 effective from close of trade on 15 December.
Anyone left holding the baby then is going to find themselves in a world of hurt as serious selling pressure comes on this highly illiquid stock.
Market seems to like it. Up 1.6% to $1.29. On very small volume.
And on a pleasing note Chair dedicates 1/7th of his report to B Corp. That will help get them out of the muck
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/418751/403611.pdf
Quote from: Basil on Sep 25, 2023, 04:08 PMhttp://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/418751/403611.pdf
Suppose making it hard to read is done on purpose
Did see they aiming for a B Corp score of 105
Quote from: Basil on Sep 25, 2023, 04:08 PMhttp://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/418751/403611.pdf
Thanks.
They have absolutely nothing to offer and have to scrape the bottom of the barrel for key highlight
- Jayhena 757MT sold for ($200,000) margin attainment
- SAMR - that was always on the cards
- Total Recordable Injury Frequency Rate >30% In a non-hazardous work environment.
- Executive Leadership Team renewal (does that mean clearing out the dead wood?)
These are essentially just business as usual achievements.
No mention of how much money the new electric boiler has saved.
Quote from: winner (n) on Sep 25, 2023, 04:22 PMSuppose making it hard to read is done on purpose
Did see they aiming for a B Corp score of 105
The ambitions for FY 2028 (on page 20) are just hopeless.
Nothing there about looking after shareholders. Synlait appears to be a vehicle for individuals to prove how virtuous they are on the latest social fad.
You've got to be impressed with the purpose though
DOING MILK DIFFERENTLY FOR A HEALTHIER WORLD
Page 16 - A lot of new Chinese and overseas banks in the syndicate. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/418751/403615.pdf
Bet you the banks leaving the syndicate are very relieved to be out.
Quote from: Minimoke on Sep 25, 2023, 04:27 PMThe ambitions for FY 2028 (on page 20) are just hopeless.
Nothing there about looking after shareholders. Synlait appears to be a vehicle for individuals to prove how virtuous they are on the latest social fad.
That's why its uninvestable. Their whole focus is on the planet and people. B corp really means B.S. corp.
Quote from: Minimoke on Sep 25, 2023, 04:27 PMThe ambitions for FY 2028 (on page 20) are just hopeless.
Nothing there about looking after shareholders. Synlait appears to be a vehicle for individuals to prove how virtuous they are on the latest social fad.
Why? They propose a 15% return on capital (that's the bottom middle pic). Given that they wasted so far only 49% of the capital they received in IPO and CR, this means they have another 36% of the shareholder capital to waste until they return their shareholders the remaining 15%.
Great invesstment - and I recon they might be right on track :) ;
I see Dairyworks made 5m profit while Synlait lost 15m
Wonder what they get for Dairyworks
Paywalled. Synlait does not rule out another capital raise if it can't sell Dairyworks.
https://www.nzherald.co.nz/business/will-synlait-have-to-raise-fresh-capital-if-sale-of-dairyworks-falls-through/REMNT7EET5DZ3EEHRDYHXAHXDU/?lid=5uxeyk9dmueq&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=News_Direct_Business_Headlines&uuid=ae2dd95d629344ca8119b12a0d7d7338
Contains interesting commentary from yesterday's analysts call.
Quote from: winner (n) on Sep 26, 2023, 01:17 PMI see Dairyworks made 5m profit while Synlait lost 15m
Wonder what they get for Dairyworks
They are expecting to get $177,881,000 for it.
They paid 7.5x EBITDA for it. Not sure how good this valuation is. But they need the cash by March next year as a requirement of their banking covenants. Reading the Annual report suggests they have someone at least kicking the tyres - and it might be a bit further progressed than that.
Quote from: Basil on Sep 26, 2023, 01:45 PMPaywalled. Synlait does not rule out another capital raise if it can't sell Dairyworks.
https://www.nzherald.co.nz/business/will-synlait-have-to-raise-fresh-capital-if-sale-of-dairyworks-falls-through/REMNT7EET5DZ3EEHRDYHXAHXDU/?lid=5uxeyk9dmueq&utm_source=newsletter&utm_medium=nzh_email&utm_campaign=News_Direct_Business_Headlines&uuid=ae2dd95d629344ca8119b12a0d7d7338
Contains interesting commentary from yesterday's analysts call.
Given A2M's recent torpedo across the bows I cant see them being too interested in throwing more cash in.
Quote from: Minimoke on Sep 26, 2023, 05:02 PMGiven A2M's recent torpedo across the bows I cant see them being too interested in throwing more cash in.
What's the bet that Bright Dairy would be the underwriter if it comes to a capital raise.
In the call, when pressed by analysts they said there were multiple parties interested in Dairy works. What they can get with the cost of capital so high at this point remains to be seen through and for all intents and purposes they are forced sellers or at best "very highly motivated" sellers and buyers will know that.
Quote from: Basil on Sep 26, 2023, 06:56 PMWhat's the bet that Bright Dairy would be the underwriter if it comes to a capital raise.
In the call, when pressed by analysts they said there were multiple parties interested in Dairy works. What they can get with the cost of capital so high at this point remains to be seen through and for all intents and purposes they are forced sellers or at best "very highly motivated" sellers and buyers will know that.
The Chinese owners are continuing to pour their money into Westland Dairy. $70m investment to construct a new lactoferrin plant.
Quote from: Basil on Sep 26, 2023, 06:56 PMWhat's the bet that Bright Dairy would be the underwriter if it comes to a capital raise.
That would be interesting. Given that Bright have about 40% then being an underwriter would almost certainly take them above 50% which would trigger a "Change of control" event for SML010 bonds which entitles bond holders to choose to redeem their bonds which they all would choose to do.
Quote from: Doug on Sep 27, 2023, 06:29 PMThat would be interesting. Given that Bright have about 40% then being an underwriter would almost certainly take them above 50% which would trigger a "Change of control" event for SML010 bonds which entitles bond holders to choose to redeem their bonds which they all would choose to do.
Bright are clearly much more involved than before. Look at the re-financing. Synlait's new banking syndicate members are ANZ, Bank of China, China Construction Bank, HSBC, and Rabobank. No question who brokered this.
Immediate capital concerns have eased and Synlait still has world class production facilities and, more importantly, the key licenses. The successful sale of Dairyworks (the disgrace that is Talbot doesn't even get a mention anymore) might get me a little interested...
Agree 100% with your first paragraph...but yes if they can sell dairy works for a fair price then....what's left is a Chinese controlled company with an appalling track record of communication, a culture of extreme wokeism, still saddled with far too much debt, minimal earnings, a soft demand outlook that's never ever paid a dividend and is unlikely too in the foreseeable future. The icing on the cake is they are almost cast iron guaranteed to be kicked out of the NZX50 in the December rebalance with all the selling by index funds that involves. Gosh, you'd almost have to have a death wish for your capital to be invested here at this point lol
Quote from: Basil on Sep 28, 2023, 11:53 AMAgree 100% with your first paragraph...but yes if they can sell dairy works for a fair price then....what's left is a Chinese controlled company with an appalling track record of communication, a culture of extreme wokeism, still saddled with far too much debt, minimal earnings, a soft demand outlook that's never ever paid a dividend and is unlikely too in the foreseeable future. The icing on the cake is they are almost cast iron guaranteed to be kicked out of the NZX50 in the December rebalance with all the selling by index funds that involves. Gosh, you'd almost have to have a death wish for your capital to be invested here at this point lol
Haha, I thought that might provoke a rapid response from you! I'm not writing SML off yet (nor am I leaping to invest either!)
No question they have dug a deep and dirty hole for themselves. Chinese control is neither here nor there for me. I do like that they're appearing to be a less silent partner though. Debt is obviously their biggest problem. Earnings and demand are variable. Abbott represents the possibility of a sustained fillip to both. However; as you say, the comms around this have been a silent circus. There may be a low point after the NZX50 index reshuffle and assuming the sale of Dairyworks (and no further filth coming to light) where this is worth some attention. Lots of milk to flow under the bridge first thou, eh.
If it's come to the stage that New Zealand can't run a dairy company, is there any point in carrying on?
Quote from: Henry Filth on Sep 29, 2023, 06:58 AMIf it's come to the stage that New Zealand can't run a dairy company, is there any point in carrying on?
Fonterra isn't doing that bad I hear. Maybe its not the industry - just a specific board?
Quote from: BlackPeter on Sep 29, 2023, 10:51 AMFonterra isn't doing that bad I hear. Maybe its not the industry - just a specific board?
Fonterra
IS 80% of the industry. Last year their financials were good. However; they have their issues too, not least losing hundreds of shareholding farms every year for the past five years (a drop of 813 since 2019.) In August they flagged the need for $1B of cost cutting. Fonterra's share price five years ago was $5.40cps It's now at $2.30. Fonterra farmers have to buy shares before they can supply milk, so any farmer who bought at around $5-$6 each five years ago have seen their value halved and more. That's some serious negative equity!
Beyond that: Mataura Valley had to be bailed out by A2. Westland got flogged to the Chinese in a distressed sale. Tatua Co-Operative is the smallest (1%) and the most consistent performer - take what you will from that. Overall we struggle to do milk well.
Quote from: Hectorplains on Sep 29, 2023, 11:39 AMOverall we struggle to do milk well.
This statement needs further qualification. Fonterra with the strength of their brands will continue to dominate dairy in NZ. Fonterra was formed by the amalgamation of NZ Dairy and Kiwi Dairy in order to be big enough to compete in supply terms on world markets with the global heavyweights like Nestle, Danone etc. Farmers could not sell their Fonterra shares by mandate for, I think it was the 1st 10 years following Fonterra's formation. Then following deregulation, a number of new dairy companies started up, and Fonterra again by mandate had to supply milk to those companies at prices allowing them to compete. Strange by todays standards.
Rather than the No. of farmer suppliers, perhaps we should look at the total litres of milk supplied to Fonterra. (Sorry I don't have that figure). It always was expected for a number of suppliers to move to supplying competitor dairy companies. Also farms have continued to be amalgamated into larger acreages with larger herds accounting for some of the decline.
In the last 20 or so years, farm gate returns have ranged from ~$4 to just under $10 per kg ms, always a reflection of the global market demand for milk proteins. So when countries like China are behind that drive in demand, as we have seen with whole milk powder, Fonterra can respond with the highest quality product available anywhere in the world. We NZ citizens benefit hugely from the tax take that demand generates. However like any global market, when the demand slackens as it has recently, we as a small nation get abnormally affected.
In the scheme of things Synlait, A2 and others are minnows, but give them their due for exploiting those niche markets- no one can deny the success of A2 - albeit on the back of a NZ reputation for producing absolute top quality dairy products.
Before anyone jumps the gun in response, there are associated issues to address like too many cows per hectare on Sth Island stoney gravelly soils.
I believe a finger can be pointed towards over exuberant or questionable competent company management at times, witness Synlait's recent years of debt management, or Fonterra's China debacle that was Beingmate, or Westland's drive to be one of the specialty products suppliers for lactoferrin when the market was already over supplied.
It's not often I sing praises for Fonterra, but if it were not for their farmer supplier owned co-operative structure which only allows company share ownership (not withstanding FSF shares) if you are a supplier of milk to Fonterra, then we would have seen the company taken over by the likes of Nestle who would love to have got their hands on all that stainless steel. The monopoly position would have turned NZ dairy farmers into peasant farmers forced to accept marginal payments for their milk, and all of NZ left worse off as the profits went off-shore. Co-ops have their problems but they also have benefits in this case to NZ dairy farmers.
Overall do we struggle to do milk well - yeah, nah, it's called the market.
This scathing Article (https://www.nzherald.co.nz/business/big-read-why-hasnt-fonterra-worked/ME3AKFTQXVCCN76HYO7PBTAVEA/), albeit seven years old is still relevant and it negates much of what you're arguing. Fonterra was actually formed to address the swings in commodity prices in "the market." The remedy was to be in 'new revenues' for value added products. The outcome though has been more intensive dairying and an acceleration in production of low-value products, mostly milk powder. The innovation as you rightly point out has come from A2 and others, not Fonterra.
I don't agree with your dystopian extrapolation of a foreign take over of Fonterra turning NZ dairy farmers into peasant farmers forced to accept marginal payments for their milk. There were other ways to protect farmers and New Zealand interests. A takeover was not guaranteed, and if one was forthcoming it would be highly unlikely to have received approval. The measure of Fonterra's success, or otherwise, is not on what it may have prevented but on what it has actually achieved. It has not achieved what it was set up to do.
I didn't see Tony Baldwin's article as scathing at all, more a balanced account of what happened or failed to happen over the years. His account is no surprise given that he was far closer involved with the process. I was trying to give a potted history as I remembered the arguments for and against the formation of Fonterra some 14 years before that article was written, and at that time the prospect of an eventual takeover by a major multinational was very much to the fore. Could have been scare tactics to influence the farmer vote - who knows?
What does come through in the article is the difficulty Fonterra has in raising capital from the international money lenders who are wary of companies with multiple owners which is what a co-op is; too hard to get owner consensus on major change proposals that require multiple meetings of owners - still the case today. This limits Fonterra's ability to raise capital; essentially can only raise capital from its shareholders.
Appreciate the link to Tony Baldwins interesting article.
Time to return the thread to Synlait matters.
Quote from: Whome on Sep 29, 2023, 05:02 PMThis statement needs further qualification.
Overall do we struggle to do milk well - yeah, nah, it's called the market.
I have worked in the NZ dairy industry (management) for over 30 years. Anchor Products (NZ dairy = half of fonterra), Tatua, DGC. And I have had extensive business, procurement and auditing relationships with Fonterra, Westland, Open Country and Synlait
The problems with Fonterra are
- price taker (through GDT), not a price setter
- mainly a commodity player, so little customer loyalty
- does not own many "brands", and brands are where the real money comes from through....... brand loyalty
- not user-friendly to deal with
- lack of value-added products (with corresponding brands)
- has been reducing head count for two decades at the expense of new product development and quality
- way too many eggs in one basket (China)
- poor CEO selections (Theo Speirings, Craig Norgate, the Canadian sugar guy who's name escapes me)
- poor director selections (they should have addressed CEO non performance)
- terrible investment decisions (Australia, Uruguay, Argentina, Sri Lanka etc etc)
- successive bad ERP software selections and implementations
The enabling legislation (DIRA) that allowed fonterra to form, was written by fonterra and agreed to by dairy farm owners. It is not the reason why fonterra has failed, they mismanaged themselves into failure
Andrew Ferrier was the Canadian who was CEO of Fonterra earlier this century
From yesterday's Herald. (https://www.nzherald.co.nz/business/mood-of-the-boardroom-fonterra-keeps-focus-on-china/TROEWTTJPFAIZC7LTQWHFJKZ5A/) While it's a Fonterra focus, some of the points are also in play for Synlait.
Global dairy auction tonight . The Futures market is suggesting rises across all the categories. At the top end ANZ are tipping 5% plus, while at the bottom Westpac reckon on 1%. Prices were up 4.6% in the previous auction a fortnight ago, with the key whole milk powder up over 4.6%
The talk is of concern around milk supply as early season NZ milk production is down 2.1%, with the forecast El Nino weather pattern likely to restrict supply further. It looks like August was bottom for prices. The longer term view is more positive with Chinese demand rebounding from 2024. That demand will allow Synlait to move inventory more quickly. Another duck, that while not yet lined up, is at least not floating upside down in the pond.
One of the best risk-adjusted fixed interest investments in the market has to be the SML 2024 bonds imo.
I have quietly picked up a parcel in recent times and believe that those who bought the bonds at 3.83% pa yield and sold out at up to 18% pa have not thought through the strategic nature of SML to Bright Foods and ATM.
Both would be very happy to take out the company completely at around current valuations (sp $1.43 vs NTA of $3.21) which could yet happen if SML makes a heavily discounted rights issue, underwritten by the principal shareholders.
Do the bondholders have any idea how long (& geopolitically difficult) it takes for a China company to build up a primary sector player like SML?
There will be a time to play SML shares - the major risk now being the NZX re-indexing in Decemeber.
Quote from: Teitei on Oct 03, 2023, 10:13 AMOne of the best risk-adjusted fixed interest investments in the market has to be the SML 2024 bonds imo.
I have quietly picked up a parcel in recent times and believe that those who bought the bonds at 3.83% pa yield and sold out at up to 18% pa have not thought through the strategic nature of SML to Bright Foods and ATM.
Both would be very happy to take out the company completely at around current valuations (sp $1.43 vs NTA of $3.21) which could yet happen if SML makes a heavily discounted rights issue, underwritten by the principal shareholders.
Do the bondholders have any idea how long (& geopolitically difficult) it takes for a China company to build up a primary sector player like SML?
There will be a time to play SML shares - the major risk now being the NZX re-indexing in Decemeber.
Gutsy call mate...I am inclined to agree at 18%. With very limited bonds now for sale (13,000 at 16.5%), that's not enough for me to even bother taking a micro position but if there's decent supply again at 18% I'll certainly think about it. No question Bright Dairy took a very proactive approach towards helping Synlait get new Chinese banks involved in their banking syndicate and are taking a far more supportive approach generally and we all know they have deep pockets. Good luck with it.
Quote from: Basil on Oct 03, 2023, 10:32 AMGutsy call mate...I am inclined to agree at 18%. With very limited bonds now for sale (13,000 at 16.5%), that's not enough for me to even bother taking a micro position but if there's decent supply again at 18% I'll certainly think about it. No question Bright Dairy took a very proactive approach towards helping Synlait get new Chinese banks involved in their banking syndicate and are taking a far more supportive approach generally and we all know they have deep pockets. Good luck with it.
Got to be there (quietly) when panic stricken bondholders (and shareholders) unload - that's when the 17% to 18% yielding bonds become available.
I am aware that one major broking house added millions of dollars of the bonds to their clients' bond portfolio when they were issued. Clients had been ringing them up expressing concern and it is easier for the firms' advisors to sell them out for capital loss of around 12% than to explain to them.
Couple of my contacts work for the China banks - I actually think they wished that Bright Foods would use them to make a full takeover offer for SML. Unlikely to happen imo unless it gets to be a FAP situation and Bright Foods is seen as a white knight.
Anyway, all fun and game out there!
Quote from: Hectorplains on Oct 03, 2023, 09:47 AMGlobal dairy auction tonight . The Futures market is suggesting rises across all the categories. At the top end ANZ are tipping 5% plus, while at the bottom Westpac reckon on 1%. Prices were up 4.6% in the previous auction a fortnight ago, with the key whole milk powder up over 4.6%
The talk is of concern around milk supply as early season NZ milk production is down 2.1%, with the forecast El Nino weather pattern likely to restrict supply further. It looks like August was bottom for prices. The longer term view is more positive with Chinese demand rebounding from 2024. That demand will allow Synlait to move inventory more quickly. Another duck, that while not yet lined up, is at least not floating upside down in the pond.
Good results from last night's global dairy auction :
https://www.stuff.co.nz/business/farming/agribusiness/133055361/farmers-will-be-happy-with-the-latest-gain-in-global-dairy-prices
The price of whole milk powder, which has the most impact on farmgate milk prices, gained for a third straight global auction, welcome news for dairy farmers as the industry heads into peak milk season.
The average price for whole milk powder rose 4.8% to US$2931 (NZ$4870) a tonne at the Global Dairy Trade auction overnight. The overall index gained 4.4% with five of the seven products increasing in price.
Global dairy prices fell sharply at the start of this season amid lacklustre demand from China, Fonterra's biggest market for whole milk powder. But Chinese buyers returned to the market last month, pushing up whole milk powder prices almost 10% following an 18% slump in August.
Investor day at Pōkeno plant on October 30. I assume that's when the public disclosure of the major multinational customer for advance nutrition products is made...Hello Abbott.
Tatua final milk payout $12.30 a kg. Maybe Synlait should benchmark themselves against that company rather than B Corps.
(Synlait are looking at $7.00 a kilo)
Quote from: Minimoke on Oct 06, 2023, 07:00 AMTatua final milk payout $12.30 a kg. Maybe Synlait should benchmark themselves against that company rather than B Corps.
(Synlait are looking at $7.00 a kilo)
Maybe too they could nab some of Tatua's management instead of Fonterra recycles?
Quote from: Hectorplains on Oct 06, 2023, 09:17 AMMaybe too they could nab some of Tatua's management instead of Fonterra recycles?
Hope so then depink/dewoke
Synlait and A2 unable to resolve their differences over the 20 day negotiation period. So it is off to confidential and binding arbitration.
This morning's Global Dairy Trade auction registered a big gain for the fourth time in a row. Good momentum!
How does that help Synlait though mate ?
I am sure you haven't forgotten this is almost certain to face elimination from the NZX50. Who is going to be brave enough to mop up that significant quantity of compulsory index-based selling and at what price ? $1.00 on the cards ?
Quote from: Basil on Oct 18, 2023, 10:39 PMHow does that help Synlait though mate ?
I am sure you haven't forgotten this is almost certain to face elimination from the NZX50. Who is going to be brave enough to mop up that significant quantity of compulsory index-based selling and at what price ? $1.00 on the cards ?
Well, it helps Synlait make more money! But you're right it won't save their share price come December.
However; if the milk prices stay up and they offload Dairyworks, that December dip you are forecasting might be a good buying opportunity. I thing it's worth watching...never say never, eh.
Quote from: Basil on Oct 18, 2023, 10:39 PMHow does that help Synlait though mate ?
I am sure you haven't forgotten this is almost certain to face elimination from the NZX50. Who is going to be brave enough to mop up that significant quantity of compulsory index-based selling and at what price ? $1.00 on the cards ?
Good reminder!
Keep eyes on the big picture always!
Quote from: Hectorplains on Oct 18, 2023, 10:57 PMWell, it helps Synlait make more money! But you're right it won't save their share price come December.
However; if the milk prices stay up and they offload Dairyworks, that December dip you are forecasting might be a good buying opportunity. I thing it's worth watching...never say never, eh.
Unlike you I do have serious reservations about Chinese controlled companies (you see their arrogance in the disgustingly pathetic level of comms with shareholders in recent years, Pokeno fiasco one good example), so while I would never say never, unless they can execute a sale of Dairyworks very soon and reduce debt, then the shares deserve to be well and truly in the dog box. To be honest, I just mainly follow this as a study of train wrecks and an interesting case study of what not to do in business.
Quote from: Basil on Oct 18, 2023, 10:39 PMHow does that help Synlait though mate ?
I am sure you haven't forgotten this is almost certain to face elimination from the NZX50. Who is going to be brave enough to mop up that significant quantity of compulsory index-based selling and at what price ? $1.00 on the cards ?
Could be an amazing opportunty for the Chinese (or a strawman?) to do a takeover on the cheap?
23 October 2023
Resignation of Synlait Chair
The Synlait Milk Limited (Synlait) Board advises that Simon Robertson has resigned as Chair and
Independent Director of the company.
Synlait's Nominations Sub-Committee will immediately commence a search for an Independent Director to
fill the vacancy. The Board expects the new Independent Director will be suitable to be appointed as
Chair.
Independent Director Paul McGilvary has been elected Acting Chair until the position is permanently filled.
Paul was elected with the full support of the Board.
Hmmm, he's only been in the big seat since December and less than 3 years on the Board in total. That's not exactly encouraging then...
The company blurb reckons, "Simon has a proven track-record in strategy and capital-intensive infrastructure investment." Shareholders didn't get to enjoy much of that at SML.
Simon's resignation is effective immediately.
I would guess either health or a bun fight.
I'd wager this is the result of a breakdown at board level due to conflict between the 3 Bright Dairy appointed directors, (they recently appointed senior members of their team), and other directors. Good luck finding a capable replacement independent director to Chair this company...not that many capable people want the stress of a "hospital pass"
Quote from: Basil on Oct 23, 2023, 12:00 PMI'd wager this is the result of a breakdown at board level due to conflict between the 3 Bright Dairy appointed directors, (they recently appointed senior members of their team), and other directors. Good luck finding a capable replacement independent director to Chair this company...not that many capable people want the stress of a "hospital pass"
...surely there's a few more ex-Fonterra employees with time on their hands...
https://www.nzherald.co.nz/business/synlait-milk-chairman-simon-robertson-resigns-paul-mcgilvary-elected-acting-chair/67NM3VVHXNGVXHP42K5Q4K5HKM/
Quote from: Basil on Oct 23, 2023, 04:07 PMhttps://www.nzherald.co.nz/business/synlait-milk-chairman-simon-robertson-resigns-paul-mcgilvary-elected-acting-chair/67NM3VVHXNGVXHP42K5Q4K5HKM/
This is very concerning.
A resignation with immediate effect. No notice given. And the best they can say is "I would like to thank Simon for his contribution to Synlait. We wish Simon well with his future endeavours."
Even when Nigel Macdonald left they said "Nigel has built and led Synlait's operations team through COVID-19, which was a challenging period for the company and its people. Nigel leaves with Synlait's best wishes and thanks."
Watson probably doing a bit of clean out of his office I reckon ......Next to go
But Penno hangs in there to the bitter end
Robertson was only appointed to Synlai Director in Nov 2020 and to the Chair in December 2022. That is one very short tenure.
Especially when compared with Ruth Richardson - she been there since 2004. I wonder if she knows she is still a board Member? And Penno has been on the board since 2018.
Quote from: Minimoke on Oct 24, 2023, 03:04 PMRobertson was only appointed to Synlai Director in Nov 2020 and to the Chair in December 2022. That is one very short tenure.
Especially when compared with Ruth Richardson - she been there since 2004. I wonder if she knows she is still a board Member? And Penno has been on the board since 2018.
She still mates with the Ship?
They could compare notes on Directors insurance?
Trying to wade my way through a 30 page power point presentation for today's Investor Day at pokeno.
Seems they have spent a lot of time designing icons. And stil lkeeping with the pink. Oh well!
But really got stuck looking at the detail when I only got to Slide three and I read Synlait reckon they are "Processing partner of choice". And I'm wondering, was the person that set up this presentation not aware that SML's biggest processing partner is taking them to arbitration for not being a great pattern.
Seems they have had one of those meetings where they through all these random marketing / production ideas on a white board. And the Icon designers have mashed the lot together to make it look pretty (by Bcorp standards - not mine) without a lot of factual detail.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/420677/406022.pdf
Didn't notice any chart on how their debt has really ballooned over the years, arguably the single most important factor when considering this company as an investment right now. No charts on how eps has deteriorated over the years either. Think they are trying to bamboozle institutions with their long-term goals and ESG aspirations. Good luck with that lol
Quote from: Basil on Oct 30, 2023, 10:12 AMhttp://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/420677/406022.pdf
Didn't notice any chart on how their debt has really ballooned over the years, arguably the single most important factor when considering this company as an investment right now. No charts on how eps has deteriorated over the years either. Think they are trying to bamboozle institutions with their long-term goals and ESG aspirations. Good luck with that lol
Don't expect them to provide any pertinent information while the bigger game is being played behind the scene.
I am calling a takeover to happen or control to pass in December when SML's sp goes into a steep fall due to exit from indices.
There is a time to play this stock!
That's a highly speculative play you've outlined there mate.
Quote from: Minimoke on Oct 30, 2023, 09:49 AMTrying to wade my way through a 30 page power point presentation for today's Investor Day at pokeno.
Seems they have spent a lot of time designing icons. And stil lkeeping with the pink. Oh well!
But really got stuck looking at the detail when I only got to Slide three and I read Synlait reckon they are "Processing partner of choice". And I'm wondering, was the person that set up this presentation not aware that SML's biggest processing partner is taking them to arbitration for not being a great pattern.
Seems they have had one of those meetings where they through all these random marketing / production ideas on a white board. And the Icon designers have mashed the lot together to make it look pretty (by Bcorp standards - not mine) without a lot of factual detail.
Well, I think the message is quite clear:
1) Synlait's future is pink!
2) their new strategy is really complicated but pink and needs to be kept under wraps ... but
3) they identified a need for selling more cream and intend to cream the Chinese market :);
While some customers clearly have been happy to pay a premium to feed their prince or princess this amazing NZ sourced IF with a happy teddy bear on the can, I am wondering whether the same instincts apply if they buy for themselves a slice of unhealthy cake, made with NZ cream?
If I think about it - if I buy a slice of cake, I have normally no clue where the baker buys the ingredients.
Hmm - :confused: .
Just curious - I noticed they published Friday afternoon an amended waver decision for various NZX listing rules.
https://www.nzx.com/announcements/420643
Clearly - if I would hold the shares I would need to read this document often enough to get the point.
However, I don't.
Anybody got a grasp of what they changed and why?
Sudden departures seem to be a contagion amongst the Dairy leadership crews. Fonterra's chief financial officer, Neil Beaumont, has resigned after eight months in the job. No explanation for his abrupt resignation. Next stop for him... SML 8) ?
Quote from: Hectorplains on Nov 01, 2023, 09:53 AMSudden departures seem to be a contagion amongst the Dairy leadership crews. Fonterra's chief financial officer, Neil Beaumont, has resigned after eight months in the job. No explanation for his abrupt resignation. Next stop for him... SML 8) ?
Ouch.
But yes, sudden departures of CFO's without a reasonable explanation make one wonder. Clearly - somebody who matters was unhappy.
Anybody know what the real purpose of Synlait having a Director of On-Farm Excellence?
I can understand a Director of Manufacturing but On-Farm Excellence.
Quote from: winner (n) on Nov 04, 2023, 03:52 PMAnybody know what the real purpose of Synlait having a Director of On-Farm Excellence?
I can understand a Director of Manufacturing but On-Farm Excellence.
***Warning the following post contains graphic examples of ESG madness, that may be upsetting to some people***
I believe that the full title is: Director of On-Farm Excellence and Business Sustainability. It probably takes two business cards to fit all that on it, which isn't very eco friendly. The irony of that being, that this is the person responsible for kicking all their ESG goals.
Every winter the highlight of this role comes at the SYNLAIT FARMER SUPPLIER CONFERENCES AND DAIRY HONOURS AWARDS. These 'awards' include; "For a healthier World " and "Greenhouse Gas."
Possibly the job should be referred to by abbreviation: Director of DoOFE and BS. Or maybe even shorter still: Director of BS.
[/quote]
Stocktalk doesn't sound positive about the Dairywork's sale. Raising more equity versus selling Pokeno or Dunsandel. That'd put Synlait firmly between the devil and the deep blue sea.
Synlait Milk's Pokeno site visit for institutional investors this week revealed little but offered a few clues about what might happen next for the cash-strapped dairy processor.
The company's Dairyworks business is for sale. It said the process had been "challenging", according to Forsyth Barr analyst Matt Montgomerie, who attended the event.
"They used the term 'optimistic' in terms of pricing from prospective buyers," Montgomerie said.
"There was an evident change in language from only a few months ago when they sounded quite confident with respect to getting that asset sold," he told Stock Takes.
The company has four options if the sale does not go ahead: raise more equity; sell other assets such as Pokeno or its Dunsandel facility; seek alternative debt arrangements; or bring in a strategic investor.
"The first and second - an equity raise or an asset sale - seem more likely to me than the other two," Montgomerie said.
Market analysts have valued Dairyworks at around $150 million.
Synlait, at its site visit, talked of the opportunities for cream. "The investor day centred around advanced nutrition and alternatives to broaden the portfolio into adult nutrition, and within that trying to leverage their hybrid plant and dairy processing capacity at Pokeno with the idea of further diversifying the customer base and trying to take advantage of the potential halo effect from gaining [US company] Abbott as a customer," Montgomerie said.
"There was also quite a focus on food service and cream opportunities which Fonterra has been very successful at in China and in the broader Asian market," he said.
"Synlait is trying to repeat the Fonterra playbook - to try and get a slice of that pie, but it's early days."
The jewel in Synlait's crown is its Dunsandel plant - which has the licence to make Chinese-label infant formula for its biggest customer and 20 per cent owner, a2Milk.
The company was hit hard by the Covid-19 pandemic, which took it into the red, but its debt woes arose from its desire to lessen its reliance on a2 Milk.
Synlait has expanded aggressively in recent years through acquisitions and by building extensive manufacturing facilities at Pokeno, at the end of Auckland's Southern Motorway.
Late last month, the company announced that Simon Robertson had resigned as chairman and as an independent director. Independent director Paul McGilvary has been elected acting chairman until the position is permanently filled.
Can't help wondering if they try and go down the capital raise route whether there will be any appetite from investors and how those who subscribed to the $200m raise @ $5.10 three years ago would feel about being asked for more money at say $1, after all the promises made last time http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/362927/334702.pdf
Wonder how many might ponder...is there any logic in throwing good money after bad ?
Pretty sure I recall the last time they passed the begging bowl around they emphatically said words to the effect that they are really going to laser focus on making money. How many mindless new capital intensive ESG initiatives since then ? What are they going to promise this time?
Will they continue to invest heaps chasing their other B Corp Objectives despite their dire financial position.? Answer, Is the Pope a Catholic...
Mark my words...one day after Bright Dairy have completely wrecked this company and its balance sheet, they will take it over and steal it for a song.
Anyone investing in this expecting a fair offer from them in due course is very naïve and on a fool's errand.
Quote from: Basil on Nov 05, 2023, 05:13 PMCan't help wondering if they try and go down the capital raise route whether there will be any appetite from investors and how those who subscribed to the $200m raise @ $5.10 three years ago would feel about being asked for more money at say $1, after all the promises made last time http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/362927/334702.pdf
Wonder how many might ponder...is there any logic in throwing good money after bad ?
Their reticence to go to shareholders suggests they feel the same.
I thought Dairyworks would be a reasonably easy sale. That has been the narrative from Synlait too. It has been an ok investment (sadly it might be their best performing to date.)
They've gone to radio silence on the mess that is Talbot. You'd be hard pressed to find a bunny to stitch that up with at any price. What happened to all those fighting words about legal action?
I really can't see them selling Pokeno or Dunsandel which leaves a cash raise for early next year as the most likely bet. Scary what kind of discount might be needed to get it over the line. A 50% off sale, would be 1 for 1 at 70c to bring in the $150m needed. That might avoid the need for furthers sweetener like bonus options. Would A2 or Bright participate or would they prefer the smell of dilution in the morning?
Needless to say, none of this is making Synlait look particularly investable.
Even the cap raise at $3.00 in 2017 doesn't look too good now
Doubt directors/management will ever get a standing ovation at the ASM again
The proposed Dairyworks sale thing. One possible explanation is the cost of capital targets are much higher now with long bonds where they are. Cost of raising finance also very expensive. This suggests in the current climate a much lower multiple than Synlait might have been hoping for.
I wouldn't expect the Muppets at Synlait to comprehend these rudimentary capital market changes and their effect on any possible indicative conditional offers that might be forthcoming. They're probably in la la land expecting to get a really high earnings multiple like when raising debt was almost free. I think the leadership all have their heads buried so deep in pink ESG nonsense they really haven't got a clue as to the current capital market conditions.
As you say HP, what heavily discounted price to get a capital raise done?...especially after the share price gets smacked around even more after next months NZX50 exit.
Quote from: Basil on Nov 05, 2023, 06:19 PMThe proposed Dairyworks sale thing. One possible explanation is the cost of capital targets are much higher now with long bonds where they are. Cost of raising finance also very expensive. This suggests in the current climate a much lower multiple than Synlait might have been hoping for.
I wouldn't expect the Muppets at Synlait to comprehend these rudimentary capital market changes and their effect on any possible indicative conditional offers that might be forthcoming. They're probably in la la land expecting to get a really high earnings multiple like when raising debt was almost free. I think the leadership all have their heads buried so deep in pink ESG nonsense they really haven't got a clue as to the current capital market conditions.
As you say HP, what heavily discounted price to get a capital raise done?...especially after the share price gets smacked around even more after next months NZX50 exit.
Unilever (https://www.afr.com/companies/retail/unilever-gives-up-pretending-soap-is-virtuous-20231031-p5egbh) is where Luxon cut his chops flogging underarm deodorant to the great unwashed. The article articulates the difficulty of re-calibrating a company culture where ESG has run amok...
Two things to bear in mind (& repeat) when evaluating Synlait :
1. Almost certain to get kicked out of NZ50 in Dec. So expect sp to continue to be under pressure until that eventuates (or not).
2. The Chinese investment & ATM investment in Synlait (or Silver Fern Farms) has a different time horizon and definitely a very different strategic focus than the other 40% minority shareholders. Profit comes second imo and it will suit both imo to go through the motions of the asset sales before unleashing a heavily discounted rights issue to increase their shareholdings.
The complication being worked on imo is how to increase their shareholdings within the takeover provisions at the cheapest price possible.
Article well worthwhile reading for perspective :
https://www.stuff.co.nz/business/farming/agribusiness/72181202/silver-fern-farms-looked-at-synlait-milk-before-choosing-bright-food
Quote from: Teitei on Nov 06, 2023, 08:19 AMTwo things to bear in mind (& repeat) when evaluating Synlait :
1. Almost certain to get kicked out of NZ50 in Dec. So expect sp to continue to be under pressure until that eventuates (or not).
2. The Chinese investment & ATM investment in Synlait (or Silver Fern Farms) has a different time horizon and definitely a very different strategic focus than the other 40% minority shareholders. Profit comes second imo and it will suit both imo to go through the motions of the asset sales before unleashing a heavily discounted rights issue to increase their shareholdings.
The complication being worked on imo is how to increase their shareholdings within the takeover provisions at the cheapest price possible.
Article well worthwhile reading for perspective :
https://www.stuff.co.nz/business/farming/agribusiness/72181202/silver-fern-farms-looked-at-synlait-milk-before-choosing-bright-food
AFR Street Talk article tonight
#Bids for Dairyworks were due last week.
#Private equity funds: Adamantem Capital, Allegro Funds, Anchorage Capital Partners and CPE Capital put in offers. However, indicative bids failed to meet the vendor's price expectations.
#Bloomberg sources reckon the asset is likely to be acquired by one of the smaller strategic buyers, with the likes of Bega understood to have swerved the auction.
#New Zealand dairy giant Fonterra is a key supplier to Dairyworks which makes $25 million to $30 million EBITDA. Local supermarkets Countdown (Woolworths NZ) and Foodstuffs are key customers. Dairyworks has also entered the Australian market, imported from NZ via Woolworths. The business is understood to be in discussions with Bega for additional contracts.
#Jarden was brought on earlier this year to advise on the sale of Synlait's consumer foods businesses Dairyworks and Talbot Forest Cheese. At the time, Dairyworks was expected to fetch up to $130 million. Sources told Street Talk that if Synlait can't sell Dairyworks – considered a strong business – the company may have to raise capital.Looks for all money like a CR incoming now...
QuoteLooks for all money like a CR incoming now...
It's going to be to late to save them from the humiliation of getting booted out of the NZX50 next month as the measurement process is average free float market cap in the preceding 6 months. Synlait board having unrealistic price expectations, gosh, there's a big surprise lol
3 bids. Between them I'd think they would have a reasonable idea of fair market value of Dairyworks. Seems Synlait have an overinflated view of the value. Probably figure the B Corp has to be worth at least $20m.
So, they probably had an idea they could collect $130m. For the sake of 10% I would have thought a deal could have been done at $117. So clearly bids were less than this.
So now lets say they can get $100m. That's a $30m shortfall
Last time they tried this they tried for $200m by putting out $180m at $5.10. SP today is $1.38. Gee - that wasn't such a great deal for punters!
Quote from: Minimoke on Nov 10, 2023, 01:50 PM3 bids. Between them I'd think they would have a reasonable idea of fair market value of Dairyworks. Seems Synlait have an overinflated view of the value. Probably figure the B Corp has to be worth at least $20m.
So, they probably had an idea they could collect $130m. For the sake of 10% I would have thought a deal could have been done at $117. So clearly bids were less than this.
So now lets say they can get $100m. That's a $30m shortfall
Last time they tried this they tried for $200m by putting out $180m at $5.10. SP today is $1.38. Gee - that wasn't such a great deal for punters!
You need to look at it from a different perspective. Hey - this used to be a $10 share ... and if you can buy into it now at say 1 new shares for 80 cents each for every two shares you hold, than, clearly - this must be the deal of the century, isn't it?
... and would give them something like $80m (well, say $70m after fees and underwriter costs) to cover for the shortfall and the next (similarly sized) screw up.
Discl:
Irony off;
Don't hold ...
Ah yes, and without irony - I guess there is in my view a remote chance that they might rise again, if they find another customer like A2 used to be. Just not sure I like the odds :) ;
I posted the following on the A2M thread...... relevant here too I suspect....
To possibly answer the confusion and conflict re the A2M and SML I turned to Hotcopper.
Interesting background here;
Source; https://hotcopper.com.au/threads/ann-cancellation-of-synlait-exclusive-supply-rights.7638794/page-14?post_id=70946501
"Correspondence between A2 Milk chief executive David Bortolussi and former Synlait chair John Penno reveals serious tension between them over Penno's interest in a third-party supplier of product tracing technology.
The emails followed Penno's appointment of receivers in January 2022 to Signum Holdings, the parent company of brand protection software company Trust Codes, an important supplier to both milk processor Synlait and its prime customer.. A2 Milk....."
A letter from Bortolussi to Penno...said, "Any interruption would have a significant adverse impact on a2MC, particularly on our customer experience, counterfeit prevention, recall risk, and channel traceability," said Bortolussi.
The article outlines possible serious conflicts of interests by Penno and serious communication failures to keep A2M informed.
Interesting...
From a report of the AGM: Dairyworks sale is still a priority and they reckon that things are, "well advanced on that" with several interested parties.
Quote from: Hectorplains on Dec 04, 2023, 09:31 PMFrom a report of the AGM: Dairyworks sale is still a priority and they reckon that things are, "well advanced on that" with several interested parties.
Doing nothing for the share price which today is at $1.17. Next stop is all time low of $1.16
Global Dairy Trade auction tonight, expectation is for higher prices as the milk powder recovery continues. Westpac prediction for is a 2% increase in milk powder price bringing us close to where whole milk powder prices were trading at a year ago and a long way from the lows of August.
Quote from: Hectorplains on Dec 05, 2023, 10:18 PMGlobal Dairy Trade auction tonight, expectation is for higher prices as the milk powder recovery continues. Westpac prediction for is a 2% increase in milk powder price bringing us close to where whole milk powder prices were trading at a year ago and a long way from the lows of August.
I don't think SML needs any increased costs at the moment
A "whopping" less than 10,000 depth on the buy side. Its going to be interesting to see the final match process on Friday the 15th when they get B Corp'd, opps sorry, booted out of the NZX50.
I'd put up a bid for 100,000 at 50 cents if I thought they were worth that...I don't.
I've warned for a long time now the culture at this company is very sick. Very pleased I sold many years ago at just over $10 average.
Any company that's decides it wants to be a B Corp is an instant sell first, (very quickly), and ask questions later.
Quote from: Basil on Dec 06, 2023, 07:30 AMA "whopping" less than 10,000 depth on the buy side. Its going to be interesting to see the final match process on Friday the 15th when they get B Corp'd, opps sorry, booted out of the NZX50.
I'd put up a bid for 100,000 at 50 cents if I thought they were worth that...I don't.
I've warned for a long time now the culture at this company is very sick. Very pleased I sold many years ago at just over $10 average.
Any company that's decides it wants to be a B Corp is an instant sell first, (very quickly), and ask questions later.
12 shares now being offered in 2 orders at $1.15. Will one buckle and take the $1.14 on offer? I'm wondering if they will last til the 15th?
BCorp = The Kiss Of Death!
Edit. Those that snooze loose. They only got $1.12 for them.
Edit.
Is today the day we see the train wreck accelerating toward the cliff? Someone now happy to take $1.09 with a $1.06 offer on the other side? (Is that you @basil looking for a sneaky 20,000 at $0.98. Brave. Could get your fingers burnt!
LOL 98 cents is not brave mate, its gross stupidity.
I got into Synlait right at the start in the first two listings.
The shine kinda went off when I got compulsorily bought out of Synlait Farms – I liked the idea of holding both parts of the value chain.
Good for a while, then the New Zealand Dairy Industry started to exhibit all sorts of speed wobbles, and the wheels looked as if they were starting to come off. So I got out of Synlait Milk as well. Even made some money!
It scares me to think of the shambles that the New Zealand Dairy Industry – and not just Synlait – has been over the past decade or so.
H*ll, if New Zealand can't make a go of dairy, then what's left. . .
I really would like to invest in New Zealand agriculture, but there just aren't the listed, liquid, vehicles available to match the scope, size, and scale of the New Zealand agricultural economy.
Someone has bailed and someone is brave. 362,827 crossed on close today at $1.076
As the day progress and the SP continues to drop I feel a chart is in order. As it may not be long before we have an SP with a $0.?? In front of it.
Bears a startling resemblance to Mt Egmont lol
Quote from: Basil on Dec 08, 2023, 01:45 PMBears a startling resemblance to Mt Egmont lol
That $10 level looks very good ....esp for those that bailed about then
When did they join the NZX50?
Handful of punters at ASM this week .......far cry from when they got a standing ovation in their hey day
Wonder how the trees are going
Synlait native tree programme launched by Rt Hon Jacinda Ardern, Prime Minister of New ZealandIMG_5575.jpeg
Quote from: winner (n) on Dec 08, 2023, 02:21 PMHandful of punters at ASM this week .......far cry from when they got a standing ovation in their hey day
Did you make it winner? I was there and the tour was interesting, lots of milk powder stacked up and shiny stuff. No one could really say why they weren't doing so well, reminds me of the condition some children get - failure to thrive (FTT) where the kid eats all the right stuff and does all the right things and still seems to not make any progress.
Quote from: winner (n) on Dec 08, 2023, 02:21 PMThat $10 level looks very good ....esp for those that bailed about then
When did they join the NZX50?
Handful of punters at ASM this week .......far cry from when they got a standing ovation in their hey day
Was 2018 they joined the NZX50. Interesting first week of the NZX50 expulsion process. Started the week at $1.31, and steadily down all week to a new all-time low of $1.06 down 19% in one week! They've been well and truly B Corp'd. Plenty more pain to come for embattled shareholders next week.
Quote from: Basil on Dec 08, 2023, 05:12 PMWas 2018 they joined the NZX50.
Suppose that caused the run up to 11 bucks
20% gain on index inclusion...ask me how I know ;D ...down almost an identical percentage this week on index exclusion...spooky eh.
Well. There we go. Support at $1.00 gone. Now trading at $0.99
Edit: a few trades at $0.95 but closed at $0.97. And still 3 days to go til Friday. And no news of a Dairyworks sale. (Makes a take over bid by A2M look tastier)
Quote from: Minimoke on Dec 12, 2023, 04:08 PMWell. There we go. Support at $1.00 gone. Now trading at $0.99
I see NTA used to be $2.69 (FY2022) - but then, so difficult to sell large chunks of stainless steel these days ;);
Quote from: BlackPeter on Dec 12, 2023, 05:08 PMI see NTA used to be $2.69 (FY2022) - but then, so difficult to sell large chunks of stainless steel these days ;);
They can't even sell an icecream and cheese maker. And its summer and Christmas. And who doesn't just love a decent cheese platter and cone at this time of year?
Quote from: Minimoke on Dec 12, 2023, 10:04 PMThey can't even sell an icecream and cheese maker. And its summer and Christmas. And who doesn't just love a decent cheese platter and cone at this time of year?
This has become a binary bet at his point. At the current price IF they can flick Dairyworks for a half decent dosh ($120m or more) the share price might offer value. IF they can't and a cash raise is the only way out... it'll be more sp punishment. Seems the dice are loaded and you'd need to be smoking a few cones to take these odds.
Today's washup all done and dusted at $0.95. 6.439m shares traded
If it wasn't so funny this would be tragic.
Synlait today announce they are re accredited B Corp.
Nope. No sale of DairyWorks achieved. No announcement to lift share price. No putting to right your tiff with your biggest customer.
No. Lets fiddle while Rome burns and aim for that prestigious B Corp Certification.
Wow, just bloody wow!. Increased their score to 97.7%
Dropped your SP from a high of $13.40 to an all time low on Friday of $0.95
The reaccreditation process would no doubt have required a vast amount of work from the senior management team. What a wonderful growth company this has become and a shining beacon on the hill of why B Corp is so vitally important to all companies. Really disappointed I sold all my shares at just under $12 average many years ago. I could have been part of this wonderful B Corp journey. Buggar...what a missed opportunity lol
Quote from: Basil on Dec 18, 2023, 09:45 AMThe reaccreditation process would no doubt have required a vast amount of work from the senior management team. What a wonderful growth company this has become and a shining beacon on the hill of why B Corp is so vitally important to all companies. Really disappointed I sold all my shares at just under $12 average many years ago. I could have been part of this wonderful B Corp journey. Buggar...what a missed opportunity lol
I can tell you are really hurting @basil.
Howabout you pop down to Bunnings and buy one to those really nice Pinus Radiata seedlings. Don't fret about the rumours they are a weed - just hand your cash over and head to your back yard. When the moon is in the right place recite some incantations and plant the seedling knowing that you are doing your bit to stop Bangladesh from flooding.
(Please to hear you still have a boat - that will help keep you above any sea level rises.)
lol mate. We already have dozens of trees on our property which I simply let grow and do my bit to soak up heaps of carbon dioxide. There's so many companies trying to hide their pitiful financial performance behind an ESG facade these days it makes me nauseous when I read their sanctimonios B.S.
Update from SML...... complex dispute with ATM it seems...and not a lot of good news for holders.
https://www.nzx.com/announcements/423987
Quote from: Left Field on Dec 22, 2023, 08:35 AMUpdate from SML...... complex dispute with ATM it seems...and not a lot of good news for holders.
https://www.nzx.com/announcements/423987
It seems the relationship with their major customer is severely harmed. And no positive light on the sale of Dairyworks.
I wouldn't be surprised if the A2M claims succeeded. I reckon Synlait management have been too busy fussing around with their B Corp Accreditation to notice compliance issues with their no one customer.
And I don't like the worlds " a deleveraging plan". Seems to me financiers have had enough. What this probably mean is the banks insisting on a major "de-risking plan". It looks to me like they arent going to make the required $130m pre-payment.
And what does this mean "Working to significantly reduce debt levels which remain elevated,including the NZX listed bonds." Does it mean another cash raise through bonds is on the table. Gee - I'd be extremely worried if I was an existing bond holder. No way I could be encouraged to become a new totally unsecured future bond holder.
For me, any light of hope at the end of the tunnel appears to have been snuffed out. Synlait are now untouchable under any circumstance.
They conclude H124 profit to be down on last year
Jeez, last year Net NPAT was a miserly $4.8 million.
So essentially breakeven in first half ...that's not good
I'm getting the sense A2 is in the process of trying to hoover up all the assets of value held by SML - eg the Some IP. Securing long term supply contracts at agreed margins while they get Matuara up and running.
And they will do this before Synlait call in the receivers. At which point Bright Dairy will take over the remains. Similar to what happened with the West Coast Coop milk company being taken over by the Chineese.
A lot of dark clouds hanging over this company as we head into 2024.
Quote from: Minimoke on Dec 22, 2023, 09:04 AMIt seems the relationship with their major customer is severely harmed. And no positive light on the sale of Dairyworks.
I wouldn't be surprised if the A2M claims succeeded. I reckon Synlait management have been too busy fussing around with their B Corp Accreditation to notice compliance issues with their no one customer.
And I don't like the worlds " a deleveraging plan". Seems to me financiers have had enough. What this probably mean is the banks insisting on a major "de-risking plan". It looks to me like they arent going to make the required $130m pre-payment.
And what does this mean "Working to significantly reduce debt levels which remain elevated,including the NZX listed bonds." Does it mean another cash raise through bonds is on the table. Gee - I'd be extremely worried if I was an existing bond holder. No way I could be encouraged to become a new totally unsecured future bond holder.
For me, any light of hope at the end of the tunnel appears to have been snuffed out. Synlait are now untouchable under any circumstance.
Agree in principle ... though, the company will have value to some. Question is just whether these people prefer to buy the company as is, or alternatively whatever is left (IP, supply lines, milk factories) after its going down.
What I don't understand is how the relationship between SML and A2M could get into such a corner. Sure - partners do have their quarrels as well, but at this stage I see neither SML nor A2M benefitting from this mess. Either they are both just puppets in the hands of the people who really pull the strings and at the end neither care about SML nor A2M, or shareholders elected to be represented by a bunch of muppets.
Sadly - both might be true.
I recon both A2M as well as SML just show what hype can do to any share price.
Sadly both might be true and probably are, but I lay the blame squarely at the board of Synlait. For many years now they have vigorously pursued all things B Corp and acted like people and the planet are more important than profit. Look where that's got them.
crickey A2 response is brief but confident....all these issues going forward and SML have to find $130m end of march 2024 to satisfy bankers, can not see the possibility of any resolve before then....cap raise at what price given the risks 50 cps on a prorata basis
Slight little nuance nobody has picked up on that gives a vital clue to the pressure Synlait are under from their banking syndicate. Pretty sure previous press releases have refferred to $130m being required. Now the use of the two extra words "at least" give an insight the banks are demanding action and see $130m as the absolute bare minimum.
Quote• Engaging with its banking syndicate about a deleveraging plan and the required prepayment
of at least $130 million, which is required by 28 March 2024.
Emphasis added
Who'd be game other than Bright Dairy to sink more money by way of a cash issue into this mange infected mutt?
Tick Tock...the clock is ticking loudly. Hope all the endless hours of executive time on reaccreditation of B Corp status didn't divert them from their task at hand. I suspect it has and as usual they just fiddle while Rome burns.
Quote from: Minimoke on Dec 22, 2023, 09:04 AMAnd what does this mean "Working to significantly reduce debt levels which remain elevated,including the NZX listed bonds." Does it mean another cash raise through bonds is on the table. Gee - I'd be extremely worried if I was an existing bond holder. No way I could be encouraged to become a new totally unsecured future bond holder.
Nice catch. My interpretation is they want to reduce debt, and that debt includes the bonds. IMO the motivation for reducing the bond debt is the current 15% discount to redemption value. This would be a great win for an entity that is a going concern - whereas for an entity that was not a going concern it wouldn't be on their radar. But to take advantage of this discount, they need cash.....and as you say, where is that cash coming from?
Quote from: Crackity on Dec 22, 2023, 06:31 PMSML could possibly redeem early but it would be at par so doesn't really help the company.
Agree re the yield & market messaging but with the part I quoted...(I think) I have seen US companies buy back their debt at market rates and bank the gain, instead of redeeming early. Can NZ companies not do this?
Quote from: Basil on Dec 22, 2023, 04:01 PMSlight little nuance nobody has picked up on that gives a vital clue to the pressure Synlait are under from their banking syndicate. Pretty sure previous press releases have refferred to $130m being required. Now the use of the two extra words "at least" give an insight the banks are demanding action and see $130m as the absolute bare minimum. Emphasis added
Who'd be game other than Bright Dairy to sink more money by way of a cash issue into this mange infected mutt?
Tick Tock...the clock is ticking loudly. Hope all the endless hours of executive time on reaccreditation of B Corp status didn't divert them from their task at hand. I suspect it has and as usual they just fiddle while Rome burns.
this just goes to show the hounds/beagles nose is working well, sniffing out small but vital word changes in ann's like this and choosing to share.....thankyou
jeez I bet they are desperate to sell off a good asset, if they don't the cap raise will have to be exceptionally attractive
Quote from: Ferg on Dec 22, 2023, 08:04 PMAgree re the yield & market messaging but with the part I quoted...(I think) I have seen US companies buy back their debt at market rates and bank the gain, instead of redeeming early. Can NZ companies not do this?
I don't know how they're going to get out of this mess, but what I do know is that there are very very strong vested interests that will not want, or let, Synlait fail, not completely anyway.
Banks, Bright Diary, ATM and Synlait themselves, all have massive vested interest in their ongoing production and viability. It's really imo just question of who ends up owning Synlait, and on that basis we can consider which of the vested parties have the most interest, individually or in partnership.
That would be ATM imo, as Synlait have the SAMR which would be a disaster for ATM to lose access to, shutting down their supply to their China market.
Bright Diary stand to lose the most though, as they are big into Synlait and ATM, so it makes sense that they could be an underwriting party to any deal that keeps Synlait afloat, regardless of the ownership structure. Both Bright through their China Govt ownership, and ATM, have clear ambitions to "own the supply chain". The ATM Chair laboured this point at the recent AGM.
So, drawing a long bow, it wouldn't be beyond consideration that ATM being the mouthpiece and Bright Diary backing them, that they are going after the best (lowest) possible price for Synlait that they can get. They are sticking it to Synlait when they are already down. Look at the fear in the Synlait announcement, vs the confidence, almost disdain in the ATM response.
Why else would ATM, at this time, hold their strategic supplier to account, unless they are setting up a takeover play of a distressed and vulnerable key supplier?
The terms of the bonds are here in the product disclosure statement. http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/345177/313032.pdf
I note they are subordinated and rank behind all bank debt and other preferred creditors.
These corporate bonds are now right at the extreme risk end of the spectrum. The rate could easily blow out to a lot more than 20%.
Capital raise looking more likely now. https://www.nzherald.co.nz/business/capital-raise-looms-for-synlait-as-dairyworks-sale-stalls/T36WZ5JXOJHFNIYBZDGOEVAVVY/
Comment: I note discussions with interested parties for Dairyworks have been ongoing for quite some time now. You would think if they could get onto the same page or a very similar page a deal would already have been documented and disclosed by now. Mexican standoff over price ?
Beggars can't be choosers and they are distressed vendors. They either take whatever they can get for Dairyworks, or another major asset or they undertake a deeply discounted rights issue.
Lets not forget that A2 have a very large war chest of cash that they have constantly refused to use. Maybe they have been keeping it for a rainy day. And as mentioned below the black storm clouds are brewing.
going to be an interesting watch from the sidelines, company will have to do a cap raise to pay back debt in March, Bright dairy and A2 strong shareholders and are in total control of this one.
Maybe in both their best interest to let this almost fail before making themselves look like white knights to the rescue, one way or the other the company no longer in control of it's own destiny unless they can sell some assets and fast.
Seen this sort of scenario play out a few times before with retail investors the real losers, doubt whether the SP is anywhere near the bottom
I learned from the 1987 stock market crash never to trust Chinese controlled companies. Minorities are almost always the loser. Back when Penno was CEO and their debt was a lot lower this had a chance...now they trade at the behest of their bankers and major shareholders. This has all the makings of a complete train wreck for minority shareholders.
Quote from: Basil on Jan 04, 2024, 11:08 AMI learned from the 1987 stock market crash never to trust Chinese controlled companies. Minorities are almost always the loser. Back when Penno was CEO and their debt was a lot lower this had a chance...now they trade at the behest of their bankers and major shareholders. This has all the makings of a complete train wreck for minority shareholders.
If you havent watched the China Hustle (its on Youtube) you should. Quite enlightening. As a result I no longer invest in
- anything with Chinese substantial shareholders
- anything with Chinese Directors or Managers
- anything that has a substantial business in China.
Without having to go back too far, there are numerous companies that have been buggered by the Chinese. BUBs with its distributor, RFT by its Directors, PET by its customers ....
Bright Dairy will do what is in its own interests, shafting everyone else, that you can be sure of.
Quote from: KW on Jan 04, 2024, 11:52 AMIf you havent watched the China Hustle (its on Youtube) you should. Quite enlightening. As a result I no longer invest in
- anything with Chinese substantial shareholders
- anything with Chinese Directors or Managers
- anything that has a substantial business in China.
Without having to go back too far, there are numerous companies that have been buggered by the Chinese. BUBs with its distributor, RFT by its Directors, PET by its customers ....
Bright Dairy will do what is in its own interests, shafting everyone else, that you can be sure of.
I don't disagree with the examples, but think we should be careful to not turn that into a racist beat up.
I don't think the problem is if board members or share holders are Chinese (or any other specific race ro nationality) - they are not more or less competent or honest than e.g. Kiwis or Ossies.
The problem is if whoever is on the board or controlling the board (like majority share holders) has an agenda unaligned to the interest of the organisation they control. Whether these conflicted shareholders or boardmembers are Chinese, American, Australian or Kiwi does not matter at all.
I am sure we can all remember plenty of examples, where shareholders have been shafted by Western majority shareholders as well as Kiwi or Australian directors.
Just look into the GFC - plenty of malice and incompetence in the US and in NZ. Look at companies like e.g. CBL, CRP, GEN, Feltex, Pumpkin Patch, Mainzeal, Hanover Finance, ... (and this is just from the top of my head)
I am sure I can find more examples of Kiwi Investors being shafted by fellow Kiwis and Ossies, rather than by Chinese.
The only sensible lesson from that is to be always alert when investing money, and particularly never trust anybody with a conflict of interest with the interests of the company they are controlling.
Admittedly - this is the case for anybody under the influence of Beijings long arm, but there are plenty of other people with undisclosed conflict of interests or just plain incompetent and stupid as well.
Quote from: KW on Jan 04, 2024, 11:52 AM- anything that has a substantial business in China.
That's one of the reasons I won't buy ATM again, probably should never have done so in the first place but hey, there was serious coin to make at one stage when Babbage was steering the ship and if I recall correctly I think you got well and truly stuck into the action when the going was good too ;)
Quote from: KW on Jan 04, 2024, 11:52 AMBright Dairy will do what is in its own interests, shafting everyone else, that you can be sure of.
I couldn't agree more. BP also makes a good point. Plenty of other nationalities have "managed" companies with nefarious intent or reckless ineptitude.
Quote from: BlackPeter on Jan 04, 2024, 12:42 PMI don't disagree with the examples, but think we should be careful to not turn that into a racist beat up.
I don't think the problem is if board members or share holders are Chinese (or any other specific race ro nationality) - they are not more or less competent or honest than e.g. Kiwis or Ossies.
The problem is if whoever is on the board or controlling the board (like majority share holders) has an agenda unaligned to the interest of the organisation they control. Whether these conflicted shareholders or boardmembers are Chinese, American, Australian or Kiwi does not matter at all.
I am sure we can all remember plenty of examples, where shareholders have been shafted by Western majority shareholders as well as Kiwi or Australian directors.
Just look into the GFC - plenty of malice and incompetence in the US and in NZ. Look at companies like e.g. CBL, CRP, GEN, Feltex, Pumpkin Patch, Mainzeal, Hanover Finance, ... (and this is just from the top of my head)
I am sure I can find more examples of Kiwi Investors being shafted by fellow Kiwis and Ossies, rather than by Chinese.
The only sensible lesson from that is to be always alert when investing money, and particularly never trust anybody with a conflict of interest with the interests of the company they are controlling.
Admittedly - this is the case for anybody under the influence of Beijings long arm, but there are plenty of other people with undisclosed conflict of interests or just plain incompetent and stupid as well.
Its not a racist beat up. Its about the lack of financial visibility of Chinese companies, the fact that financial accounts can't be audited, the securities laws in China that allow Chinese companies to defraud overseas investors as its not a crime, the accepted corruption that is standard business practice in China, the cultural attitudes to foreign investors, etc etc etc. As I said, watch the China Hustle and you may begin to understand the problem.
At least with Western companies and Directors, you know they are at least subject to srtong Western laws and short of fleeing to a country with no extradition treaty, there is no ability to take the money and simply disappear.
Secondly, its not about race, its about nationality - Chinese-Americans or Chinese-Australians are not included. Its mainland Chinese people who operate according to Chinese laws and business practices that are of concern. And if you don't understand those laws and practices, and still invest in companies being run according to them, then more fool you.
Quote from: KW on Jan 04, 2024, 01:47 PMIts not a racist beat up. Its about the lack of financial visibility of Chinese companies, the fact that financial accounts can't be audited, the securities laws in China that allow Chinese companies to defraud overseas investors as its not a crime, the accepted corruption that is standard business practice in China, the cultural attitudes to foreign investors, etc etc etc. As I said, watch the China Hustle and you may begin to understand the problem.
At least with Western companies and Directors, you know they are at least subject to srtong Western laws and short of fleeing to a country with no extradition treaty, there is no ability to take the money and simply disappear.
Secondly, its not about race, its about nationality - Chinese-Americans or Chinese-Australians are not included. Its mainland Chinese people who operate according to Chinese laws and business practices that are of concern. And if you don't understand those laws and practices, and still invest in companies being run according to them, then more fool you.
Fair enough. Still feel uncomfortable though, to out one particular nation in that way.
If you look around - more than half of all societies have very questionable and shady legal systems, and most of them would not allow NZ to extradict their citicens and hold court over them.
So - as a minimum, you should warn as well to avoid companies with Russian interests, with Saudi Arabian Interests, with interests from any of the tax havens, with interests from any high corruption country and with interests from any country accepting international law only when it suits whoever is currently in power (like the US).
Quote from: BlackPeter on Jan 05, 2024, 09:17 AMFair enough. Still feel uncomfortable though, to out one particular nation in that way.
If you look around - more than half of all societies have very questionable and shady legal systems, and most of them would not allow NZ to extradict their citicens and hold court over them.
So - as a minimum, you should warn as well to avoid companies with Russian interests, with Saudi Arabian Interests, with interests from any of the tax havens, with interests from any high corruption country and with interests from any country accepting international law only when it suits whoever is currently in power (like the US).
As they say, "be woke, go broke". Never a more apt saying in this case. I'll discriminate against any group that I feel presents a threat of me losing my money.
Quote from: KW on Jan 05, 2024, 05:42 PMAs they say, "be woke, go broke". Never a more apt saying in this case. I'll discriminate against any group that I feel presents a threat of me losing my money.
For the Love of money is the root of all kinds of evil.
Quote from: KW on Jan 05, 2024, 05:42 PMAs they say, "be woke, go broke". Never a more apt saying in this case. I'll discriminate against any group that I feel presents a threat of me losing my money.
Hits the nail on the head. Synlait is the most extreme woke company on the NZX by a country mile and where's that got them ? Onto their knees financially is where. Share price is a tiny fraction of the $12 it was several years ago and that's after raising $200m more capital at $5 a while back.
Destroyed vast amounts of capital over their history and never paid a dividend. The company and its directors are a bloody disgrace.
For what it's worth and I don't want this thread to get any more unpleasant than it already is, but I think it's more than fair to question the motives of the Chinese controlled entity Bright Dairy. Ever since the days of the Pokeno development and all the drama's that involved, Sylait have been far less than completely transparent, and it really does bring into question the ultimate motivation of a board that's ostensibly dominated by Bright Dairy directors.
More pointedly, it seems even ATM themselves as a 20% shareholder in recent times now have major issues with Synlait so if they lack confidence, it begs the question why anyone else would have any?
I think suggestion that Bright Dairy and ATM will collude together to disadvantage minority shareholders is drawing a long bow but Chinese controlled companies buying resources or manufacturing companies at rock bottom distressed prices because they've been very poorly managed is hardly a new thing. Being involved themselves in the mismanagement of a company as well really does beg the question whether they have been been acting in the best interests of the company overall at all times. Well, certainly in my mind it does.
Some of us have been debating legitimate on topic concerns about Synlait, its management and board. On the other hand...oh dear...
SML share price down to 96 after hitting 100 this morning
Quote from: Basil on Jan 08, 2024, 01:56 PMMore pointedly, it seems even ATM themselves as a 20% shareholder in recent times now have major issues with Synlait so if they lack confidence, it begs the question why anyone else would have any?
I think suggestion that Bright Dairy and ATM will collude together to disadvantage minority shareholders is drawing a long bow but Chinese controlled companies buying resources or manufacturing companies at rock bottom distressed prices because they've been very poorly managed is hardly a new thing. Being involved themselves in the mismanagement of a company as well really does beg the question whether they have been been acting in the best interests of the company overall at all times. Well, certainly in my mind it does.
I think there is a high chance not only of minority shareholders being shafted, but also A2 as well. Perhaps they have seen the writing on the wall and that is why they are trying to extricate themselves from their exclusive contract?
It would seem there has been a major change in the relationship for sure. I'm sure many of us recall the highly unusual spat that played out in the media last year when Synlait downgraded their outlook and ATM more or less in a nutshell through the media said WTF ? 99.9% of the time that's the sort of conversation you have at board level between the companies so to see that sort of thing played out in the media was highly unusual to say the least. That's suggests to me there has been a complete breakdown in the relationship at board level.
Ever since then it would appear ATM's level of confidence in Synlait's board and management has seriously changed and its readily apparent now their attitude is far more hardnosed, even adversarial in nature.
I've always been fascinated in commercial trainwrecks, so many lessons to be gleaned from them and I agree that this one has all the makings of a complete derailment with huge consequences for minority shareholders.
I've always been highly surprised that Bright have 3 directors on the board, whereas A2 has none, when they have 19.8% to Brights 39.0%. If nothing else you'd think beneficial for A2 to have someone at the table reporting back. Is it because they are a major customer? But wouldn't Bright be a customer as well? Otherwise are A2 privy to any further information that minorities aren't? (in theory they shouldn't be).
Love a good trainwreck me - providing I am not a shareholder of said trainwreck.....
Quote from: Basil on Jan 08, 2024, 04:17 PMIt would seem there has been a major change in the relationship for sure. I'm sure many of us recall the highly unusual spat that played out in the media last year when Synlait downgraded their outlook and ATM more or less in a nutshell through the media said WTF ? 99.9% of the time that's the sort of conversation you have at board level between the companies so to see that sort of thing played out in the media was highly unusual to say the least. That's suggests to me there has been a complete breakdown in the relationship at board level.
Ever since then it would appear ATM's level of confidence in Synlait's board and management has seriously changed and its readily apparent now their attitude is far more hardnosed, even adversarial in nature.
I've always been fascinated in commercial trainwrecks, so many lessons to be gleaned from them and I agree that this one has all the makings of a complete derailment with huge consequences for minority shareholders.
I had lost total confidence in SML around the time Leon got up at the AGM and did an intro in te reo - completely disregarding the chinese board members and lack of maori in the audience. So what took A2M so long? Why have they held their silence for so long. Why is it in only the past year they seem to have pricked their ears up about SML's abysmal performance? A2M have up until the past year seem "happy" enough to keep SML afloat with its various cap raises.
(And the past few posts have reminded me of dear Ronny at QEX - and good old connor English as well)
If something looks like a lame duck, walks like a lame duck and sounds like a lame duck there's a fairly good chance it isn't a stallion.
Quack quack lol.. No question whatsoever Synlait is the poster child on the NZX for all things woke and has been for many years.
Happy new year all, I have taken the axe to this thread to clear out some off-topic unpleasantness. Quite of bit of it was back and forth between people calling each other out. Please just use the report button INSTEAD in the future.
Kind of seemed like some borderline trolling occurred here which isn't very cool. Keep in mind we all invest and research for the purpose of making money, no one cares if you're right or wrong if there isn't money involved.
So is the $130M debt due in March additional to the $150M in bonds that expire in December 2024? Who owns the debt and bonds?
Quote from: KW on Jan 08, 2024, 06:35 PMSo is the $130M debt due in March additional to the $150M in bonds that expire in December 2024? Who owns the debt and bonds?
Yep separate issues
Banks expect $130m in March and the 'retail' bonds need to be paid in December
That's what they said in recent preso.
17 bond holders hold 1,000,000 or more and about 78% of the total.
Banks are making noises they want AT LEAST $130M repaid in March and there's in fact $180m of those bonds that mature in December. That's at least $310m due for repayment this year. On top of that from memory, the banks are gradually reducing the level of their other lending facilities.
Make no mistake, they are forced sellers of Dairyworks and are reported to have up to 4 potential purchasers and have had for many months now but have not accepted or negotiated an acceptable price with any one of them? Why not? Surely you have to wonder who is calling the shots here and what their real motives are? Interesting to note there are currently no bids to buy those bonds on the market at any price. (SML010) and also note those bonds are subordinated to all bank debt. Chances of default look very high to me. Even a 50% face value yield for an 11 month debt obligation, (about 75 cents on the dollar per bond) wouldn't interest me in the slightest. 100% yield would amount to about 50 cents on the dollar and would probably more correctly reflect the binary nature of what could play out here, but even then, maybe red or back on the roulette wheel is a less risky bet with better odds of success?
Bright Dairy could easily run this into the ground and pick up the assets from the receivers and leave the unsecured subordinated bondholders to hang out to dry.
Quote from: Basil on Jan 08, 2024, 07:17 PMBright Dairy could easily run this into the ground and pick up the assets from the receivers and leave the unsecured subordinated bondholders to hang out to dry.
Agree they could run it into the ground, but not so easily pick up the assets. By the time it got that desperate, there will be competition for the assets and the receivers will take the highest bidder. Maybe not in Bright's interests (or ATM) to let it get that vulnerable to other interests and find themselves in a bidding war, for something they collectively already own more than half of. Also, there's no evidence yet that Bright and/or ATM are not one of potential buyers of the assets for sale.
Quote from: Basil on Jan 08, 2024, 07:17 PMBanks are making noises they want AT LEAST $130M repaid in March and there's in fact $180m of those bonds that mature in December. That's at least $310m due for repayment this year. On top of that from memory, the banks are gradually reducing the level of their other lending facilities.
Make no mistake, they are forced sellers of Dairyworks and are reported to have up to 4 potential purchasers and have had for many months now but have not accepted or negotiated an acceptable price with any one of them? Why not? Surely you have to wonder who is calling the shots here and what their real motives are? Interesting to note there are currently no bids to buy those bonds on the market at any price. (SML010) and also note those bonds are subordinated to all bank debt. Chances of default look very high to me. Even a 50% face value yield for an 11 month debt obligation, (about 75 cents on the dollar per bond) wouldn't interest me in the slightest. 100% yield would amount to about 50 cents on the dollar and would probably more correctly reflect the binary nature of what could play out here, but even then, maybe red or back on the roulette wheel is a less risky bet with better odds of success?
Bright Dairy could easily run this into the ground and pick up the assets from the receivers and leave the unsecured subordinated bondholders to hang out to dry.
I would be EXTREMELY worried if I was a bond holder.
SML quite clearly cannot raise $150m to keep the banks happy. Lets say by some miracle they do manage to flog off Dairy works and keep they banks happy. That's essentially all of the family jewels sold. Including the glass rubies, Pewterware and Tobby Jug. There will be nothing left other than Dunsandael and bits of pokeno (they have already sold / leased back parts of Auckland already.
Given they essentially don't make a profit so won't have any extra cash to put into the bond repayments I am at a total loss to figure out how bond holders will get paid.
Surely they can't issue more bonds to pay existing bonds - isn't that equivalent to a ponzi?
Oh well. Bond Holders should sleep a virtuous sleep knowing their money went down the gurgler to a B Corp.
Quote from: Buzz on Jan 08, 2024, 08:00 PMBy the time it got that desperate, there will be competition for the assets and the receivers will take the highest bidder.
Sure, if it comes to that the receivers are legally obligated to get the best price they can but there's been plenty of receiverships over the years where plant and equipment goes for a small fraction of book value. Maybe if it comes to that, this time will be different, who knows but remember that the receivers fees must all be paid, then preferential creditors, and then all loans to all banks fully repaid before subordinated bondholders have any chance of seeing some potential payback.
Quote from: Minimoke on Jan 08, 2024, 09:08 PMSurely they can't issue more bonds to pay existing bonds - isn't that equivalent to a ponzi?
Potentially they could but that presupposes there's sufficient appetite from new investors or existing bondholders to roll over their investment for a further term. I would think any new bond issue would have a very different interest rate than the current one, perhaps 6-7% higher so that's potentially another ~ $11m in annual interest costs going forward if they can be rolled over, potentially with Bright Dairy underwriting the new bond offer.
Quote from: Minimoke on Jan 08, 2024, 09:08 PMI would be EXTREMELY worried if I was a bond holder.
I couldn't agree more.
Quote from: Minimoke on Jan 08, 2024, 09:08 PMOh well. Bond Holders should sleep a virtuous sleep knowing their money went down the gurgler to a B Corp.
LOL - Classic !
Things must be bad when Forbar slash their target for Synlait ........ target price from $1.40 a share to $1.10.
Here the the one you've all been waiting for. Really!!
Synlait's Sustainability Report. ::)
https://www.nzx.com/announcements/424497
It even has some pink!!
Nothing about financial sustainability but.........
And here is a nice wee graph to show what has happened to Synlait SP since it announced in June 2018 it was going down this "sustainability" path
Quote from: Sideshow Bob on Jan 09, 2024, 08:35 AMHere the the one you've all been waiting for. Really!!
Synlait's Sustainability Report. ::)
https://www.nzx.com/announcements/424497
It even has some pink!!
Nothing about financial sustainability but.........
That really speaks volumes. In light of everything else going on, this was the priority? Unbelievable.
"And the band played on"
Market not moved by customer (A2M) getting onto USA Amazon. New low of $0.90 today - will we see SP with an "8" in front of it by end of day.
Highly dilutive equity raise on the way according to Craigs.
So :
Current market cap of $196m with sp at 90c (218.6m shares on issue).
Say $200m to be raised so it will have to be a 3 for 1 rights issue at 30c?
Bright Foods & ATM to jointly underwrite the CR?
https://businessdesk.co.nz/article/primary-sector/synlait-faces-the-choice-of-the-lesser-evil-in-dealing-with-debt-issues
paywalled
Quote from: Teitei on Jan 18, 2024, 11:36 AMHighly dilutive equity raise on the way according to Craigs.
So :
Current market cap of $196m with sp at 90c (218.6m shares on issue).
Say $200m to be raised so it will have to be a 3 for 1 rights issue at 30c?
Bright Foods & ATM to jointly underwrite the CR?
https://businessdesk.co.nz/article/primary-sector/synlait-faces-the-choice-of-the-lesser-evil-in-dealing-with-debt-issues
paywalled
Bright and A@M need to be running the numbers. They have seen their initial investments significantly diluted over time.
Say they have $200m (we know A2M has), are they better off supporting a capital raise and see their investment diluted even more.
Or do they just put this mutt down and for their $200m buy the assets off the receivers.
Quote from: Minimoke on Jan 18, 2024, 11:41 AMBright and A@M need to be running the numbers. They have seen their initial investments significantly diluted over time.
Say they have $200m (we know A2M has), are they better off supporting a capital raise and see their investment diluted even more.
Or do they just put this mutt down and for their $200m buy the assets off the receivers.
Why would their investment be diluted further with a CR? As long as they= participate (and underwrite), they would at worse maintain their stakes and if there are big shortfalls, could very well increase their stake at 'cheap' prices.
Makes sense to put Synlait into receivership and try to pick up the assets cheap. That assumes though that there are no other buyers around for the assets or ATM does not outbid Bright Foods for the assets.
In any case, Synlait in receivership could mean the loss of the SAMR registration & ATM can kiss its exports to China for a while?
As an observation, my take is that a CR has already been decided on and advisors appointed - matter of time now as to when it is announced.
Craigs would not be publishing a report about a CR if they are still in the running to do the CR. Looks to me that they have missed out on the mandate.
That's just how the investment banking/stockbroking industry operates.
Quote from: Teitei on Jan 18, 2024, 12:27 PMWhy would their investment be diluted further with a CR? As long as they= participate (and underwrite), they would at worse maintain their stakes and if there are big shortfalls, could very well increase their stake at 'cheap' prices.
Makes sense to put Synlait into receivership and try to pick up the assets cheap. That assumes though that there are no other buyers around for the assets or ATM does not outbid Bright Foods for the assets.
In any case, Synlait in receivership could mean the loss of the SAMR registration & ATM can kiss its exports to China for a while?
They will retain their % share of the company. But a company that becomes worth less and less as time goes on.
As I recall they originally bought in at $2.20 a share. Then increased there shareholding to at $3.275.in 2016. Then in 2018 paid $10.90 a share. In 2020 they participated in the cap raise at $4.95.
A2 now hold 19.9%.
Synlait keep raising money which allows the executive team to continue working on their ESG vanity projects while failing to control debt or return a even semi meaningful profit.
So at what point do A2M stop throwing good moment after bad.
Quote from: Teitei on Jan 18, 2024, 12:48 PMAs an observation, my take is that a CR has already been decided on and advisors appointed - matter of time now as to when it is announced.
Craigs would not be publishing a report about a CR if they are still in the running to do the CR. Looks to me that they have missed out on the mandate.
That's just how the investment banking/stockbroking industry operates.
Could be Forsyth Barr clipping the ticket again quite nicely
Have to remember if its for $200m, the are still $110m short for debt repayments in 2024. So does this suggest a deal for Dairyworks for around $110 is near finalised?
Quote from: Minimoke on Jan 18, 2024, 01:02 PMCould be Forsyth Barr clipping the ticket again quite nicely
Have to remember if its for $200m, the are still $110m short for debt repayments in 2024. So does this suggest a deal for Dairyworks for around $110 is near finalised?
I know of very few companies which operate without debt.
Quote from: Teitei on Jan 18, 2024, 01:16 PMI know of very few companies which operate without debt.
Debt isn't a problem. In fact I'd go so far as saying its a good thing if you really want to work your balance sheet.
But its not a good thing when your total market cap is $206m and your 2024 debt due is $310m
And its not good when you last report your cash and receivable's sit at $92.1 but your Payables are at $281m
And its not good when you put aside $177m for assets to sell. And you can't sell those assets at that value. And you may only get $110m for them when and if they do sell.
And that's excluding total loans and borrowing of $423m.
Support at $0.89 seems to have dried up
Have started to get interested in this stock and have been following developments. Craig's report today is grim reading indeed. The title sums it up "Who'll be left carrying the can"
Not a lot of volume but down 7 percent today so far.
Hope it survives on the NZX
$180m of unsecured subordinated bonds due for repayment in December. Good luck to bondholders with that
Quote from: Basil on Jan 18, 2024, 10:40 PM$180m of unsecured subordinated bonds due for repayment in December. Good luck to bondholders with that
I don't know what this talk of a $200m cap raise expects to achieve.
These bonds were issued for the purpose of getting debt under control. Since then the debt situation has worsened . Now to the tune of over $420m.
Clearly the cap raise talk is simply to appease the bankers. Once that debt is cleared there is no way Synlait can manufacture and create a profit enough to clear the rest of the debt.
So what option is there. Go into liquidation with as many assets as possible to make it look like a reasonable going concern. With the aim of looking after the remaining secured debtors. Liquidation will look after major shareholders. Minor shareholders will be toast. And bond holders the crumbs on that toast.
If I was the major shareholders Id be saying to the secured debtors, "look heres $240m. We clear your debt as long as we have a process that allows us to takes over all assets but leave us clear of any debt. We like the shiny stainless and the shiny new SAP. But not much else. What do you guys think?"
I think the problems and sickness with extreme woke culture, combined with the very weak heavily indebted balance sheet, is such a dire situation you'd have to have rocks in your head to buy the shares or bonds. Anyone considering the bonds should take expert professional advice to ensure they truly understand that these are unsecured and subordinated and rank behind all bank debt. Extremely high risk, be warned!
Synlait today announce a further increase in costs. Base milk $7.50/kgMS from $7.25/kgMS for 2023/24 season
SML the sort of company that you are almost guaranteed to have your face ripped off if purchasing shares.
They really do have their balls in the ever tightening vice......tick tok
A ship which has been heading in the wrong direction and is now about to crash head on into a wall of due debt.
One would not want to be an unsecured bond holder
I have the unsecured subordinated bonds and am perfectly relaxed.
There's $800m (soon to be $1 billion?) of shareholders' funds ahead of the bonds before bondholders lose money.
And ATM will lose all of its China IF business if SML goes belly up. ATM shareholders should be very very worried?
Quote from: Minimoke on Jan 19, 2024, 10:08 AMSynlait today announce a further increase in costs. Base milk $7.50/kgMS from $7.25/kgMS for 2023/24 season
So why is it a positive for Fonterra but a negative for SML?
Quote from: Minimoke on Jan 18, 2024, 01:29 PMDebt isn't a problem. In fact I'd go so far as saying its a good thing if you really want to work your balance sheet.
But its not a good thing when your total market cap is $206m and your 2024 debt due is $310m
And its not good when you last report your cash and receivable's sit at $92.1 but your Payables are at $281m
And its not good when you put aside $177m for assets to sell. And you can't sell those assets at that value. And you may only get $110m for them when and if they do sell.
And that's excluding total loans and borrowing of $423m.
And you left out inventories of $250m for some reason. Are inventories not working capital?
Quote from: Teitei on Jan 19, 2024, 02:47 PMSo why is it a positive for Fonterra but a negative for SML?
Where have I said its a positive for Fonterra.
Maybe Fonterra can actually afford to pay farmers more without further stretching their balance sheet.
Quote from: Teitei on Jan 19, 2024, 02:51 PMAnd you left out inventories of $250m for some reason. Are inventories not working capital?
High pay out to farmers is due to higher milk powder prices. It's good for both farmers and Synlait
Quote from: Teitei on Jan 19, 2024, 02:51 PMAnd you left out inventories of $250m for some reason. Are inventories not working capital?
. Inventory is worth nothing until it gets off the shelf and is turned into cash.A large amount of that inventory is work in progress - and it appears SML have quality issues so may not even get to a warehouse shelf as a finished good
But since you raise it. Total liabilities of 895m. Total assets of 1685m. Excess assets of 790m. Take out $177m for Dairyowrks and talbot that no one seems to want to buy we have $613m. This figure gives us a sense of how much they can realistically expect for the stainless steel they otherwise have put into the books at 993m
Who would pay $613m for residual assets that create a los of 4$m. And even in a good year a miserly profit of $38m. Youde be better putting your cash in the bank on term deposit and save yourself the grief of running a B corp enterprise.
But lets dwell on liabilities for a bit longer. Theres 281m in payables which can be offsett by onnly $83m in recievebles. I'd be very worried if I was a creditor too.
Theres $244m in secured borrowing. Cash on hand to pay that back is only $9m
But this is all moot. The market currently values SML at $209.7m
Quote from: Minimoke on Jan 19, 2024, 04:06 PM. Inventory is worth nothing until it gets off the shelf and is turned into cash.A large amount of that inventory is work in progress - and it appears SML have quality issues so may not even get to a warehouse shelf as a finished good
But since you raise it. Total liabilities of 895m. Total assets of 1685m. Excess assets of 790m. Take out $177m for Dairyowrks and talbot that no one seems to want to buy we have $613m. This figure gives us a sense of how much they can realistically expect for the stainless steel they otherwise have put into the books at 993m
Who would pay $613m for residual assets that create a los of 4$m. And even in a good year a miserly profit of $38m. Youde be better putting your cash in the bank on term deposit and save yourself the grief of running a B corp enterprise.
But lets dwell on liabilities for a bit longer. Theres 281m in payables which can be offsett by onnly $83m in recievebles. I'd be very worried if I was a creditor too.
Theres $244m in secured borrowing. Cash on hand to pay that back is only $9m
But this is all moot. The market currently values SML at $209.7m
Interesting!
Quote from: Teitei on Jan 19, 2024, 02:47 PMI have the unsecured subordinated bonds and am perfectly relaxed.
There's $800m (soon to be $1 billion?) of shareholders' funds ahead of the bonds before bondholders lose money.
And ATM will lose all of its China IF business if SML goes belly up. ATM shareholders should be very very worried?
Good luck mate. I wouldn't be a buyer even at 50 cents on the dollar.
Quote from: Basil on Jan 19, 2024, 06:46 PMGood luck mate. I wouldn't be a buyer even at 50 cents on the dollar.
Thanks Beagle.
I do not rely on luck when making investments so here's to me making the right assessment!
Happy though if Lady Luck decides to smile on me too!
Meanwhile, I do agree with most of what is posted about SML's management.
Quote from: Teitei on Jan 19, 2024, 02:47 PMI have the unsecured subordinated bonds and am perfectly relaxed.
There's $800m (soon to be $1 billion?) of shareholders' funds ahead of the bonds before bondholders lose money.
And ATM will lose all of its China IF business if SML goes belly up. ATM shareholders should be very very worried?
I'm not sure where you get your $800m plus more to come in shareholder funds figure from.
From the last annual report:
Cash on hand = $9.3m
Accounts receivable = $83m
So lets call readily available cash $92m
And lets be generous and say all that inventory of $250m wil shortly turn to cash. So we now have $342m as our best case scenario to give back to bond holders.
However. Trade payables are $281m. So that leaves us a bit of a surplus of $61m
And we know banks want at the very least $130m by the end of march. So that puts me at -$69m.
Ok. Its the beginning of the week. Lets start it off positively and say Synlait will get the whole $178m they have in their accounts as assets held for sale. That now puts us back in positive territory of $109m
So, if Synlait buck their long term trend of negative numbers and all four winds are actually in their favour at the right time and at the right value best case scenario is them having $109m
From this $109m they owe $180m to bond holders. So short $71m
And lets not forget they will still owe the secured banks $113m
So we are now at all up debt of $184m. And no dairy works, cash or inventory. This is a long way short of yoru $800m and more.
So. How close can we get to $800m.
Well. They do have remaining shiny stainless steel assets in the books at $993m. This was $253m down on the prior year. So to keep things simple, lets say they take off another $250m off book value. Leaving $743m
If we apply this $743m to the remaining $184 debt the grand total figure best case scenario is potential shareholder funds of $559m.
I'm sorry. But no matter how I cut and dice the numbers every which way they turn out to be ugly.
Which is why I can't see why a capital raise is an attractive option for anyone.
Synlait should do like AirNZ ought to have done. Pull the plug, call in the receivers and flog off the assets so a new owner can start afresh with a clean slate.
Quote from: Minimoke on Jan 18, 2024, 12:55 PMThey will retain their % share of the company. But a company that becomes worth less and less as time goes on.
As I recall they originally bought in at $2.20 a share. Then increased there shareholding to at $3.275.in 2016. Then in 2018 paid $10.90 a share. In 2020 they participated in the cap raise at $4.95.
A2 now hold 19.9%.
Synlait keep raising money which allows the executive team to continue working on their ESG vanity projects while failing to control debt or return a even semi meaningful profit.
So at what point do A2M stop throwing good moment after bad.
Not sure ATM is even a meaningful player in this game. Essential is the City of Shanghai (aka Bright Dairy) with their more than 40% stake ... and Chinas ability to influence ATM's actions via a quite significant Chinese stake in ATM. ATM itself is just a puppet.
The real question is - what is the most effective way for China to get their hands on this for them material part of the foodchain for their people. I don't think that anybody of the power players worries about whether the outcome will be based on Synlaits or ATM's success - otherwise they wouldn't perform this stupid wrestling match between the two companies on the public stage. Remember - it all started with ATM crashing Synlaits shareprice by undermining their market postion as supplier. Clearly not good for ATM, i.e. they are just the puppets of somebody who will benefit.
The only thing which matters for the puppet masters will be whether China manages to get full control of this part of their food supply, no matter how Synlait or ATM get out of this spectacle.
Quote from: BlackPeter on Jan 22, 2024, 10:39 AMNot sure ATM is even a meaningful player in this game. Essential is the City of Shanghai (aka Bright Dairy) with their more than 40% stake ... and Chinas ability to influence ATM's actions via a quite significant Chinese stake in ATM. ATM itself is just a puppet.
The real question is - what is the most effective way for China to get their hands on this for them material part of the foodchain for their people. I don't think that anybody of the power players worries about whether the outcome will be based on Synlaits or ATM's success - otherwise they wouldn't perform this stupid wrestling match between the two companies on the public stage. Remember - it all started with ATM crashing Synlaits shareprice by undermining their market postion as supplier. Clearly not good for ATM, i.e. they are just the puppets of somebody who will benefit.
The only thing which matters for the puppet masters will be whether China manages to get full control of this part of their food supply, no matter how Synlait or ATM get out of this spectacle.
i have no doubt bright dairy are the puppet masters. A2 has a blocking stake but no real influence - otherwise they would have been on the board.
No doubt there is some play between Bright (Synlait) and China State Farms (A2) (With Yili watching closely form the sidelines)
Some brave person closed the day out at $0.81
Looks extremely ugly on the chart. Where's the bottom ? Zero ?
Quote from: Basil on Jan 30, 2024, 06:36 PMLooks extremely ugly on the chart. Where's the bottom ? Zero ?
Do we need reminding its another month gone by and no Dairy works sale (announced intention to sell 2 June 2023) and a month closer to the banks deadline. I think it is fair to say the clock on the time bomb in now ticking. Tomorrow they will know their half year performance and so will their bankers. They have until 28 March (now less than 2 months) to find at least $130m and they essentially have no cash to do so.
So the obvious question is "What is the shortest possible time to do a capital raise?".
Quote from: Minimoke on Jan 30, 2024, 07:35 PMDo we need reminding its another month gone by and no Dairy works sale (announced intention to sell 2 June 2023) and a month closer to the banks deadline. I think it is fair to say the clock on the time bomb in now ticking. Tomorrow they will know their half year performance and so will their bankers. They have until 28 March (now less than 2 months) to find at least $130m and they essentially have no cash to do so.
So the obvious question is "What is the shortest possible time to do a capital raise?".
IMO the shortest time to do a capital raise is not overly relevant, of more relevance is at what price? companies performance is not going to inspire, then you have to deal with the reason for a cap raise, which is as simple as swapping new SHER funds to satisfy the bankers who want their money out of this risky beast.
I suspect the 2 major shers are probably going to set the price of any cap raise as the brokers will want to announce that both are on board the cap raise when they do the promotion.
Quote from: snapiti on Jan 30, 2024, 09:17 PMIMO the shortest time to do a capital raise is not overly relevant, of more relevance is at what price? companies performance is not going to inspire, then you have to deal with the reason for a cap raise, which is as simple as swapping new SHER funds to satisfy the bankers who want their money out of this risky beast.
I suspect the 2 major shers are probably going to set the price of any cap raise as the brokers will want to announce that both are on board the cap raise when they do the promotion.
I'm not so sure price is relevant.
I think it safe to assume Bright and A2 will take up 60 % forcing minority shareholders to participate to ensure their holdings arent diluted to nothing.
So the only question is how much are Bright and A2 prepared to chuck in the pot.
Big box of popcorn required here.
Lots of water to go under the bridge yet, time pressures starting and games to be played out.
The good old slow motion trainwreck.....
Quote from: Sideshow Bob on Jan 31, 2024, 08:44 AMBig box of popcorn required here.
Lots of water to go under the bridge yet, time pressures starting and games to be played out.
The good old slow motion trainwreck.....
I've put on 15 kilos with the buttered popcorn I have consumed watching this train wreck over the years.
Quote from: Minimoke on Jan 31, 2024, 09:24 AMI've put on 15 kilos with the buttered popcorn I have consumed watching this train wreck over the years.
Compulsive viewing, but more running must be required MM! :)
Quote from: Sideshow Bob on Jan 31, 2024, 08:44 AMBig box of popcorn required here.
Lots of water to go under the bridge yet, time pressures starting and games to be played out.
The good old slow motion trainwreck.....
Agreed.
And like SKT, NZK and AIR, there's plenty of money to be made!
Quote from: Minimoke on Jan 31, 2024, 09:24 AMI've put on 15 kilos with the buttered popcorn I have consumed watching this train wreck over the years.
I am buying it by the 20kg wholesale pack. In terms of train wreck viewing, Synlait is the gift that keeps on giving
Quote from: Basil on Jan 31, 2024, 03:21 PMI am buying it by the 20kg wholesale pack. In terms of train wreck viewing, Synlait is the gift that keeps on giving
Someone will write a text book on them one day.
One possible headline soon :
"Synlait to sell Dunsandel plant to ATM for $550m. All disputes between the two parties discontinued."
Quote from: Minimoke on Jan 30, 2024, 10:15 PMI'm not so sure price is relevant.
I think it safe to assume Bright and A2 will take up 60 % forcing minority shareholders to participate to ensure their holdings are not diluted to nothing.
So the only question is how much are Bright and A2 prepared to chuck in the pot.
the answer to that is easy....."as little as possible"
Quote from: Minimoke on Jan 31, 2024, 03:38 PMSomeone will write a text book on them one day.
Titled "How ESG destroyed a company"
Quote from: Minimoke on Jan 18, 2024, 02:16 PMSupport at $0.89 seems to have dried up
2 weeks later we have trades today at $0.78. Closed today at $0.80
Quote from: Teitei on Jan 31, 2024, 04:13 PMOne possible headline soon :
"Synlait to sell Dunsandel plant to ATM for $550m. All disputes between the two parties discontinued."
Actually - if I remember correctly is the Chinese import licence defining as well the owner of the factory which produces the infant formula: Synlait. A change of ownership would void the import licence.
This means:
1) Bright Diary (as 40% plus shareholder) would need to agree
2) Chinese authorities (as issuer of the import licence) would need to agree
and yes,
3) Retail shareholders would need to agree (material change of assetbase).
Not worried about the retail shareholders, but how likely is 1 and 2, unless these changes would be good for the empire of the middle?
Quote from: Minimoke on Jan 31, 2024, 06:22 PM2 weeks later we have trades today at $0.78. Closed today at $0.80
I think if you'd got this far, you'd just hold on tight and ride it into the ground....
Quote from: BlackPeter on Feb 01, 2024, 09:53 AMActually - if I remember correctly is the Chinese import licence defining as well the owner of the factory which produces the infant formula: Synlait. A change of ownership would void the import licence.
This means:
1) Bright Diary (as 40% plus shareholder) would need to agree
2) Chinese authorities (as issuer of the import licence) would need to agree
and yes,
3) Retail shareholders would need to agree (material change of assetbase).
Not worried about the retail shareholders, but how likely is 1 and 2, unless these changes would be good for the empire of the middle?
Good points.
1. A deal will obviously only happen with Bright Dairy which one assumes will be happy to agree if they do not want to put in more money into Synlait. This is not my view as I believe the Chinese take a long term view.
2. The SAMR registration attaches to the Dunsandel plant so presumably with the close ties between China entities and government, if 1 above is forthcoming, then 2 will happen.
Here's what Synlait says :
" Synlait continues to hold the Chinese regulatory State Administration for Market Regulation (SAMR) licence which is attached to Synlait's Dunsandel manufacturing facilities. The licence is for The a2 Milk Company's Chinese labelled 至初® Infant Formula (stages one, two and three), the company expects to manufacture those products for The a2 Milk Company for products destined for the China market for the period of that licence (currently expiring September 2027)."
Now 38 working days to find at least $130m. SP today around $0.83
Quote from: Minimoke on Feb 07, 2024, 01:54 PMNow 38 working days to find at least $130m. SP today around $0.83
Plenty of time.
An underwritten CR takes less than 1 month to be completed. The devil is on the structure of the CR so that 'certain' parties can best benefit from the CR.
Another scenario my contact in one of the China banks operating here is that the bank debt will be refinanced by overseas banks.
How are you getting on with those Synlait bonds you bought at 17-18% mate ?
Quote from: Teitei on Feb 08, 2024, 09:24 AMPlenty of time.
An underwritten CR takes less than 1 month to be completed. The devil is on the structure of the CR so that 'certain' parties can best benefit from the CR.
Another scenario my contact in one of the China banks operating here is that the bank debt will be refinanced by overseas banks.
That may be the bank debt sorted. But it is still debt. Will these White Knights provide enough finance to give Bond Holders comfort?
Still no word on any Dairywork sales etc......
Quote from: Teitei on Feb 01, 2024, 11:10 AMGood points.
1. A deal will obviously only happen with Bright Dairy which one assumes will be happy to agree if they do not want to put in more money into Synlait. This is not my view as I believe the Chinese take a long term view.
2. The SAMR registration attaches to the Dunsandel plant so presumably with the close ties between China entities and government, if 1 above is forthcoming, then 2 will happen.
Here's what Synlait says :
" Synlait continues to hold the Chinese regulatory State Administration for Market Regulation (SAMR) licence which is attached to Synlait's Dunsandel manufacturing facilities. The licence is for The a2 Milk Company's Chinese labelled 至初® Infant Formula (stages one, two and three), the company expects to manufacture those products for The a2 Milk Company for products destined for the China market for the period of that licence (currently expiring September 2027)."
According to a broker report & their discussion with an industry insider it would be 'fairly straightforward' for a new company that acquires Dunsandel (ATM included) to transfer and rebrand the SAMR slots to the new company's product. It would only need 'some' regulatory sign-offs.
So it's a huge risk to ATM if another IF company buys Synlait and takes over the license i.e. leaving an enormous earnings hole at A2.
Quote from: Goob on Feb 11, 2024, 10:20 PMAccording to a broker report & their discussion with an industry insider it would be 'fairly straightforward' for a new company that acquires Dunsandel (ATM included) to transfer and rebrand the SAMR slots to the new company's product. It would only need 'some' regulatory sign-offs.
So it's a huge risk to ATM if another IF company buys Synlait and takes over the license i.e. leaving an enormous earnings hole at A2.
unless Atm (as 20% shareholder) buys it out.
Ouch for holders
https://www.nzx.com/announcements/425973
Quote from: Left Field on Feb 12, 2024, 08:36 AMOuch for holders
https://www.nzx.com/announcements/425973
.
Things seem to be getting worse
Quote from: winner (n) on Feb 12, 2024, 08:45 AM.
Things seem to be getting worse
Well, yes - and the key message seems to be "The HY24 result remains subject to review procedures by Synlait's auditor, and
the range excludes any additional adjustments, including accruals, provisions, and impairments, which are still being assessed.", which clearly means - all bets are off.
Anybody counted how many downgrades they already had? No matter whats the number, it sounds they are confident that there is more to come :o ;
While I don't share all the cynicism around BCorp ... it clearly appears that this board forgot over all the excitement of a new paintjob that the most important ingredients for a safe and successful journey are good vehicle maintenance, a skilled driver and above all some sensible decisions where to go.
Net loss now expected to be in the region of $17 - $21m. (From $4.5m loss last year). Full year now expected to be flat or down on last year.
A couple of thoughts.
- SML now has to be totally, absolutely 100% un-investible
- FY24 guaranteed to be a loss. Only question is how much (they have to recoup $17 - $21m to at least break even.
- No profit = no extra cash in the bank = no extra ability to repay at least $130, by 31 March
- I can smell bond holders sweat from here.
- Given loss, cash flow has to be really constrained. Ability to pay banks interest has to be questionable. Do they even have enough cash to pay staff? Are they actually still a trading concern?
Also interesting to note zero mention of the Dairyworks sal.
Instead we get this. "The Board and Management are actively working on the need to deleverage Synlait's balance sheet as a priority. Synlait will provide an update when it releases its HY24 result in March."
What other family silver does SML have?
Since they sold their Auckland facility, as I recall they only have Pokeno and Dunsandel left as significant assets
Edit. Market opens at $0.78, giving a Market Cap of $179m
Fonterra also announced today a lift in farmgate milk pricing from $7.50 to $7.80 as the midpoint.
Quote from: Sideshow Bob on Feb 12, 2024, 10:09 AMFonterra also announced today a lift in farmgate milk pricing from $7.50 to $7.80 as the midpoint.
Synlaits is currently $7.50. So increased costs already.
And will need to match fonterra to keep farm supply. (My A2 milk that sits in my fridge is Anchor / Fonterras)
Sp should really be down now to 50c.
And that would suit some parties very very well!
Another downgrade...there's a BIG surprise lol
More to come, you can bank on that.
QuoteWell, yes - and the key message seems to be "The HY24 result remains subject to review procedures by Synlait's auditor, and the range excludes any additional adjustments, including accruals, provisions, and impairments, which are still being assessed.", which clearly means - all bets are off.
Gosh the auditors will be feeling they need to do a very thorough job this year. I can see the definite prospect of a qualified audit report stating going concern risks. Anyone who doesn't think this company is now in a battle for its very survival, is not reading the situation at all.
Its a funny old world that we can reflect on from time to time. Back in Sept there was chatter about the need for a capital raise if dairy works didn't sell. SP was around $1.20 back then.
When SML did its last $200m cap raise it did so at a 15% discount on share price.
So if a cap raise had been done then it might have been done at around $1.02
Today SP is trading now at $0.70. So if the same 15% rule applies we are looking at an SP of $0.595. Which makes @teitei post look quite realistic.
And at $0.595 this would give SML a market cap of $130m. Which coincidentally is the same amount the banks want by the end of March.
Quote from: Minimoke on Feb 12, 2024, 11:28 AMIts a funny old world that we can reflect on from time to time. Back in Sept there was chatter about the need for a capital raise if dairy works didn't sell. SP was around $1.20 back then.
When SML did its last $200m cap raise it did so at a 15% discount on share price.
So if a cap raise had been done then it might have been done at around $1.02
Today SP is trading now at $0.70. So if the same 15% rule applies we are looking at an SP of $0.595. Which makes @teitei post look quite realistic.
And at $0.595 this would give SML a market cap of $130m. Which coincidentally is the same amount the banks want by the end of March.
If there is a CR, count upon one which will be like that of Sky TV - could be rights to buy at 15c.
Quote from: Minimoke on Feb 12, 2024, 07:27 AMunless Atm (as 20% shareholder) buys it out.
Yeah that's what I'm getting at. There's an added incentive for A2 to buy Dunsandel.
I can see SML going the same way as food spice company burns philp did, large sher sher Greame Hart sat back and watched the company disintegrate before stepping in to look like a white knight by putting an offer on the table that saved the company from bankruptcy......I am pretty sure he cleaned out the board and soon after the company was making 10's of millions.
One just has to guess at what price bright dairy will make an offer....given SML's circumstances I think they will wait as long as possible especially given the bond payment due at year end and the 50% change in ownership trigger attached to those bonds..... IMO this trigger and bond payment could mean the SP is worthless
Quote from: snapiti on Feb 20, 2024, 10:28 PMI can see SML going the same way as food spice company burns philp did, large sher sher Greame Hart sat back and watched the company disintegrate before stepping in to look like a white knight by putting an offer on the table that saved the company from bankruptcy......I am pretty sure he cleaned out the board and soon after the company was making 10's of millions.
One just has to guess at what price bright dairy will make an offer....given SML's circumstances I think they will wait as long as possible especially given the bond payment due at year end and the 50% change in ownership trigger attached to those bonds..... IMO this trigger and bond payment could mean the SP is worthless
Sounds like a likely scenario to me, only that in this case it won't be a "white knight", but a band of kung fu fighters stepping in. And yes, the interests of retail shareholders won't feature very high on their agenda.
I was thinking about the Warehouse selling Torpedo 7 for $1. And just musing if this is what Synlait should do.
Then I got to thinking. Say A2M was to offer to buy all outstanding shares (ie 80.1% of shares) at say a 25% premium on todays Sp of $0.70. (Bright Dairy might be quite happy with this) A2m would need to come up with $152.6m. But of course if they did this they would also be buying the debt.
So say for $280m they could by SML out right and pay back the $130m. This would leave A2 with around $520m cash in the bank.
Then lets say they flogged off Dairy works for $50m (surely someone would bite at that price) and Pokeno for $50m they would be back to $620m in the bank.
And then decide to find a clause so they could default on the bands.
So now we have A2 owning Dunsandel for $180m, quite manageable debt, an opportunity to bring synergies with Mataura - which includes using Dunsandles blending and canning plant (saving them at least $40m spend on this at Mataura). And still have $620m for other M&A activity.
Quote from: Minimoke on Feb 22, 2024, 03:23 PMI was thinking about the Warehouse selling Torpedo 7 for $1. And just musing if this is what Synlait should do.
Then I got to thinking. Say A2M was to offer to buy all outstanding shares (ie 80.1% of shares) at say a 25% premium on todays Sp of $0.70. (Bright Dairy might be quite happy with this) A2m would need to come up with $152.6m. But of course if they did this they would also be buying the debt.
So say for $280m they could by SML out right and pay back the $130m. This would leave A2 with around $520m cash in the bank.
Then lets say they flogged off Dairy works for $50m (surely someone would bite at that price) and Pokeno for $50m they would be back to $620m in the bank.
And then decide to find a clause so they could default on the bands.
So now we have A2 owning Dunsandel for $180m, quite manageable debt, an opportunity to bring synergies with Mataura - which includes using Dunsandles blending and canning plant (saving them at least $40m spend on this at Mataura). And still
have $620m for other M&A activity.
Default on the bonds cough cough lol.
How could they manage that.
Quote from: Clearasmud on Feb 22, 2024, 04:13 PMDefault on the bonds cough cough lol.
How could they manage that.
Which brings me back full circle to liquidation - a situation where Synlait can't pay its creditors (and gee - arnet there a lot of them) and Synlait or the shareholders have it placed into liquidation via special resolution (Bright Dairy 39.01% + A2M 19.9% = 58.91%. Which means they only have to convince 16.1% of shareholders to get on board with the idea.
Liquidator moves in and sell assets to pay back net debt of $213m ($413m last reported position less $180m that unsecured creditors won't see.)
So Bright Dairy, a2 plus 16% of shareholders toss $213m into the pot to buy a pile of debt free stainless steel.
Bright could keep Pokeno for a hundred mil. A2 could keep Dunsandel for $100m and keep the 16%ers sweet with Dairyworks that they could flog off for $50m and its a done deal.
Its seems no surprise to me that A2 apparently haven't been approached about a capital raise. Why would they throw say $30m into the cap raise pot (say 20% of a $150m cap raise) when for just an extra $70m they could have Dunsandle debt free.
The Bonds will be unsecured and on liquidation of the Issuer will rank:
• behind Synlait's senior bank debt, other secured borrowed money and other claims
preferred by law;
• equally with all unsecured and unsubordinated financial indebtedness of Synlait; and
• ahead of claims of holders of ordinary shares in Synlait and holders of securities and other
financial products and financial indebtedness that rank after the Bonds.
Quote from: Minimoke on Feb 22, 2024, 05:20 PMWhich brings me back full circle to liquidation - a situation where Synlait can't pay its creditors (and gee - arnet there a lot of them) and Synlait or the shareholders have it placed into liquidation via special resolution (Bright Dairy 39.01% + A2M 19.9% = 58.91%. Which means they only have to convince 16.1% of shareholders to get on board with the idea.
Liquidator moves in and sell assets to pay back net debt of $213m ($413m last reported position less $180m that unsecured creditors won't see.)
So Bright Dairy, a2 plus 16% of shareholders toss $213m into the pot to buy a pile of debt free stainless steel.
Bright could keep Pokeno for a hundred mil. A2 could keep Dunsandel for $100m and keep the 16%ers sweet with Dairyworks that they could flog off for $50m and its a done deal.
Its seems no surprise to me that A2 apparently haven't been approached about a capital raise. Why would they throw say $30m into the cap raise pot (say 20% of a $150m cap raise) when for just an extra $70m they could have Dunsandle debt free.
Except there may be other bidders.
Quote from: Clearasmud on Feb 22, 2024, 08:06 PMExcept there may be other bidders.
as i recall a liquidators sole (or primary) responsibility is to creditors. That is to sell assets to those who have debts secured in some priority order by assets.
There is little responsibility to shareholders (thats why they have limited liabilty). And if you are an unsecurwd creditor then good luck. Your risk has already been recognised by the interest rate you chooae to accept when taking up the bond offer.
How clean would it be if there was $220 worth of debt and current majority owners came up with $220 worth of cash for creditors. An elegant solution.
It will be a bit of an anticlimax for the train-wreck watchers if the banks just acquiesce and roll over the loans, and even lighten up on the covenants. I read an article recently (somewhere, can't remember) that was suggesting this is a possibility. Nothing to see here, BAU, carry on.
It's said that better to be massively in debt and it's the bankers problem, than a bit in debt and it's your problem. Banks don't want to end up with the asset and a mortgagee sale, let alone liquidation and risk getting pennies on their dollar back.
Back to the train wreck, you don't have long to wait to see how this unfolds.
Quote from: Minimoke on Feb 22, 2024, 03:23 PMI was thinking about the Warehouse selling Torpedo 7 for $1. And just musing if this is what Synlait should do.
Then I got to thinking. Say A2M was to offer to buy all outstanding shares (ie 80.1% of shares) at say a 25% premium on todays Sp of $0.70. (Bright Dairy might be quite happy with this) A2m would need to come up with $152.6m. But of course if they did this they would also be buying the debt.
So say for $280m they could by SML out right and pay back the $130m. This would leave A2 with around $520m cash in the bank.
Then lets say they flogged off Dairy works for $50m (surely someone would bite at that price) and Pokeno for $50m they would be back to $620m in the bank.
And then decide to find a clause so they could default on the bands.
So now we have A2 owning Dunsandel for $180m, quite manageable debt, an opportunity to bring synergies with Mataura - which includes using Dunsandles blending and canning plant (saving them at least $40m spend on this at Mataura). And still have $620m for other M&A activity.
are you not aware of the change of ownership clause trigger attached to the bonds
Quote from: snapiti on Feb 22, 2024, 08:48 PMare you not aware of the change of ownership clause trigger attached to the bonds
Triggered by bondholders "
Bondholders have the right to elect that Synlait must Redeem all of their Bonds" . Which is pointless if there is no money to repay the bonds. Ergo liquidation
And worth pondering a default triggering event "indebtedness in respect of borrowed money of more than $35 million is not paid when due"
Quote from: Buzz on Feb 22, 2024, 08:36 PMIt will be a bit of an anticlimax for the train-wreck watchers if the banks just acquiesce and roll over the loans, and even lighten up on the covenants. I read an article recently (somewhere, can't remember) that was suggesting this is a possibility. Nothing to see here, BAU, carry on.
It's said that better to be massively in debt and it's the bankers problem, than a bit in debt and it's your problem. Banks don't want to end up with the asset and a mortgagee sale, let alone liquidation and risk getting pennies on their dollar back.
Back to the train wreck, you don't have long to wait to see how this unfolds.
I've seen those comments. But they seem to ignore the fact that $180m unsecured bonds are due for repayment later in the year. Which banks would want to increase debt by another $180m to a company that just keeps losing more and more money. And imagine the interest rates payable on those extended finance facilities - they would be crippling.
Theres over $400m in net debt - how do you pay that off if you are making a loss and not selling assets?
Quote from: Minimoke on Feb 22, 2024, 09:35 PMI've seen those comments. But they seem to ignore the fact that $180m unsecured bonds are due for repayment later in the year. Which banks would want to increase debt by another $180m to a company that just keeps losing more and more money. And imagine the interest rates payable on those extended finance facilities - they would be crippling.
Theres over $400m in net debt - how do you pay that off if you are making a loss and not selling assets?
I don't know exactly, to be clear, but the banks I've worked for are very cunning and have many strategies before they foreclose and end up with the assets (which they hate doing), or worse liquidation (which they hate even more) and get a portion of their investment back. Don't underestimate the creditors flexibility to wiggle SML out of this obvious but fixable mess, even if it means extending lines of credit and/or ameliorating covenants, albeit certainly still time limited.
Quote from: Buzz on Feb 22, 2024, 09:41 PMI don't know exactly, to be clear, but the banks I've worked for are very cunning and have many strategies before they foreclose and end up with the assets (which they hate doing), or worse liquidation (which they hate even more) and get a portion of their investment back. Don't underestimate the creditors flexibility to wiggle SML out of this obvious but fixable mess, even if it means extending lines of credit and/or ameliorating covenants, albeit certainly still time limited.
I havent suggested a bank foreclosure. Banks are only owed approx $220m. My money is on them not giving a brass razoo worth of concern for bond holders.
As I pointed out below an eloquent liquidation would raise that $220 with no problem at all. Banks are happy. A2 and Bright are happy. Bond holders are obviously unhappy - but they got the big interest payment to mitigate the known risk they were taking. And retail shareholders only have themselves to blame for any loss - they have had loads of waring to exit this share. That they chose to hang on isn't a concern of the banks.
Indeed the banks would be super happy if A2 went to them and said "hey mate, we need to leverage our balance sheet, howabout a $100m loan over 5 years?"
Synlait appointing George Adams as an Independent Director. On Georges CV is his Arborogen Directorship. A seed company based in the USA.
Lets look at their SP
sm1.png
Quote from: Minimoke on Mar 01, 2024, 12:04 PMSynlait appointing George Adams as an Independent Director. On Georges CV is his Arborogen Directorship. A seed company based in the USA.
Lets look at their SP
sm1.png
QuoteGeorge Adams' biography
George has outstanding commercial and governance experience with over 30 years of international business experience in the fast-moving consumer goods and telecommunications industries and an occupational health and safety background.
Before focussing on governance, George held a range of executive leadership positions. Notably he was, Managing Director of Coca-Cola Amatil New Zealand and Finance Director of British Telecom, Northern Ireland. George's previous governance highlights include being Chair of Bell Tea & Coffee, Chair of the New Zealand Grocery Council and Occupational Health and Safety Board and a Director of Hellers Group and Tegel Foods.
Yes, Arborgen is a shootoff from Fletcher Forest and George on their board. They lost over the years plenty of shareholder capital!
But wait - there is more, hasn't he as well Tegel Chicken on his CV?
Quite relevant experience if destroying shareholder funds is what Synlait is after ...
Quote from: BlackPeter on Mar 01, 2024, 12:25 PMYes, Arborgen is a shootoff from Fletcher Forest and George on their board. They lost over the years plenty of shareholder capital!
But wait - there is more, hasn't he as well Tegel Chicken on his CV?
Quite relevant experience if destroying shareholder funds is what Synlait is after ...
I havent followed Tegal.
But I used to hold Arborogen., And all I recall is a company that promised a lot and delivered little. Seemed to pay board well. And always had a weather event as an excuse for failure to execute to plan
"Purrfect" appointment then lol
Tick Tock. Tick Tock.
Synlait is required to make a mandatory prepayment of at least $130 million by no later than 31 March 2024.
31 March is a Sunday. 29 March is Good Friday.
No announcement today of the sale of Dairyworks or re-financing plans.
So by my reckoning they now have 19 working days to stitch together a plan
Synlait (SM1) gets removed from the All Ordinaries Index effective prior to the Open on March 18, 2024
Quote from: Minimoke on Mar 04, 2024, 06:47 AMSynlait (SM1) gets removed from the All Ordinaries Index effective prior to the Open on March 18, 2024
Found a copy of the changes here (https://company-announcements.afr.com/asx/fcl/74e4003b-d791-11ee-b0b6-4ea8d8dfdb2c.pdf). Bubs (BUB.ASX) is out with the bathwater too.
Also of note to NZ watchers, Gentrack (GTK.ASX) is in.
On 10 February 2023 Synlait announced they would release their half year results would be released on Monday 27 March.
This year on 6 March they announce they will release results on Tuesday 2 April
Half year ends on 31 January. They have 60 days to release results. So Tueday 2 April is the very last day they can release results.
It is also after 31 March when the $130m is due to be repaid.
Talk about taking things to the wire. Not a sign of good management my mind.
Which leads me to wonder about the dealy. My money is on the auditors going through accounts line by line and looking at their liability exposure for every entry.
Quote from: Teitei on Feb 08, 2024, 09:24 AMPlenty of time.
An underwritten CR takes less than 1 month to be completed. The devil is on the structure of the CR so that 'certain' parties can best benefit from the CR.
Another scenario my contact in one of the China banks operating here is that the bank debt will be refinanced by overseas banks.
By my reckoning Synlait now have 13 working days
Quote from: Minimoke on Mar 11, 2024, 05:19 PMBy my reckoning Synlait now have 13 working days
I believe Businessweek already broke the news that the banks are rolling over the loans?
Quote from: Teitei on Mar 11, 2024, 07:28 PMI believe Businessweek already broke the news that the banks are rolling over the loans?
That's the only lever the banks (creditors) have, other than relaxing covenants as well. It's also the path of least resistance, but banks don't like taking on more risk and SML has proven to be a severe credit risk. Stands to reason they would hold out until the last minute, maybe happy not to take on more risk but transfer the risk to another banking (syndicate?) and walk away, or some white knight play eventuates, which still may happen. It is in nobodies interest that SML fails. As Mini says 'tick tock' time is running out.
Quote from: Teitei on Mar 11, 2024, 07:28 PMI believe Businessweek already broke the news that the banks are rolling over the loans?
the debt repayment is a material issue. If it has been resolved there should have been a market announcement. (Im very wary of anything written in Media - all very untrustworthy)
Quote from: Buzz on Mar 11, 2024, 08:03 PMThat's the only lever the banks (creditors) have, other than relaxing covenants as well. It's also the path of least resistance, but banks don't like taking on more risk and SML has proven to be a severe credit risk. Stands to reason they would hold out until the last minute, maybe happy not to take on more risk but transfer the risk to another banking (syndicate?) and walk away, or some white knight play eventuates, which still may happen. It is in nobodies interest that SML fails. As Mini says 'tick tock' time is running out.
lets assume for a moment this is correct.
What does it achieve?
Firstly i guess banks can extract an even higher interest rate than currently paid by synlait. Good for banks. Bad for synlait.
Its obvious synlait are making a loss. So extra interest payments will stretch cashflw further and increase loss. Which in turn devalues business.
So where is $130m going to com from. Dsiry eorks is the only current option. And if that doesnt play out bond holders are due repayment in December.
Even if the banks have refinanced i still see zero hope for bond holders.
Quote from: Minimoke on Mar 11, 2024, 09:33 PMlets assume for a moment this is correct.
What does it achieve?
Firstly i guess banks can extract an even higher interest rate than currently paid by synlait. Good for banks. Bad for synlait.
Its obvious synlait are making a loss. So extra interest payments will stretch cashflw further and increase loss. Which in turn devalues business.
So where is $130m going to com from. Dsiry eorks is the only current option. And if that doesnt play out bond holders are due repayment in December.
Even if the banks have refinanced i still see zero hope for bond holders.
If you believe that, you should be shorting the hell out of SML shares as they will be worth ZERO before the bondholders lose anything.
Quote from: Teitei on Mar 12, 2024, 09:25 AMIf you believe that, you should be shorting the hell out of SML shares as they will be worth ZERO before the bondholders lose anything.
I haven't seen any strategy that provides for the repayment of bonds. If there is one I'd be interested in seeing it.
Quote from: Minimoke on Mar 12, 2024, 09:36 AMI haven't seen any strategy that provides for the repayment of bonds. If there is one I'd be interested in seeing it.
From everything I read from you, you believe SML will default on repaying the bonds?
Means the shares go to zero first.
Therefore, you should be shorting the heck out of them - surely!
Chart on SML and SML010 looks pretty ominous. At 30-40 cents on the dollar I think SML010 could be worth a very small and highly speculative punt assuming they can somehow jump the $130m debt repayment hurdle that's right in front of them. That's how I see it.
If I wanted to loose capital I would speculate in a loss making poorly managed business with a huge debt burden.
SML fits the bill perfectly.
.
Quote from: Teitei on Mar 12, 2024, 09:44 AMFrom everything I read from you, you believe SML will default on repaying the bonds?
Means the shares go to zero first.
Therefore, you should be shorting the heck out of them - surely!
A bond default trigger is now only 14 working days away. One of the default events is failure to pay at $35m when due. Synlait have a mandatory $130m due for repayment by 31 March 2024.
At year end we know they only had $10.3m cash on hand and currently running at a multi $m loss.
A default event doesn't automatically trigger a liquidation event - that's the discretion of the Bond Supervisor.
Bond Holders can of course by special resolution require repayment - put this would be a pyric victory vote - because the bonds are subordinated and unsecured.
Bond holders were alerted to this risk - they were told a default event could well trigger a Bank Facility default. And that doesn't serve bondholders at all.
Quote from: Minimoke on Mar 12, 2024, 10:21 AMBond Holders can of course by special resolution require repayment - put this would be a pyric victory vote - because the bonds are subordinated and unsecured.
Bondholders are in a very weak and vulnerable position and in any possible future restructure might only get pennies on the dollar back in the way of a take it or leave it type restructure offer as an alternative to liquidation. Just as well we know that Bright Dairy's owners have such a great reputation for caring so deeply about fair and equitable outcomes for all other stakeholders...oh wait...hang on a minute...
Quote from: Basil on Mar 12, 2024, 10:36 AMBondholders are in a very weak and vulnerable position and in any possible future restructure might only get pennies on the dollar back in the way of a take it or leave it type restructure offer as an alternative to liquidation. Just as well we know that Bright Dairy's owners have such a great reputation for caring so deeply about fair and equitable outcomes for all other stakeholders...oh wait...hang on a minute...
Im quite sure bond holders are taking a great deal of comfort from Synlaits B Corp certification. Ethical companies focussing on tree growing and diversity are bound to meet their debts when they fall due.
Quote from: Minimoke on Mar 12, 2024, 10:21 AMA bond default trigger is now only 14 working days away. One of the default events is failure to pay at $35m when due. Synlait have a mandatory $130m due for repayment by 31 March 2024.
At year end we know they only had $10.3m cash on hand and currently running at a multi $m loss.
A default event doesn't automatically trigger a liquidation event - that's the discretion of the Bond Supervisor.
Bond Holders can of course by special resolution require repayment - put this would be a pyric victory vote - because the bonds are subordinated and unsecured.
Bond holders were alerted to this risk - they were told a default event could well trigger a Bank Facility default. And that doesn't serve bondholders at all.
All very well - so there's a bond default and equity holders will be the first to lose everything.
So why are you not shorting the hell out of SML shares?
Genuine question, minimoke - I am not trying to have a who's right or who's wrong contest with you or anyone.
Huge gains to be made when you are so convinced that SML is going broke by shorting the stock.
I would think it's pretty hard to get a loan of a decent amount of SML scrip to short even if one is predisposed towards that sort of activity.
I really can see a substantial chance of SML bondholders getting leaned on with a very cheap and incredibly nasty low ball take it or leave it restructure offer. Subordinated and unsecured are terrible words to describe bondholders security. Yeah they could reject any possible future lowball restructure offer and that probably means they end up getting nothing. 37.4% yield that SML010 have traded at this morning is just on 80 cents in the dollar. That's seems like an incredibly "brave" price to pay given all the circumstances.
You're a good guy Teitei, so I hope I am wrong, and it works out well for you.
Quote from: Basil on Mar 12, 2024, 10:58 AMI would think it's pretty hard to get a loan of a decent amount of SML scrip to short even if one is predisposed towards that sort of activity.
I really can see a substantial chance of SML bondholders getting leaned on with a very cheap and incredibly nasty low ball take it or leave it restructure offer. Subordinated and unsecured are terrible words to describe bondholders security. Yeah they could reject any possible future lowball restructure offer and that probably means they end up getting nothing. 37.4% yield that SML010 have traded at this morning is just on 80 cents in the dollar. That's seems like an incredibly "brave" price to pay given all the circumstances.
You're a good guy Teitei, so I hope I am wrong, and it works out well for you.
Thanks, Basil.
I always appreciate and respect your comments and observations as you know.
My investment in the bonds is part and partial of an overall balanced portfolio - not catastrophic if the bonds go to zero. I am not and have never been an 'all in or all out' 'hero or zero' investor!
There is scrip available at Forbar & Craigs so that's not a problem to short. I am simply interested in minimoke's reluctance to short when he is so convinced SML is beyond salvation and that bond holders will lose.
Quote from: Teitei on Mar 12, 2024, 10:51 AMAll very well - so there's a bond default and equity holders will be the first to lose everything.
So why are you not shorting the hell out of SML shares?
Genuine question, minimoke - I am not trying to have a who's right or who's wrong contest with you or anyone.
Huge gains to be made when you are so convinced that SML is going broke by shorting the stock.
Simply because I have never shorted and don't intend breaking a habit of a life time. I invest for a positive future. Not negative outcomes.
Quote from: Teitei on Mar 12, 2024, 11:11 AMThanks, Basil.
I always appreciate and respect your comments and observations as you know.
There is scrip available at Forbar & Craigs so that's not a problem to short. I am simply interested in minimoke's reluctance to short when he is so convinced SML is beyond salvation and that bond holders will lose.
I remain interested in opinions and facts that support an argument that SML
ISN'T beyond salvation and bondholders can sleep easily at night.
Quote from: Minimoke on Mar 12, 2024, 11:15 AMI remain interested in opinions and facts that support an argument that SML ISN'T beyond salvation and bondholders can sleep easily at night.
That's the spirit, Minimoke. We are all here to exchange views, discuss and learn.
Many bond holders will not be sleeping well at night with them trading at 80c in the dollar.
But I would be not sleeping at all if I held SML shares as they will go to zero first before bond holders lose any money.
I doubt there would be too many shareholders on this forum holding SML shares.
Maybe recent buyers, but not long term. How many opportunities have there been over the last 5 years to exercise any stop loss limit and reinvest your capital.
It's been a very steep downward graph from the dizzy heights of 13 bucks.
Im sure that there hasn't been a stone left unturned with a hefty 11 intelligent Directors to right the ship.
Quote from: Toddy on Mar 12, 2024, 01:34 PMIm sure that there hasn't been a stone left unturned with a hefty 11 intelligent Directors to right the ship.
Hmmm...I guess there were at least 11 intelligent people who designed the Titanic to be unsinkable too...
Speaking of 11...I am pleased to be out at an average of ~ $11 many years ago and have been looking for a point of logical reentry based on potential risks and rewards ever since. Looking increasingly unlikely there will ever be one which is pretty sad and a damming inditement on the board and all their endless "b"anking with their B corp nonsense.
Quote from: Minimoke on Mar 12, 2024, 11:15 AMI remain interested in opinions and facts that support an argument that SML ISN'T beyond salvation and bondholders can sleep easily at night.
Hard to say how this plays out. I am sure, the Chinese dragon will manage to secure this element in their food supply chain in the (for them) most suitable and economic way - thinking long term.
Whether it is part of this strategy to allow Synlait to crash and buy the pieces on the cheap, or whether they just want to push the SP as low as possible (for a take over) is anybody's best guess. Later strategy might be seen as tidier - and I guess they don't want to burn their reputation - so, sure, there might be some hope for bond and shareholders to get something offered.
What I don't understand is, is why the conflict between A2M and SML (which in my view basically caused this whole dilemma) was allowed to go public. Washing dirty laundry in public is very un-Chinese ... so - maybe we see here not a planned takeover strategy, but just some big inept western egos clashing and playing with shareholders funds and with their jobs - and the Chinese in the background just trying to make the best out of the spectacle.
I am wondering, which articles from Sun Zhu's "The art of war" might be apply? There must be some equivalent to "When two people argue, the third one is happy"?
Yes, watching and learning without having to have any exposure.
PGW shareholders and SML shareholders are probably comparing notes.
And in sporting speak.... 'We will take away the learnings and get better'.
Quote from: BlackPeter on Mar 12, 2024, 01:42 PM...
I am wondering, which articles from Sun Zhu's "The art of war" might be apply? There must be some equivalent to "When two people argue, the third one is happy"?
Actually - Just found some which might help sleepless bondholders:
Sun Zhu said (the art of war, chapter three, first paragraph): "In the practical art of war, the best thing of all is to take the enemy's country whole and intact: to shatter and destroy it is not so good."
He said as well (chapter 11, paragraph 68): At first, then, exhibit the coyness of a maiden, until the enemy gives you an opening; afterwards emulate the rapidity of a running hare, and it will be too late for the enemy to oppose you".
I recon the latter is the phase we are currently in, so - just lets all sit back, watch and enjoy the spectacle :) ;
Applied to Synlait this might mean ... whatever happens, it will happen fast ... and yes, there is probably a good chance that the company might survive as a going concern (though I'd expect a meaningful tribute (i.e. material contribution) from bond and shareholders).
Of course, only if whoever pulls the threads has read Sun Zhu, but I understand - most educated Chinese have.
Quote from: BlackPeter on Mar 12, 2024, 02:16 PMActually - Just found some which might help sleepless bondholders:
Sun Zhu said (the art of war, chapter three, first paragraph): "In the practical art of war, the best thing of all is to take the enemy's country whole and intact: to shatter and destroy it is not so good."
He said as well (chapter 11, paragraph 68): At first, then, exhibit the coyness of a maiden, until the enemy gives you an opening; afterwards emulate the rapidity of a running hare, and it will be too late for the enemy to oppose you".
I recon the latter is the phase we are currently in, so - just lets all sit back, watch and enjoy the spectacle :) ;
Applied to Synlait this might mean ... whatever happens, it will happen fast ... and yes, there is probably a good chance that the company might survive as a going concern (though I'd expect a meaningful tribute (i.e. material contribution) from bond and shareholders).
Of course, only if whoever pulls the threads has read Sun Zhu, but I understand - most educated Chinese have.
I reckon parts of Synlait are going concerns,
Talbot cheese obviously isn't.
Richard Pearce Drive in Mangere blending / canning facility isn't - that's been flogged off already.
Dairy works appears not to be.
But Dunsandel could well be since it can process mega tones of milk and create 140 cans of infant formula a minute. Nice synergy there with Mataura
And Pokeno could be on a lesser scale - the as yet unnamed international customer might be interested in looking after that as a going concern.
Quote from: Minimoke on Mar 12, 2024, 03:38 PMI reckon parts of Synlait are going concerns,
Talbot cheese obviously isn't.
Richard Pearce Drive in Mangere blending / canning facility isn't - that's been flogged off already.
Dairy works appears not to be.
But Dunsandel could well be since it can process mega tones of milk and create 140 cans of infant formula a minute. Nice synergy there with Mataura
And Pokeno could be on a lesser scale - the as yet unnamed international customer might be interested in looking after that as a going concern.
Agreed - and, to be honest - for me Synlait always was only Dunsandel. Did any other part make money? Maybe Dairy works is paying their own bills, but otherwise - don't think so. The rest has been bought by an imprudent board driven by hype and the desire to diversify without considering the cost or the quality of doing so. That way they ended up with the worst case from both worlds - they bought a lot of additional plants for risk mitigation (like Pokeno) and product diversification (Talbot) without ever checking the viability of any of them - and worse - after all this diversification they still had only the one cash cow they had before (A2 IF), which sadly fall ill during Covid and subsequently got transported to the meat works by the one customer (ATM) they relied on.
Clearly - Synlait will be viable based on Dunsandel alone - and don't forget that they would bring as bonus not just the Chinese IF import license, but as well the milk supply. Synlait has lots of contractually bound farmers in mid Canterbury and their own transport network. Don't think that they managed to build up anything similar anywhere else.
Quote from: Minimoke on Mar 12, 2024, 11:15 AMI remain interested in opinions and facts that support an argument that SML ISN'T beyond salvation and bondholders can sleep easily at night.
Others have made good contributions to this but I do know bankers (generally) do not like owning businesses. It's not their strength, desire or core business. They will do everything in their power to not own a business, unless it is the last resort.
So in addition to providing temporary debt and covenant relief which Buzz suggested (and it does happen, don't ask how I know), there will be a lot of bankers burning a lot of midnight oil to ensure they get back most or all of their money. But someone somewhere will have to pay. That someone may well be a combination of everyone - bondholders, debtholders, shareholders, new investors etc.
It is also possible some debt gets converted to PIK notes at a discount and on-sold where interest payments cease and accrue instead to new (PE?) investors.
There will be numerous conversations occurring, with each party trying to extract the best deal for themselves. Shareholders and bondholders are mere spectators until there is an EGM whereupon they will likely be given Hobson's choice. Will it survive? Sure. In its current form? Unlikely.
Quote from: Ferg on Mar 12, 2024, 10:32 PMOthers have made good contributions to this but I do know bankers (generally) do not like owning businesses. It's not their strength, desire or core business. They will do everything in their power to not own a business, unless it is the last resort.
So in addition to providing temporary debt and covenant relief which Buzz suggested (and it does happen, don't ask how I know), there will be a lot of bankers burning a lot of midnight oil to ensure they get back most or all of their money. But someone somewhere will have to pay. That someone may well be a combination of everyone - bondholders, debtholders, shareholders, new investors etc.
It is also possible some debt gets converted to PIK notes at a discount and on-sold where interest payments cease and accrue instead to new (PE?) investors.
There will be numerous conversations occurring, with each party trying to extract the best deal for themselves. Shareholders and bondholders are mere spectators until there is an EGM whereupon they will likely be given Hobson's choice. Will it survive? Sure. In its current form? Unlikely.
In a post somewhere below I've pointed out that I think the bankers are in a very good position. By splitting the current assets into bite size chunks it shouldn't be had to find a couple of hundred million$ to pay back the bank debt. At its very simplest $70m for dairy works, $70m for Dunsandel and $70m for Pokeno. A2 could have Dunsandel. Bright could have Pokeno. Someone else could have dairy works.
I wouldn't be in the least bit worried if I was a banker. There may be a bit of work bringing in any other top level secured creditors so they don't muddy the waters
What will be taking some effort is how some temporary relief is worded and structured so as not to trigger the bond default (the $35m debt repayment trigger now that $130m has to be paid back)
Well, I have to say I am a bit confused by today's announcement.
Sure I get the "lead with Pride" thing.
But it seems to me that Synlait (the company with no money) is now going to dabble further in farm effluent management systems, emissions-friendly feed options, advanced soil testing, alternative fertilisers, and tree planting.
So is Nestlé the "big new international Customer" that we still haven't officially heard about?
And its a bit scant on detail - just how much cash is Synlait throwing into the pot?
And how much product are they going to produce for Nestle? What does "potential" mean?
And when they say "anticipated investment" does this mean they are just thinking about investing (on the presumption they will still be around) or is it an actual done deal - and if so why the word "anticipated"
(and why does the last government "breaking news" con come to mind - you remember the one. Where all news outlets were stopping the presses for an urgent govt announcement. And it ended up with the government lawyers, Hipkins and Blackrock announcing an environment fund with no money in it)
I know, call me skeptical. But isn't this just a big diversion from the more pressing issues at hand. Like selling Dairy works. Finding $35m to stop a bond default, finding $130m to keep the bankers happy. Even perhaps turning the ship around from a loss maker to something profitable.
Marked as not price sensitive which says it all.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/427901/414770.pdf
Just more B Corp nonsense, rearranging the deck chairs on the Titanic thinking it will make a difference lol
Really...you couldn't make this garbage up if you tried lol
Quote from: Basil on Mar 13, 2024, 02:31 PMMarked as not price sensitive which says it all.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/427901/414770.pdf
Just more B Corp nonsense, rearranging the deck chairs on the Titanic thinking it will make a difference lol
Really...you couldn't make this garbage up if you tried lol
New Synlait & Nestlé co-investment partnership to reduce on-farm emissions
Synlait Milk Limited (Synlait) has joined Nestlé in a unique three-way partnership with its farmer
suppliers to help fund innovative on-farm emissions reduction tools.
The partnership is focused on pragmatic on-farm solutions that improve efficiency, such as effluent
management systems...Hmmm, I reckon a bit of similar focus in the Board room would go a L-O-N-G way with these guys. An "effluent management system" sounds like just to the go for them.
Quote from: Basil on Mar 13, 2024, 02:31 PMMarked as not price sensitive which says it all.
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/427901/414770.pdf
Just more B Corp nonsense, rearranging the deck chairs on the Titanic thinking it will make a difference lol
Really...you couldn't make this garbage up if you tried lol
These guys are that woke they make Greta look right wing.
QuoteHmmm, I reckon a bit of similar focus in the Board room would go a L-O-N-G way with these guys. An "effluent management system" sounds like just to the go for them.
[/quote]
ROFL, classic. I am sure shareholders will take tremendous comfort from the fact that this groundbreaking new partnership has been the focus point of board and senior management's attention in recent weeks and months...I mean there's nothing else of greater importance going on is there, lol
Quote from: Basil on Mar 13, 2024, 03:17 PMROFL, classic. I am sure shareholders will take tremendous comfort from the fact that this groundbreaking new partnership has been the focus point of board and senior management's attention in recent weeks and months...I mean there's nothing else of greater importance going on is there, lol
Helps explain the delay (to the very last moment) of the half year results announcement. Effluent management has been front of mind.
Have a look at the lovely pink colored sp chart since listing on their website, thats the most impressive mountain range on earth, pathetic company.
We can do that
sml.jpg
Quote from: Hectorplains on Mar 13, 2024, 02:43 PMNew Synlait & Nestlé co-investment partnership to reduce on-farm emissions
Synlait Milk Limited (Synlait) has joined Nestlé in a unique three-way partnership with its farmer
suppliers to help fund innovative on-farm emissions reduction tools.
The partnership is focused on pragmatic on-farm solutions that improve efficiency, such as effluent
management systems...
Hmmm, I reckon a bit of similar focus in the Board room would go a L-O-N-G way with these guys. An "effluent management system" sounds like just to the go for them.
Hmm - while I understand all the outpour of cynicism (not just yours) - and while I contributed myself in beating up this company ... I guess there is just one thing I am asking myself:
Why would Nestle go all the length to shape an effluent partnership agreement with a quickly deteriorating milk producer sitting on a rock in the South Pacific taking just its last breaths before it is being squashed between the interests of an inept management and selfish shareholders with a hidden agenda (which would be contrary to the agenda of Nestle)?
Just wondering - maybe, just maybe Nestle might be the white knight - and maybe it is not just the Chinese waiting to seize an opportune moment in the self destruction battle between SML and A2M.
Wouldn't it be interesting if Nestle buys into SML on the cheap - and adds it to its empire?
While a secure milk supply would be good for China, it clearly would be as well desirable for the largest food and beverage company in the world.
Who knows, maybe the board had a bright moment after all and did put their priorities right ... but we shall see.
Quote from: BlackPeter on Mar 14, 2024, 11:11 AMHmm - while I understand all the outpour of cynicism (not just yours) - and while I contributed myself in beating up this company ... I guess there is just one thing I am asking myself:
Why would Nestle go all the length to shape an effluent partnership agreement with a quickly deteriorating milk producer sitting on a rock in the South Pacific taking just its last breaths before it is being squashed between the interests of an inept management and selfish shareholders with a hidden agenda (which would be contrary to the agenda of Nestle)?
Just wondering - maybe, just maybe Nestle might be the white knight - and maybe it is not just the Chinese waiting to sieze an opportune moment in the self destruction battle between SML and A2M.
Wouldn't it be interesting if Nestle buys into SML on the cheap - and adds it to its empire?
While a secure milk supply would be good for China, it clearly would be as well desirable for the largest food and beverage company in the world.
Who knows, maybe the board had a bright moment after all and did put their priorities right ... but we shall see.
I thought about that - and its why I likened it to the "Stop The Presses" BlackRock" announcement.
One party to the "deal" needs some positive publicity.
And it worked. If you look at the article in the magazine below it appears to have been written by a journalist, Suddish Kissun. But on closer inspection it isn't an article at all. Its essentially a word for word copy of the Synlait market announcement.
So I'm left thinking that Nestle needs some positive ESG publicity - and what better than some positive environmental announcement in a company in the bottom of the south pacific which is hardly likely to grab any closer attention.
And of course the other party gets a distraction in the media.
Win / Win
https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/synlait-nestle-sign-deal-to-reduce-on-farm-emissions
Quote from: Minimoke on Mar 14, 2024, 12:21 PMI thought about that - and its why I likened it to the "Stop The Presses" BlackRock" announcement.
One party to the "deal" needs some positive publicity.
And it worked. If you look at the article in the magazine below it appears to have been written by a journalist, Suddish Kissun. But on closer inspection it isn't an article at all. Its essentially a word for word copy of the Synlait market announcement.
So I'm left thinking that Nestle needs some positive ESG publicity - and what better than some positive environmental announcement in a company in the bottom of the south pacific which is hardly likely to grab any closer attention.
And of course the other party gets a distraction in the media.
Win / Win
https://www.ruralnewsgroup.co.nz/rural-news/rural-general-news/synlait-nestle-sign-deal-to-reduce-on-farm-emissions
Just trying to grab some positive kudos by woke virtue signaling.
Someone has had enough. Over 1.5m shares crossed at close at $0.69 (1 cent shy of all time low). About the third highest volume in past 12 months.
The flip side, obviously is that someone is keen. And seems to be accumulating.
And we are now officially in space countdown period.
10, no 9 days to go.
About to do a SpaceX and break up ?
So. By my reckoning Synlait now have 4 working days to pay back at least $130m. At least that is what they have told the market.
I don't know much about capital raises. But I reckon it takes longer than 4 days to do. Unless you have come to a behind the scenes arrangement with someone that excludes minority shareholders.
Alternatively they have done a behind the scenes deal with bankers -in which case I would have thought market disclosure rules would apply.
Alternatively they have sold off Dairy works and can pay back the $130m in which case I would have thought market disclosure rules would apply.
And bond holders ought to be kept in the know - they have a $35m repayment desperately needed otherwise there is a bond default trigger.
Quote from: Minimoke on Mar 22, 2024, 06:24 PMAlternatively they have done a behind the scenes deal with bankers -in which case I would have thought market disclosure rules would apply.
There will be some t that has not yet been correctly crossed, or some i not yet correctly dotted, which means any such relief from the bankers is not currently 'finalised' so they can't release it to the market right now. That's my prediction.
2nd April - one day after April Fools' Day - when all will have to be revealed. Who will be the fools?
As one of my ex-bosses (high flyer with a law degree from Harvard) used to advise, keep an eye on the big picture before going through the fine details.
Here's where I see the big picture for SML :
1. ATM needs SML to stay in business until 2027 (3 more years at least) or else, ATM itself will be out of business.
"Without Synlait, which holds the licence for manufacture of Chinese-labelled "a2 Platinum", a2Milk is in big trouble. It would mean a2Milk would need to obtain an equivalent licence for its majority-owned Mataura Milk in Southland. Obtaining that licence could be a long process, and there is also a long herd-conversion process before Mataura will have the necessary volume of A2 milk."
2. Synlait is part of the long term global food chain supply strategy of Shanghai Maling via Bright Foods in NZ - the other being Silver Fern Farm ($311m).
3. There are 8 directors in Synlait (including ex Finance Minister, Ruth Richardson), consisting of 5 NZ directors and 3 Bright Foods appointees. They will be very mindful of the implications of Synlait being able to meet its ongoing debt servicing and debt repayment/refinance obligations. Otherwise, like Jenny Shipley found with Mainzeal, they become personally liable.
https://www.nzherald.co.nz/business/mainzeal-claims-hit-159m-dame-jenny-shipley-settles-66m-payment/6KJ3J36BC5CUZBML5NPVYYVGLY/
paywalled
"The big court case result out last August ruled the Mainzeal directors were liable for $39.8m plus interest and costs but it also sparked more creditor claims. Shipley, Peter Gomm and Clive Tilby had settled payments of $6.6m each, the report said.
"The Supreme Court ordered the directors to contribute to the assets of the companies $39.8m together with interest at the prescribed rates for the period from 28 February 2013 to the date of the judgment. With interest, the judgment sum exceeds $60m," McKay and Bethell's report said.
4. Last observation goes to Keith Woodford :
https://www.farmersweekly.co.nz/opinion/where-does-synlaits-future-lie/
"The cleanest outcome would be if a2Milk were to make an outright bid to purchase Synlait. Bright could then decide to sell or retain its shares.
If Bright decided to retain the shares, then a2milk would need to buy at least 76% of other shareholdings to obtain control. Perhaps a2Milk is biding its time, as the screws are tightened on Synlait. And then, what would Bright decide to do? Perhaps a counter offer to ratchet up the price?
The only thing close to a certainty is that something big now has to happen. The Synlait of the future is going to be very different to the current Synlait."
Might apply for the job and get an insight into the refinancing deals! ;D
https://www.seek.co.nz/job/74706310?type=promoted&ref=search-standalone#sol=9d51e8f7f3dbbe9e6604d72d23c3b87ec9fa4188
Quote from: Teitei on Mar 27, 2024, 01:27 PMMight apply for the job and get an insight into the refinancing deals! ;D
https://www.seek.co.nz/job/74706310?type=promoted&ref=search-standalone#sol=9d51e8f7f3dbbe9e6604d72d23c3b87ec9fa4188
"Work for an award-winning company"
Yea. Working for a B Corp is a real draw card for an able minded person.
Trading halt
https://www.nzx.com/announcements/428715
Interesting times ahead!
Trading halt pending announcement on financial support from Bright Dairy.
https://www.nzx.com/announcements/428715
Convertible note issue of $150m to Bright Dairy? Say $150m at 5% pa convertible to SML shares at 75c (subject to shareholders' approval) - will deliver full control to Bright Dairy in 2027.
Interesting crossing of SML bonds yesterday - 860,000 bonds crossed at 80c (37% yield to maturity) so who was the buyer?
Quote from: Teitei on Mar 28, 2024, 09:12 AMTrading halt pending announcement on financial support from Bright Dairy.
https://www.nzx.com/announcements/428715
Convertible note issue of $150m to Bright Dairy? Say $150m at 5% pa convertible to SML shares at 75c (subject to shareholders' approval) - will deliver full control to Bright Dairy in 2027.
Interesting crossing of SML bonds yesterday - 860,000 bonds crossed at 80c (37% yield to maturity) so who was the buyer?
I wonder what A2 think about that. They have a blocking stake.
Talk about taking things to the wire. Synlait have had ages to get this done. But in the meantime they have succeeding in getting a B Corp accreditation and some lipstick provided by nestle to stick on the pig.
Quite clearly the banking syndicate is stitching something together that sees them in the clear.
They won't be thinking about Bond holders.
If I was a bond holder I would be EXTREMELY concerned
Lets just highlight a pertinent part in today's announcement
"As previously announced by SML, SML (i) is required under its syndicated banking facilities to make a prepayment of at least $130 million on Thursday, 28 March 2024"
Quite clealry they have not and will not make this paymenton 28 March.
Now lets refer to the bond documents andin particualry the "events of default" provisions
"The Supervisor may in its discretion, and must upon being directed to do so by a Special Resolution of Bondholders, declare the Bonds to be due and payable at the Redemption Amount if one of the following events occurs:.......
- indebtedness in respect of borrowed money of more than $35 million is not paid when
due, or is called up as a result of a default or a commitment for such indebtedness is
cancelled;"
So, what say the Bond Supervisors? What liability do they have if they fail to exercise their discretion?
With respect, I think you are debating semantics here mate. It's quite clear they are seeking a deferment of just 1 trading day. I really don't think any bond supervisor is going to take prescriptive action over that or face any liability especially as its in a trading halt to give effect to that deferment. If Bright Dairy doesn't come through with a rescue package next Tuesday...the "proverbial" is likely to hit the fan shortly afterwards.
Get a large fresh batch of popcorn in over Easter for consumption on Tuesday morning 😊
Quote from: Minimoke on Mar 28, 2024, 09:31 AMI wonder what A2 think about that. They have a blocking stake.
Talk about taking things to the wire. Synlait have had ages to get this done. But in the meantime they have succeeding in getting a B Corp accreditation and some lipstick provided by nestle to stick on the pig.
Quite clearly the banking syndicate is stitching something together that sees them in the clear.
They won't be thinking about Bond holders.
If I was a bond holder I would be EXTREMELY concerned
If you are a bond holder, you would be extremely distressed - that's for sure!
Quote from: Basil on Mar 28, 2024, 11:26 AMWith respect, I think you are debating semantics here mate. It's quite clear they are seeking a deferment of just 1 trading day. I really don't think any bond supervisor is going to take prescriptive action over that or face any liability especially as its in a trading halt to give effect to that deferment. If Bright Dairy doesn't come through with a rescue package next Tuesday...the "proverbial" is likely to hit the fan shortly afterwards.
Get a large fresh batch of popcorn in over Easter for consumption on Tuesday morning 😊
The chess pieces are in place for Bright Dairy to make its move and I do not see ATM & other shareholders as having much option but to accept whatever is proposed by Bright Dairy.
Quote from: Teitei on Mar 24, 2024, 11:00 AM2nd April - one day after April Fools' Day - when all will have to be revealed. Who will be the fools?
As one of my ex-bosses (high flyer with a law degree from Harvard) used to advise, keep an eye on the big picture before going through the fine details.
Here's where I see the big picture for SML :
1. ATM needs SML to stay in business until 2027 (3 more years at least) or else, ATM itself will be out of business.
"Without Synlait, which holds the licence for manufacture of Chinese-labelled "a2 Platinum", a2Milk is in big trouble. It would mean a2Milk would need to obtain an equivalent licence for its majority-owned Mataura Milk in Southland. Obtaining that licence could be a long process, and there is also a long herd-conversion process before Mataura will have the necessary volume of A2 milk."
2. Synlait is part of the long term global food chain supply strategy of Shanghai Maling via Bright Foods in NZ - the other being Silver Fern Farm ($311m).
3. There are 8 directors in Synlait (including ex Finance Minister, Ruth Richardson), consisting of 5 NZ directors and 3 Bright Foods appointees. They will be very mindful of the implications of Synlait being able to meet its ongoing debt servicing and debt repayment/refinance obligations. Otherwise, like Jenny Shipley found with Mainzeal, they become personally liable.
https://www.nzherald.co.nz/business/mainzeal-claims-hit-159m-dame-jenny-shipley-settles-66m-payment/6KJ3J36BC5CUZBML5NPVYYVGLY/
paywalled
"The big court case result out last August ruled the Mainzeal directors were liable for $39.8m plus interest and costs but it also sparked more creditor claims. Shipley, Peter Gomm and Clive Tilby had settled payments of $6.6m each, the report said.
"The Supreme Court ordered the directors to contribute to the assets of the companies $39.8m together with interest at the prescribed rates for the period from 28 February 2013 to the date of the judgment. With interest, the judgment sum exceeds $60m," McKay and Bethell's report said.
4. Last observation goes to Keith Woodford :
https://www.farmersweekly.co.nz/opinion/where-does-synlaits-future-lie/
"The cleanest outcome would be if a2Milk were to make an outright bid to purchase Synlait. Bright could then decide to sell or retain its shares.
If Bright decided to retain the shares, then a2milk would need to buy at least 76% of other shareholdings to obtain control. Perhaps a2Milk is biding its time, as the screws are tightened on Synlait. And then, what would Bright decide to do? Perhaps a counter offer to ratchet up the price?
The only thing close to a certainty is that something big now has to happen. The Synlait of the future is going to be very different to the current Synlait."
Quote from: Minimoke on Mar 28, 2024, 09:31 AMI wonder what A2 think about that. They have a blocking stake.
Putting out the fire with Gasoline ? https://www.youtube.com/watch?v=dAagFKdsSNs
Quote from: Basil on Mar 28, 2024, 11:26 AMWith respect, I think you are debating semantics here mate. It's quite clear they are seeking a deferment of just 1 trading day. I really don't think any bond supervisor is going to take prescriptive action over that or face any liability especially as its in a trading halt to give effect to that deferment. If Bright Dairy doesn't come through with a rescue package next Tuesday...the "proverbial" is likely to hit the fan shortly afterwards.
Get a large fresh batch of popcorn in over Easter for consumption on Tuesday morning 😊
I'm not suggesting the Bond Supervisor act today. But he will be burying the midnight oil and checking out his exposure to this situation
Clearly a deal hasn't been done by today. So things are not straightforward
I'd expect any deal to require approval by shareholders. Bright is not a majority holder
I can't see A2 allowing their holding to be diluted or extinguished. Or allow their supply to be put at risk
A2 and SML are in a fractious, litigious relationship
Agreed mate, all good points you've just made.
Quote from: Minimoke on Mar 28, 2024, 12:02 PMI'm not suggesting the Bond Supervisor act today. But he will be burying the midnight oil and checking out his exposure to this situation
Clearly a deal hasn't been done by today. So things are not straightforward
I'd expect any deal to require approval by shareholders. Bright is not a majority holder
I can't see A2 allowing their holding to be diluted or extinguished. Or allow their supply to be put at risk
A2 and SML are in a fractious, litigious relationship
But not Bright Foods and ATM.
So put yourself in the shoes of the two of them and think of how you would play the game to maximise your position.
My pick is a convertible note issue to Bright Foods and this will be supported by ATM.
A carve up of SML in 2027 to follow.
Quote from: Teitei on Mar 28, 2024, 12:19 PMBut not Bright Foods and ATM.
So put yourself in the shoes of the two of them and think of how you would play the game to maximise your position.
My pick is a convertible note issue to Bright Foods and this will be supported by ATM.
A carve up of SML in 2027 to follow.
Convertible notes. Or liquidation
I have given my thoughts on that in earlier posts below.
Some outcome that sees A2 gets Dunsandel (with bright if they are both so inclined)
Bright can have Pokeno for that security of food supply
Flog dairy works for a song.
Every scenario I have does not include bond holders.
Quote from: Minimoke on Mar 28, 2024, 12:31 PMI have given my thoughts on that in earlier posts below.
Some outcome that sees A2 gets Dunsandel (with bright if they are both so inclined)
Bright can have Pokeno for that security of food supply
Flog dairy works for a song.
Every scenario I have does not include bond holders.
Huge assumption by you that minorities in NZ have zero remedy and remember this - they lose everything before bond holders lose a cent.
And the independent directors? Mainzeal beckons.
Quote from: Teitei on Mar 28, 2024, 12:34 PMHuge assumption by you that minorities in NZ have zero remedy and remember this - they lose everything before bond holders lose a cent.
And the independent directors? Mainzeal beckons.
Yes, minority shareholders could be facing a loss of everything. But they have had ample opportunity to exit their position. So if that is the outcome I have zero sympathy for them. (I exited my position ages ago)
If I was Bright / A2 I'd be looking at a deal that best suited our two combined interest. And that would be a takeover of stainless steel assets in exchange for clearing bank debt. Everyone else plays the remaining cards as they fall.
Quote from: Minimoke on Mar 28, 2024, 12:50 PMYes, minority shareholders could be facing a loss of everything. But they have had ample opportunity to exit their position. So if that is the outcome I have zero sympathy for them. (I exited my position ages ago)
If I was Bright / A2 I'd be looking at a deal that best suited our two combined interest. And that would be a takeover of stainless steel assets in exchange for clearing bank debt. Everyone else plays the remaining cards as they fall.
Have you seen who are the minority shareholders? 8)
Quote from: Teitei on Mar 28, 2024, 01:03 PMHave you seen who are the minority shareholders? 8)
Do you mean the likes of John Penno (2.34%) and ACC (2.68%. Holders who have had ample opportunity to quit their positions.
Between them Bright and A2 own something like 58 - 59%. These are the only two with a greater than 5% holding that enables them to call a Special Meeting
Next largest holding is HSBC clients with 3.4%
These small holders can block the required 75% of vote for a special resolution.
Which indicates Bright / A2 need to lobby 15.8% of small shareholders
I'm pleased my name isn't on the list
Quote from: Minimoke on Mar 28, 2024, 01:34 PMDo you mean the likes of John Penno (2.34%) and ACC (2.68%. Holders who have had ample opportunity to quit their positions.
Between them Bright and A2 own something like 58 - 59%. These are the only two with a greater than 5% holding that enables them to call a Special Meeting
Next largest holding is HSBC clients with 3.4%
These small holders can block the required 75% of vote for a special resolution.
Which indicates Bright / A2 need to lobby 15.8% of small shareholders
I'm pleased my name isn't on the list
A huge assumption on your part that they want to get out.
I don't like to make wild assumptions.
But I do reflect on this. And when it will crater
sm1.png
Quote from: Minimoke on Mar 28, 2024, 02:13 PMI don't like to make wild assumptions.
But I do reflect on this. And when it will crater
sm1.png
So when will it crater?
Quote from: Teitei on Mar 28, 2024, 11:48 AMIf you are a bond holder, you would be extremely distressed - that's for sure!
I thought you said that you had some bonds and were unconcerned?
Quote from: Teitei on Mar 28, 2024, 02:16 PMSo when will it crater?
Could be as early as Tuesday. Or In december when Bonds need to be repaid. I don't see life after that.
Quote from: Buzz on Mar 28, 2024, 02:18 PMI thought you said that you had some bonds and were unconcerned?
I was referring to Minimoke. 8)
Quote from: Minimoke on Mar 28, 2024, 02:43 PMCould be as early as Tuesday. Or In december when Bonds need to be repaid. I don't see life after that.
Illogical.
SML will crater on Tuesday or not at all. Think about it - why would Bright Foods drag out the saga if they want SML to fall over?
Quote from: Teitei on Mar 28, 2024, 04:42 PMIllogical.
SML will crater on Tuesday or not at all. Think about it - why would Bright Foods drag out the saga if they want SML to fall over?
There is a huge swinging brick.
First swing is today when $130m (or the full full proceeds of Dairyworks) had to be paid to bankers.. Fail
Second Swing. Tuesday. Can they find at least $130m by the time loss making announcements are made
Third swing. December when unsecured bonds have to be repaid
Fourth swing brick B Corp renewal - must be really stressing everyone out and full focus will be on them getting certification again. Failure will result in tears. Which is a whole lot worse than destruction of shareholder wealth.
Disclaimer. I thought it would be obvious from my posts. But I do not hold bonds (nor shares)
Crikey..... things getting worse (... or inline with pessimistic expectations.)
https://www.nzx.com/announcements/428830
Key financial metrics:
• Revenue up 3% to $793.5 million.
• Earnings before interest, taxes, depreciation, and amortization (EBITDA) was $19.9 million. Adjusted EBITDA was $36.1 million.
• Net loss after tax was ($96.2) million. Adjusted net loss after tax was ($17.4) million.
• Net debt up 8% to $559.0 million.
• Gross profit down 47% to $43.6 million.
• Forecast base milk price for the 2023 / 2024 season is $7.80 per kg/MS up from $7.50 per kg/MS.
Full year 2024 (FY24) guidance statement
Synlait has updated its FY24 guidance.
The previously announced guidance stated that earnings before interest, taxes, depreciation, and amortization (EBITDA) performance was expected to be broadly flat or down compared to FY23. Synlait's FY23 EBITDA was $90.7 million.
Synlait now expects the FY24 EBITDA result to be significantly down on FY23 within the range of $45 million to $60 million, excluding a non-cash adjustment for the product costing method change of approximately $17 million.
The FY24 EBITDA result is impacted by:
• Softening demand and/or margins across all business units.
• Adverse foreign exchange and product mix.
• Increased operating expenses e.g., legal costs, inventory management, and a range of other costs.
In addition to the above, Synlait is facing material uncertainties in respect of the timings and outcomes of various deleveraging options which are currently progressing. The deleveraging options include an equity raise, a North Island strategic asset review, and the sale of Dairyworks.
What's the resident SML guru minimoke think
Seems just kicking the can down the road and hoping something good will happen ...doesn't seem much progress has been made at all
Someone needs to come up with a read between the lines version ...that be a sad story
Quote from: winner (n) on Apr 02, 2024, 09:02 AMWhat's the resident SML guru minimoke think
Seems just kicking the can down the road and hoping something good will happen ...doesn't seem much progress has been made at all
Someone needs to come up with a read between the lines version ...that be a sad story
Totally uninvestable.
Take this for example "there are material uncertainties which may cast significant doubt over the Group's ability to continue trading as a going concern." What have I been saying?
Then thiss "Group's current liabilities exceeding its current assets by $204.9m. The Group is unable to repay these debts on demand without additional support from shareholders or from other sources of capital."
So, Bright have given a "letter of support" I reckon this is like getting a Certificate of Participation in the Form 5 100m sprint athletics event.
As expected Dairworks grossly over valued. No one wants it at any price.
Good news is they are going to get $7.5m for the sale of some property plant and equipment. Goodwill on dairyworks has taken a $31m hit. Inventories are up. Dairy works now on the bookat $120.3m.
Clearly Pokeno is going to go on the block. Still silence about this great white knight international customer that Pokeno was built and upgraded for.
Only asset of value is Dunsandel.
The $130m repayment date has now been pushed out to 15 July. Bright Dairy will stump up this cash via a short term bridging loan - subject to requisite shareholder approval. I note utter silence on A2M.
Going for an equity raise by 30 July but Material uncertainties will exist around the quantum, timing, structure, participation rate, and ultimate success of the equity raise and resulting impact on the Group's capital and ownership structure. The Group's shareholder structure creates further complexity and uncertainty around the potential outcome of an equity raise" Here we see A2's influence.
"An unsuccessful equity raise will result in significant adverse effects on the Group, including the ability for the Group to remain a going concern."
Shareholders - you still have an opportunity to get out. Bondholders. I still reckon you are stuffed.
So a $31m write down of Dairyworks assets to reflect the value of non-binding offers received
So not worth as much as they thought
But wait there is more.....
Pokeno sale to be considered
Synlait will undertake a strategic review of its world-class North
Island assets, including its manufacturing facility in Pokeno and
its blending and canning facility in Auckland.
The strategic review will explore the highest-value ownership
structure of the assets to maximise value for all shareholders.
The strategic review is expected to take several months, and
there is no certainty that any transaction will result. No decisions
will be made regarding any potential transaction or other
outcomes until the completion of the strategic review.
Dairy Works sale
Synlait remains in discussions with potential purchasers, but no
sale has been completed or is assured.
This is a high value business and the Board will ensure the best
possible return is achieved for shareholders.
Equity Raise
Synlait is progressing with an equity raise as a key option
alongside the outcome of the strategic review of the North Island
assets.
Given that Synlait's share price is trading at a significant discount
to its net tangible asset value, the Board believes that asset
realisation should be progressed to produce maximum value for
shareholders. Equity raise remains an option under consideration
by the Board in parallel to achieve deleveraging of Synlait's
balance sheet.
(.......and no mention anywhere of ATM ?)
Agree 100% with Minimoke, totally uninvestable.
In the midst of all this turmoil, operating margins have ~ halved "Gross profit down 47% to $43.6m"
Unfortunately for bondholders the key words to describe those bonds are "unsecured" and "subordinated" to all other debt.
Just out of sheer interest here's the pre-open at 9:40 this morning
sm1.png
I've referred to these line items before. Here they are now.
Cash and receivables = $140m
Payables = $286m
Workers might want to consider going on a weekly payroll
And heres the first few minutes
sm1.png
Notice how the buyers have suddenly evaporated
Best bid currently $0.61 :-X
Ahh, well - net losses and net debts up. Things going up is good, isn't it?
But apart from that - nobody seems to appreciate the amazing design of the reports and presentations. All in pretty pink colour (so appropriate) - and did anybody notice the beautifully shaped picture of a death spiral made from pouring milk they spread all over their presentations? I think the photographer deserves credits!
Rarely seen more telling illustrations to a financial report ....
Be positive, people ... I am sure this spectacle will keep us entertained for some time to go.
Quote from: BlackPeter on Apr 02, 2024, 10:35 AMBut apart from that - nobody seems to appreciate the amazing design of the reports and presentations. All in pretty pink colour (so appropriate) - and did anybody notice the beautifully shaped picture of a death spiral made from pouring milk they spread all over their presentations? I think the photographer deserves credits!
LOL here it is http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/428830/415920.pdf
QuoteBe positive, people ... I am sure this spectacle will keep us entertained for some time to go.
Yeap agreed. Don't think I can recall such a spectacular train wreck that's played out in such super slow motion for many years.
Quote from: BlackPeter on Apr 02, 2024, 10:35 AMAhh, well - net losses and net debts up. Things going up is good, isn't it?
But apart from that - nobody seems to appreciate the amazing design of the reports and presentations. All in pretty pink colour (so appropriate) - and did anybody notice the beautifully shaped picture of a death spiral made from pouring milk they spread all over their presentations? I think the photographer deserves credits!
Rarely seen more telling illustrations to a financial report ....
Be positive, people ... I am sure this spectacle will keep us entertained for some time to go.
Call me a sensitive wee snowflake. But seems to me the opening line in the Chair and CEO address in the half year review is so far out of touch. This was an issue I raised way back in Leons first opening address at the AGM.
But all good on the walking the B Corp walk - but personally, I'd like to see a bit more sensitivity to the Chinese owners who are on the cusp of bailing SML out.
This train wreck nor the angst between SML and A2M seems to be affecting the increasing A2 sp, perhaps the market is looking through to the eventual decoupling from this derelict train or perhaps a total T/O in conjunction with Bright.
So much baggage on that train Breezy, I reckon decouple all the carriages carrying endless ESG nonsense, remove the entire (mis)management structure, sell Dairy foods to the highest bidder, Bright Dairy gets Pokeno and ATM gets Dunsandel, banks get their money back and minority shareholders and all bondholders get hung out to dry.
Quote from: Basil on Apr 02, 2024, 10:39 AMLOL here it is http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/428830/415920.pdfYeap agreed. Don't think I can recall such a spectacular train wreck that's played out in such super slow motion for many years.
Doesn't seem that long ago you sold your SML for more than 10 bucks .....after I told you cash flows were indicating this was a dog
Quote from: winner (n) on Apr 02, 2024, 12:00 PMDoesn't seem that long ago you sold your SML for more than 10 bucks .....after I told you cash flows were indicating this was a dog
Time fly's as you get older. Was quite a few years ago mate but no question about it, I am forever in your debt. That's the real value of forums. The ability to share ideas and point out things that might otherwise slip under another one's radar. Think my average sale price was about $11.
Well. I can't figure out the market. Trades at $0.72
Quote from: winner (n) on Apr 02, 2024, 12:00 PMDoesn't seem that long ago you sold your SML for more than 10 bucks .....after I told you cash flows were indicating this was a dog
Yes, good point, though - to be honest, I think cash flows just have been a consequence of them ignoring for many years some of the basic principles of doing business:
1) Do not put all eggs into one basket (like ATM, China IF)!
2) While diversifying your business is good (see (1), it is crucial that the options you add increase your earnings rather than your losses.
3) Understand your companies abilities as well as the abilities of your opponents (from Zhu's "the art of war") - relying only on one major customer who does not even understand their own sales channel is not clever!
4) Never hire CEO's who consider it as their main contribution to change the companies logo or colour schema
5) Due diligence is not a 4 letter word! Never ever invest large amounts of money without a sound business case (like for buying Talbot cheese)?) or without understanding of the legal framework you invest in (like Pokeno).
6) If you ignored points 1 to 5 ... as a minimum - DO NOT BITE THE HAND WHICH IS STILL FEEDING YOU!
I probably could go on with that for some more time, but hey - Synlait clearly turned out to be an amazing example for how not to do business ... I expect that they will compete in years to come with Ford's Edsel for the largest business flop in history, and no matter the numbers, Synlait is will undoubtedly be the pinkest failure in business history!
Delving into the notes, I am wondering why Bright is the potential White Knight.
According to segment revenue, 6% comes from china (down from 15% last year). I presume this is Bright.
55% comes from New Zealand. I presume this is mainly A2 and Foodstuffs.
Then you have 24% rest of Asia (what is Brights interest here?), 8% Middle east / Africa, 5% Australia and 2% rest of world.
We should remember that one of the reasons cited for building Pokeno, and subsequently buying the Blending / Canning plant was to de-risk single site manufacture for Bright. They also invested for Munchkin (and that didn't turn out so well) as well as Chinese New Hope Nutritional
(I haven't heard how the a2 herd conversations are going up north - so not sure how much A2 is being processed out of Pokeno / auckland.
Quote from: Minimoke on Apr 02, 2024, 01:38 PMDelving into the notes, I am wondering why Bright is the potential White Knight.
According to segment revenue, 6% comes from china (down from 15% last year). I presume this is Bright.
55% comes from New Zealand. I presume this is mainly A2 and Foodstuffs.
Then you have 24% rest of Asia (what is Brights interest here?), 8% Middle east / Africa, 5% Australia and 2% rest of world.
We should remember that one of the reasons cited for building Pokeno, and subsequently buying the Blending / Canning plant was to de-risk single site manufacture for Bright. They also invested for Munchkin (and that didn't turn out so well) as well as Chinese New Hope Nutritional
(I haven't heard how the a2 herd conversations are going up north - so not sure how much A2 is being processed out of Pokeno / auckland.
Just a couple of observations:
You will find that they create a lot of revenue without making a lot of money. Bulk milk powder falls into this category, and their interferon business used to be highly cyclical. I think it only was really profitable before Synlait started producing it. Which means - source of revenue is not a very good criterium to assess how they might improve their bottom line.
Ah yes, and their profitable China business was all going through ATM (and so potentially all counted as NZ business) in form of these aptly called Platinum tins. Not sure, what else they sold to China, but the 6% revenue you found won't have a lot to do with their only Cashcow (A2 Platinum, which is sold by - you might guess it, ATM). Not sure, whether they (Synlait) sell at all to Bright Dairy, but if yes, it will be probably boring bulk milk powder - lots of volume and meagre earnings.
Quote from: BlackPeter on Apr 02, 2024, 02:10 PMJust a couple of observations:
You will find that they create a lot of revenue without making a lot of money. Bulk milk powder falls into this category, and their interferon business used to be highly cyclical. I think it only was really profitable before Synlait started producing it. Which means - source of revenue is not a very good criterium to assess how they might improve their bottom line.
Ah yes, and their profitable China business was all going through ATM (and so potentially all counted as NZ business) in form of these aptly called Platinum tins. Not sure, what else they sold to China, but the 6% revenue you found won't have a lot to do with their only Cashcow (A2 Platinum, which is sold by - you might guess it, ATM). Not sure, whether they (Synlait) sell at all to Bright Dairy, but if yes, it will be probably boring bulk milk powder - lots of volume and meagre earnings.
I was just looking at the Gross revenue lines. Really doesn't seem to be much gross revenue that could be attributed to Bright.
And if we assume most revenue comes from A2, then I find it interesting A2 haven't been included in the recapitalisation plans. Which suggests to me the relationship between the two must be extraordinarily strained.
I think this company and its whole B Corp nonsense will make for a fabulous case study at Investment analysis courses at universities around N.Z. Professors must be rubbing their hands with glee as to what a marvelous debate the whole B Corp concept of placing people and planet on the same level as shareholders provides.
Final exam question. Was Gordon Gekko in the famous Movie Wall Street right when he said "Greed is good, Greed is right, greed cuts through and clarifies..."....or is there real merit in this B Corp process of elevating people and the planet to the same level as shareholders? Debate both sides with a good recent case study example that illustrates your point. Oh my gosh...I could write pages and pages...might get an A+ pass this time lol
Quote from: Basil on Apr 02, 2024, 04:23 PMI think this company and its whole B Corp nonsense will make for a fabulous case study at Investment analysis courses at universities around N.Z. Professors must be rubbing their hands with glee as to what a marvelous debate the whole B Corp concept of placing people and planet on the same level as shareholders provides.
Final exam question. Was Gordon Gekko in the famous Movie Wall Street right when he said "Greed is good, Greed is right, greed cuts through and clarifies..."....or is there real merit in this B Corp process of elevating people and the planet to the same level as shareholders? Debate both sides with a good recent case study example that illustrates your point. Oh my gosh...I could write pages and pages...might get an A+ pass this time lol
A case in point. In today's announcement they mention the increased costs of running their ESG boilers. Shoulda stuck with coal!
Quote from: Minimoke on Apr 02, 2024, 02:42 PMI was just looking at the Gross revenue lines. Really doesn't seem to be much gross revenue that could be attributed to Bright.
And if we assume most revenue comes from A2, then I find it interesting A2 haven't been included in the recapitalisation plans. Which suggests to me the relationship between the two must be extraordinarily strained.
I didn't say most of their
revenue comes from A2, but I did some years ago a more in depth analysis and found that most of their
earnings came from A2. Had at that stage as well a discussion with one of the previous CFO's (Nigel Greenwood) ... and he didn't disagree with my findings :) ;Given that since than none of the other products they tried really took off (like Munchkin, Interferon, grassfed, night milk, unknown white knight, plant based, ....), I assume this is still the case, which is bad for anybody who wants to see them survive. Talk about being a captive of your sole (and hostile) customer.
So yes, ATM pays their bills - and they are certainly not in a trustful and friendly client - supplier relationship. Agree, it doesn't look good that ATM isn't even mentioned in the recent announcement (as major shareholder and customer) - but then this just confirms what we already knew.
Two companies, both basically controlled by Chinese stakeholders - and washing their dirty laundry out in the open for anybody to see.
Quite unusual for Chinese to act that way in public ... unless they want everybody to know, that they want to kill each other.
Quote from: BlackPeter on Apr 02, 2024, 05:53 PMI didn't say most of their revenue comes from A2, but I did some years ago a more in depth analysis and found that most of their earnings came from A2. Had at that stage as well a discussion with one of the previous CFO's (Nigel Greenwood) ... and he didn't disagree with my findings :) ;Given that since than none of the other products they tried really took off (like Munchkin, Interferon, grassfed, night milk, unknown white knight, plant based, ....), I assume this is still the case, which is bad for anybody who wants to see them survive. Talk about being a captive of your sole (and hostile) customer.
So yes, ATM pays their bills - and they are certainly not in a trustful and friendly client - supplier relationship. Agree, it doesn't look good that ATM isn't even mentioned in the recent announcement (as major shareholder and customer) - but then this just confirms what we already knew.
Two companies, both basically controlled by Chinese stakeholders - and washing their dirty laundry out in the open for anybody to see.
Quite unusual for Chinese to act that way in public ... unless they want everybody to know, that they want to kill each other.
i think then we can assume A2 will do everything possible to protect their interests. Which does not mean looking after synlait.
Quote from: Minimoke on Apr 02, 2024, 06:54 PMi think then we can assume A2 will do everything possible to protect their interests. Which does not mean looking after synlait.
Seriously? A2 would be destroyed if Synlait folded. Despite not being mentioned in the announcements, I think it's safe to say A2 will be doing everything they can to "look after Synlait", in whatever form that takes.
Quote from: Buzz on Apr 02, 2024, 07:00 PMSeriously? A2 would be destroyed if Synlait folded. Despite not being mentioned in the announcements, I think it's safe to say A2 will be doing everything they can to "look after Synlait", in whatever form that takes.
synlait is just a name on a certificate and on some ownership papers.
If they wanted to look after synlait they wouldnt be pursuing them through arbitration.
NZ Herald shows Synlait CEO pay only 45th highest out of 54
Pay way belowc average ...expected company performance way below average lol
Good summary by Keith Woodford.
Listened in on the Conference Call yesterday and must admit I am surprised that the sp is not 35c. Because That's where I would want it to be if I were Bright Foods.
https://www.interest.co.nz/rural-news/127103/keith-woodford-says-synlait-cannot-survive-without-major-asset-sales-plus-major
Quote from: winner (n) on Apr 03, 2024, 08:29 AMNZ Herald shows Synlait CEO pay only 45th highest out of 54
Pay way belowc average ...expected company performance way below average lol
In context though. If you spend your time working on B Corp Accreditation like the local natures Own Manuka honey face balm or Mung Bean grocer perhaps your pay should be similar
Quote from: Teitei on Apr 03, 2024, 08:47 AMGood summary by Keith Woodford.
Listened in on the Conference Call yesterday and must admit I am surprised that the sp is not 35c. Because That's where I would want it to be if I were Bright Foods.
https://www.interest.co.nz/rural-news/127103/keith-woodford-says-synlait-cannot-survive-without-major-asset-sales-plus-major
Surprised me as well. This is quite obviously a company as we know it today in its final death throes.
There is zero chance of a dividend, in I'd say just about forever.
And any capital injection is bound to involve some kind of equity deal which will see substantial share dilution.
We'd really need to see a clearing of the books once Dairyworks, Talbot and Pokeno are all sold (and not leased back). Get rid of the underperformance and debt. Start with fresh view at Dunsandel.
Trouble is we know Dunsandle produces for A2 at presumably low margins in what can only be called an extremely toxic customer / owner relationship.
Even at $0.35 that might be generous.
Probably time to totally clean slate it. The stainless steel at Dunsandel needs new owners. With a clear vison of business imperatives. Which includes looking after customers and suppliers. The planet (in context of what Dunsandel can do) will look after itself.
Quote from: winner (n) on Apr 03, 2024, 08:29 AMNZ Herald shows Synlait CEO pay only 45th highest out of 54
Pay way belowc average ...expected company performance way below average lol
Not sure, though there is a correlation between company performance and CEO salary. Wasn't the FBU CEO on the Top ten list of earners ... and to be honest, not sure about the underwear salesman cahing in big dollars for running now A2 (and washing dirty underwear with Synlait) either.
Sadly I think the ability to pull the wool over the heads of a mediocre company board (and negotiate an outrageous salary) is not correlated with the skills we would like to see from a good CEO.
Some well paid CEO's run well run companies, some well paid CEO's even improve their companies (like David Mair - SKL) and other well paid CEO's just run their companies down, while some less outrageous paid CEO's do outstanding jobs. Just shows that most boards are quite bad in recruiting good people.
Quote from: Minimoke on Apr 03, 2024, 08:59 AMSurprised me as well. This is quite obviously a company as we know it today in its final death throes.
There is zero chance of a dividend, in I'd say just about forever.
And any capital injection is bound to involve some kind of equity deal which will see substantial share dilution.
We'd really need to see a clearing of the books once Dairyworks, Talbot and Pokeno are all sold (and not leased back). Get rid of the underperformance and debt. Start with fresh view at Dunsandel.
Trouble is we know Dunsandle produces for A2 at presumably low margins in what can only be called an extremely toxic customer / owner relationship.
Even at $0.35 that might be generous.
Probably time to totally clean slate it. The stainless steel at Dunsandel needs new owners. With a clear vison of business imperatives. Which includes looking after customers and suppliers. The planet (in context of what Dunsandel can do) will look after itself.
Actually - the problem might be larger. While Synlait is an outstanding example for a badly run company, there are indications that the whole industry might move towards a death spiral:
https://learn.rethinkx.com/precision-fermentation/dairy
Synlait might just be one of the frontrunners ....
Quote from: BlackPeter on Apr 03, 2024, 09:47 AMActually - the problem might be larger. While Synlait is an outstanding example for a badly run company, there are indications that the whole industry might move towards a death spiral:
https://learn.rethinkx.com/precision-fermentation/dairy
Synlait might just be one of the frontrunners ....
Good point
If ice cream consumption in US isca lead indicator demand for animal milk production might be falling as well
Bugger ...can't post chart ...file too big
IMG_5711.jpeg
Quote from: winner (n) on Apr 03, 2024, 09:51 AMGood point
If ice cream consumption in US isca lead indicator demand for animal milk production might be falling as well
I noticed the sky hadn't fallen while out walking early this morning.
Quote from: Minimoke on Apr 02, 2024, 10:05 PMsynlait is just a name on a certificate and on some ownership papers.
If they wanted to look after synlait they wouldnt be pursuing them through arbitration.
What do you think A2 might do, or be doing, to ensure they do not lose the all important SAMR that Synlait holds, and manufacturing of their IF?
Quote from: Buzz on Apr 03, 2024, 09:57 AMWhat do you think A2 might do, or be doing, to ensure they do not lose the all important SAMR that Synlait holds, and manufacturing of their IF?
Someone here might know the process of changing the name of the owner of the production facilities that makes infant formula under SAMR. I don't.
However I think we can safely assume Bright Dairy and China State Farms primary interest is in securing the ongoing supply of safe infant formula to the chinese. Therefore I would expec tthem to have the internal knowledge on how to transition the name of the owner of production facilities (that don't change manufacturing processes that put standards at risk) from one owner to another.
It is afterall not so much that "synlait" is registered" it is the manufacturing processes that allows them to be registered.
And take this to the next logical step. Say Synlait go bust. And someone buys the Dunsandle plant and processes. Do we think China will allow the new owner to produce and export somewhere else. I don't think so. I think it is in chinas best interests to make sure China Label can still be produced no matter the owner. Providing manufacturing and food safety standards continue to be met.
Quote from: BlackPeter on Apr 03, 2024, 09:47 AMActually - the problem might be larger. While Synlait is an outstanding example for a badly run company, there are indications that the whole industry might move towards a death spiral:
https://learn.rethinkx.com/precision-fermentation/dairy
Synlait might just be one of the frontrunners ....
Didnt they say the same about vegetable "meat" (or whatever that test tube stuff is made from)
I share the view it's surprising the share price hasn't taken another precipitous fall. Fact is aside from all the other issues that have been well discussed above, at an operational level their gross profit margin has been smashed and the announced FY24 outlook was seriously downgraded.
Quote from: Basil on Apr 02, 2024, 09:38 AMAgree 100% with Minimoke, totally uninvestable.
In the midst of all this turmoil, operating margins have ~ halved "Gross profit down 47% to $43.6m"
Unfortunately for bondholders the key words to describe those bonds are "unsecured" and "subordinated" to all other debt.
Bonds today crossed at 42%
No buyers for those bonds now. Good luck to holders. I wouldn't pay 10 cents on the dollar for them now. This is. now all about the odds you will get your money back, not the return on your money through to Dec 2024. Even 150% yield is 42 cents on the dollar which would be "incredibly brave" It will be interesting if anyone is prepared to speculate at about that level. That,s nearly $2.50 back for each dollar gambled... note the choice of word, gambled, not invested.
Following on from Minimoke's post #696 (https://stocktalk.co.nz/index.php?topic=94.msg19495#msg19495).....page 9 of the auditors section of the interim report (http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/428830/415919.pdf) states:
QuoteThe successful execution of an equity raise in combination with other deleveraging options by 31 July 2024...is critical to the ability of the Group to continue trading as a going concern.
So shareholders will have to bail out the bankers. By 31 July. Dilution incoming.....
Also the bankers have been busy as expected:
- $130m loan prepayment due on 28 March 2024 extended to 15 July 2024
- shareholder funds covenant reduced from a requirement of $600m to $400m
- interest coverage ratio reduced from a requirement of 2.25x to 1.75x for 31 July 2024 test
But, whilst the can has been kicked down the road for now.....other issues still loom:
QuoteThe working capital facilities expire on 1 October 2024 and will require refinancing.
And this paragraph is particularly sobering:
QuoteWithout successful execution of an equity raise in combination with other deleveraging options by 31 July 2024, the Group will be in breach of its banking covenants and the banking syndicate will have the right to call on the full $410m of outstanding bank debt. The Supervisor for the $180m subordinated bond will also have the right to call on the bond which will become repayable on demand immediately due to the bank facilities being in default. The loss of support from the Group's banking syndicate due to the above commitments not being met resulting in the facilities and bond being called as well as the inability to refinance longer term debt would result in significant adverse effects on the Group, including the ability for the Group to remain a going concern.
If you understand the ramifications of that paragraph, then you would not invest or you would immediately divest. If you do not understand the ramifications of that paragraph, then you should not invest in anything on the share market.
As Minimoke said : "Totally uninvestable".
On the positive side of the ledger, the CEO has this to say:
QuoteThe balance sheet reset initiatives are underpinned by a letter of support from our largest shareholder, Bright Dairy. Bright Dairy's support, coupled with the banking amendments, offers Synlait additional stability, and confirms that our largest shareholder and our banking syndicate remains very supportive.
Not advice. DYOR.
I asked that guy AÍ if Synlait were going bankrupt
Based on the information provided in the Synlait Half Year 2024 Results, there is no indication that the company is going bankrupt. They are actively working on resetting the company to achieve strategic objectives, reduce debt levels, and have received support from their largest shareholder and banking syndicate. While facing challenges, they are focused on key growth areas and have initiatives in place to improve financial performance.
What they really need is a letter of support from their Farming Suppliers. But they would never get it.
It's a perfect mess.
At what price would the current shareholders tip more money in. 50 cents per share still sounds too expensive.
I don't know anyone who owns shares in SML. Everyone had plenty of time to sell out over the years.
Quote from: Toddy on Apr 04, 2024, 09:48 AMWhat they really need is a letter of support from their Farming Suppliers. But they would never get it.
It's a perfect mess.
At what price would the current shareholders tip more money in. 50 cents per share still sounds too expensive.
I don't know anyone who owns shares in SML. Everyone had plenty of time to sell out over the years.
Lets look at some hard cold facts.
Synlait report net debt as being $559m.
They have 218.5m shares
Lets say they go for a strategy of completely clearing debt. Well that ends up being $2.56 per share needing to be raised. Well - that's never going to happen
To get shareholders to stump up $0.50 pt share they are only going to reduce debt by approx $111.8m. The banks want at least $130m
So. Lets round it of at $0.60 contribution per share they can see the bankers clear of their $130m
Now we have those pesky bond holders that must be paid in December. That requires another $0.82 to be realised per share. Bringing the total to $1.42 per share to clear the immediate pressing debt.
Shares are currently trading at $0.68.
It seems to me to be utter bonkers to think that shareholders will bail Synlait out
But lets say the shareholders do stump up $1.42 a share. That still leaves $249m of debt. In a company that is inherently unprofitable with over capacity.
And according to Newsdesk losing 50 farmer suppliers. Which makes me wonder what they have done to annoy the farmers. Afterall the stainless steel processing plant is going nowhere.
Which begs the obvious question. Why would anyone throw good money after bad.
Now lets look at Bright.
Synlait have reported that they have "a letter of support from our largest shareholder, Bright
Dairy" and this letter includes "The letter includes "a commitment to participate in a future equity raise and to extend a loan at the request of Synlait, subject to Synlait and Bright receiving all necessary approvals."
Bright hold 85.266m insahers. So say they stumped up $0.5o a share this would only raise $42.6m
So to get the bankers $130m off synlait back, bright would need to come up with $1.52 a share.
Someone else can do the math for me, but say this is done for some euity swap, there wil be some massive sahre dilution coming up. To a point you'de have to wonder why the other 60% of shareholders would agree. They are probably better off trying to quit there shares at today's corrent value of $0.67. If they could find buyers of course.
And Bright say they could provide a loan. But what would be used as collateral. Profitable Dairyworks is for sale and may be gone soon. Looks like Pokeno is going on the block as well. Which really only leaves Dunsandel.
Which brings us back to "all necessary approvals" - whatever that means.
I still see liquidation as the best and only option. Whose going to change my mind?
Not me mate, I think you've summed up the challenges facing the company and bondholders very well. What we have here is a litany of very poor decision making, poor governance, inadequate disclosure...the Pokeno development has been a train wreck from beginning to end, a board and management focused on all things ESG, LGTBQ and whatever other feel good garbage that's currently on trend. Worse, there appears to be no way they can continue without selling all their north island assets and Dairy works as well as a capital raise.
Remembering they have completely squandered the last $200m they raised a few years back at $5, why on earth would you back the current management and board with fresh capital knowing they have displayed such truly appalling skills with managing resources before and also knowing that from an operational point of view, going forward after all the above, they are still in a litigious situation with what will ostensibly be their sole remaining customer and supplying at half the previous margin ?
I'm all for picking the mutt with the least fleas but what we have here is a mutt with metastasized cancer, allowed to spread by a totally incompetent board and management and no amount of flea powder fixes that.
In an earlier post back in February I ran some number on A2 buying SML at a premium on the share price at the time.
But let's revisit the idea.
At today's current SP of $0.67 SML is worth $146.450m To keep it simple let's call A2's holding worth 20% or $29.29m
Based on the lastest news I don't think there is any reason at all to justify an offer at a premium.
So lets say A2 offers $0.67 to existing shareholders. A2 would need to stump up with $117.160m
A2's current cash on hand sits at $792m. So buying SML, A2 would deplete this to $674.84m.
And realistically A2 would need to keep the bankers happy and chuck them $130m. So this would leave A2 with $544.84m cash on hand.
Now lets say they need to keep Bright happy. They could offer Pokeno lock stock and barrel for $100m. A2 now has $644.84m cash
And say A2 can flog off Dairy works for $80m. Now gives them $724.84m cash on hand
So for essentially $67.16m A2 buys Dunsandel, SAMR license, Production at zero margin and Canning / blending facilities (something they have earmarked $120m for at Mataura)
Of course they have to do something with the $180m worth of bonds. But even if they pay these back without a further bond issue A2 is still left with $544 in the bank
Convince me this isn't a cunning plan! (oh and while I have written this SP has dropped back to $0.65. Be in quick for this once in a life time offer)
I imagine that if sml enters liquidation it would trigger an automatic and immediate right for milk suppliers to move to alternative buyer (fonterra)
Dunsandel wouldn't be worth a hill of beans to any new owner without supply in place.
So a2m or bright might need to be very wary of receivership path.
Also there isn't any guarantee that a2m and or bright would be the only potential buyers of assets after a receivership.
Quote from: Poet on Apr 04, 2024, 12:30 PMI imagine that if sml enters liquidation it would trigger an automatic and immediate right for milk suppliers to move to alternative buyer (fonterra)
Dunsandel wouldn't be worth a hill of beans to any new owner without supply in place.
So a2m or bright might need to be very wary of receivership path.
Also there isn't any guarantee that a2m and or bright would be the only potential buyers of assets after a receivership.
That would be dependent on Fonterrs ability to process. I have no idea if they are running at such low capacity that they could take on Synlaits farmers.
Anyway, Synlait farmers must love the B Corp and ESG stuff Synlait has been up to. (Otherwise why would Synlait bother?). That said Fonterra do offer the Rainbow Tick. Maybe Synlait haven't been trying hard enough.
Quote from: Basil on Apr 03, 2024, 01:20 PMNo buyers for those bonds now. Good luck to holders. I wouldn't pay 10 cents on the dollar for them now. This is. now all about the odds you will get your money back, not the return on your money through to Dec 2024. Even 150% yield is 42 cents on the dollar which would be "incredibly brave" It will be interesting if anyone is prepared to speculate at about that level. That,s nearly $2.50 back for each dollar gambled... note the choice of word, gambled, not invested.
Go on. You know you want to. 50% today!
Quote from: Minimoke on Apr 04, 2024, 01:19 PMGo on. You know you want to. 50% today!
LOL I don't have a death wish for my capital.
Quote from: Basil on Apr 04, 2024, 02:46 PMLOL I don't have a death wish for my capital.
Someone does. Now at 51%
Hope Teitei not buying more for his own sake. First rule of investing, when you're in a deep dark hole with little prospect of climbing out, whatever you do, don't keep digging ! 51% is still 74 cents on the dollar for those deeply subordinated unsecured bonds. Paying that much for them is absolute madness in my opinion.
Quote from: Minimoke on Apr 04, 2024, 12:02 PMIn an earlier post back in February I ran some number on A2 buying SML at a premium on the share price at the time.
But let's revisit the idea.
At today's current SP of $0.67 SML is worth $146.450m To keep it simple let's call A2's holding worth 20% or $29.29m
Based on the lastest news I don't think there is any reason at all to justify an offer at a premium.
So lets say A2 offers $0.67 to existing shareholders. A2 would need to stump up with $117.160m
A2's current cash on hand sits at $792m. So buying SML, A2 would deplete this to $674.84m.
And realistically A2 would need to keep the bankers happy and chuck them $130m. So this would leave A2 with $544.84m cash on hand.
Now lets say they need to keep Bright happy. They could offer Pokeno lock stock and barrel for $100m. A2 now has $644.84m cash
And say A2 can flog off Dairy works for $80m. Now gives them $724.84m cash on hand
So for essentially $67.16m A2 buys Dunsandel, SAMR license, Production at zero margin and Canning / blending facilities (something they have earmarked $120m for at Mataura)
Of course they have to do something with the $180m worth of bonds. But even if they pay these back without a further bond issue A2 is still left with $544 in the bank
Convince me this isn't a cunning plan! (oh and while I have written this SP has dropped back to $0.65. Be in quick for this once in a life time offer)
I came up with this cunning plan on 22 Feb when SP was $0.70. And I reckoning a premium of say 25% brought the price to $0.875.
Today SP closed at $0.62. Minor shareholders really need to get in touch with A2M and get them to take up my plan before they lose even more.
The fly in the ointment is that ATM and SML management stopped talking some time back and only talk through their lawyers now.
Quote from: Minimoke on Apr 04, 2024, 12:02 PMIn an earlier post back in February I ran some number on A2 buying SML at a premium on the share price at the time.
But let's revisit the idea.
At today's current SP of $0.67 SML is worth $146.450m To keep it simple let's call A2's holding worth 20% or $29.29m
Based on the lastest news I don't think there is any reason at all to justify an offer at a premium.
So lets say A2 offers $0.67 to existing shareholders. A2 would need to stump up with $117.160m
A2's current cash on hand sits at $792m. So buying SML, A2 would deplete this to $674.84m.
And realistically A2 would need to keep the bankers happy and chuck them $130m. So this would leave A2 with $544.84m cash on hand.
Now lets say they need to keep Bright happy. They could offer Pokeno lock stock and barrel for $100m. A2 now has $644.84m cash
And say A2 can flog off Dairy works for $80m. Now gives them $724.84m cash on hand
So for essentially $67.16m A2 buys Dunsandel, SAMR license, Production at zero margin and Canning / blending facilities (something they have earmarked $120m for at Mataura)
Of course they have to do something with the $180m worth of bonds. But even if they pay these back without a further bond issue A2 is still left with $544 in the bank
Convince me this isn't a cunning plan! (oh and while I have written this SP has dropped back to $0.65. Be in quick for this once in a life time offer)
I guess what surprises me is that you see the muppets at ATM in a key position to do anything with SML. They are not (other than potentially as useful idiots for the Chinese).
The largest shareholder is Bright Dairy with 43% and they even have an agreement with NZX that this allows them to control the board (as they do).
They won't care a jota about the interests of ATM or the interests of any other share- or bondholder. Bright Dairy will clarify what's in the best interest of the CCP, and this is going to happen.
I doubt that ATM will play any outstanding role in this process.
Quote from: BlackPeter on Apr 04, 2024, 05:59 PMI guess what surprises me is that you see the muppets at ATM in a key position to do anything with SML. They are not (other than potentially as useful idiots for the Chinese).
The largest shareholder is Bright Dairy with 43% and they even have an agreement with NZX that this allows them to control the board (as they do).
They won't care a jota about the interests of ATM or the interests of any other share- or bondholder. Bright Dairy will clarify what's in the best interest of the CCP, and this is going to happen.
I doubt that ATM will play any outstanding role in this process.
I think it odd Brights interest given so little seems to be produced for them. A2 is essentially Dunsandles only customer.
Quote from: Basil on Apr 04, 2024, 05:41 PMThe fly in the ointment is that ATM and SML management stopped talking some time back and only talk through their lawyers now.
SML management might do well to remember that A2 are not only key customer but also large shareholder. And they only hold their jobs for as long as suppliers, customers and shareholders are happy.
Quote from: Minimoke on Apr 04, 2024, 06:20 PMI think it odd Brights interest given so little seems to be produced for them. A2 is essentially Dunsandles only customer.
You are right, Bright didn't gain so far a lot through Synlait apart from using them to train up young and inexperienced Chinese board members abroad, and even the value of this training would be highly questionable given the obviously lacking quality of the teachers. And of course - Bright lost so far a huge amount of capital for basically nothing in return. I think they paid in average somewhere around $3 per share ...
I still think that Synlait fits well into the foreign expansion strategy of the CCP (securing food supplies for the empire of the middle and creating foreign dependencies) - and in this game, clearly Bright is as well just another pawn on the board.
Lets wait another couple of decades and decide then, whether Synlait was a loss or a gain for the CCP, shall we? They are normally much better in playing that long game than we are.
After a bit more thought somehting else comes to mind.
It seems to me that given Synlait, and their auditors have said there is a substantial risk that SML is not a going concern this places Synlait at major risk.
This is turn creates major risk for manufactured product
And this in turn must now be a material risk to ATM in terms of being able to deliver to it forecast.
But silence from A2M.
Which leads me to conclude A2M does not see a material risk to synlaits manufacturing output. Hmm - I wonder why?
is AT therefore in a position to make an offer... but when would they want to do this?
Bonds now 55% and climbing. Jarden Directs interaction with the NZDX fixed interest market is not really set up for situations like this and doesn't allow bids that are materially above the offered yield. Even a bid 10% above the offer is rejected as being too far away from market, which is clearly ridiculous in the current situation.
Quote from: Waltzing on Apr 05, 2024, 12:37 PMis AT therefore in a position to make an offer... but when would they want to do this?
What do we know as fact.A2 has loads of cash on hand. Over $700m. And no debt.
A2 has very close relationships with China State Farm Agribusiness.
A2 have for many years said they have a very keen eye on merger and acquisition opportunities. That's why they won't pay a dividend.
What we can presumeA2 must have people within (and outside) looking at opportunities and constant scanning and modelling and costing and analysing.
These people probably have poorly run companies on their radar.
I've been saying Synlait has been poorly run for years. So A2 must have had their M&A people with their eyes on Synlait for years.
Therefore A2 have had years to be doing all the backroom analysis they need to do on a monthly basis on Synlait.
What is speculation?
I got wind of takeover activity in Christchurch in 2021. It never came to anything. But by all accounts it got close. Maybe it was SML.
What can we summise?Yes. A2 is in a very good position to make a takeover offer.
As for time - well now is as good a time as any.
Unless they are waiting for binding arbitration decision to come out to drive SML share price even lower.
They have between now and mid July to take control of the situation. After that the banks will be more aggressively sticking their or in.
At the end of the day, I reckon it is now time for the A2 Board to put their money where their mouth is. If they don't see Synlait as an M&A opportunity then they have to start paying a dividend and resign - they won't find a better M&A opportunity.
Quote from: Basil on Apr 05, 2024, 01:32 PMBonds now 55% and climbing. Jarden Directs interaction with the NZDX fixed interest market is not really set up for situations like this and doesn't allow bids that are materially above the offered yield. Even a bid 10% above the offer is rejected as being too far away from market, which is clearly ridiculous in the current situation.
57%!
Maybe they don't want the North Island assets ?
P.S. Interesting volume in the bonds today. Just over 700,000 traded at an average yield of about 54% = 73 cents on the dollar.
Market is saying they're not worthless. I am not convinced and am not a buyer of the bonds or shares.
I'm not a great fan of Chris Lee but his views on SML are on target (albeit in hindsight.)
https://www.chrislee.co.nz/taking-stock (scroll down to find it.)
I think fair value is somewhere around 10-20 cents on the dollar whatever the yield is at that price, (62% is still 70 cents on the dollar and vastly overpriced in my view). Fact is the markets are very weak and it's going to be increasingly hard to sell assets in the current environment. I think the chances of this being put into receivership have gone up in recent weeks in the current extremely risky geopolitical environment.
Shares now at all time low of 50 cents and falling and bonds at all time high yield of 65% and climbing.
Raising money by way of an issue of shares or bonds looking less and less plausible with each passing week.
Quote from: Basil on Apr 23, 2024, 04:40 PMShares now at all time low of 50 cents and falling and bonds at all time high yield of 65% and climbing.
Raising money by way of an issue of shares or bonds looking less and less plausible with each passing week.
Maybe they should change the name from Russian roulette to Chinese roulette?
Though I think the chances for retail shareholders and bondholders to say good bye to their principle might be larger than the chances of Russian Roulette players to say good bye to their life.
Quote from: Minimoke on Apr 04, 2024, 05:27 PMI came up with this cunning plan on 22 Feb when SP was $0.70. And I reckoning a premium of say 25% brought the price to $0.875.
Today SP closed at $0.62. Minor shareholders really need to get in touch with A2M and get them to take up my plan before they lose even more.
This refers to my 4 April cunning plan update
crikey ..
Gulp! Bonds 75% today
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Quote from: Minimoke on Apr 24, 2024, 11:55 AMGulp! Bonds 75% today
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Yep $66 per $100 ...last week about $70
Great lesson for new investors (not necessarily holders) to follow the SML story.
This is just a repeat of the many companies that have been listed and failed.
Not until the noose is so tight will the company Ann's remove the hype and hope(you have just seen this) to reveal the true hopelessness of the companies position.
Now from here I suggest that the dominant Shers will let this run it's course, coming in at the last minute with a deal that is only beneficial to themselves, smashing bond holders and retail investors.
At what price the SP will be who knows, it's more about the bigger shers using time, the bankers attitude and the position the company has put itself in to put themselves in the best position possible. The company is in the perfect crap position to allow this to happen. I suggest the SP will be a lot lower than it is now unless a sudden trading halt is put in place, then it will be to late to sell and retail investors and bond holders will have to take whatever medicine is dished out.
The only positive being the big SHers won't let this tip over completely, because if the receivers step in the big SHers lose a lot of their power.
Is there any hope for a recovery from here under the current structure, IMO absolutely no show as the bankers and large SHers are in total control of this thing.
There is no benefit to large Shers to formally step in as a white night until the last minute, I suggest informal talks with the bankers are probably already under way.
Like I say this has all been seen before with other failing listed companies so fairly predictable what the outcome will be.
Just an opinion
As an ATM share holder I consider myself "well positioned."
Quote from: Left Field on Apr 26, 2024, 09:19 AMAs an ATM share holder I consider myself "well positioned."
Well positioned? - not so sure, but probably better than SML shareholders. Time will tell. The will-full destruction of its key supplier and one of their key investments is unlikely to benefit ATM in the long run.
Who in their right mind will do in future deals with ATM given this history?
Quote from: BlackPeter on Apr 26, 2024, 09:27 AMWell positioned? - not so sure, but probably better than SML shareholders.
Exactly.
Quote from: BlackPeter on Apr 26, 2024, 09:27 AMWell positioned? - not so sure, but probably better than SML shareholders. Time will tell. The will-full destruction of its key supplier and one of their key investments is unlikely to benefit ATM in the long run.
Who in their right mind will do in future deals with ATM given this history?
Looks like it's "Game Over" for Yashili NZ (subsidiary of Mengniu) and New Zealand New Milk (subsidiary of Lactalis) new a2 milk commercial supply chain partners. They did not receive BP's advice on time and now will be willfully destructed by evil ATM company :'(
Just out of curiosity, how exactly ATM will-fully destruct SML, by paying hundreds of millions for the products SML supply?
I feel a little sad for John Penno who today announces his immediate resignation from the Board.
He started a company that had so much potential. But he leaves it in a place much much worse than it was when it listed.
At IPO investors paid $2.20 a share. Yesterday shares traded at $0.48. Bonds were 77%. Dairyworks still hasn't sold. Banks are breathing down their necks, drowning in debt and they are in a major fight with their largest customer.
So the reality is he has played a part in the substantial destruction of shareholder wealth.
"The Story of Synlait" will one day be a business text book on how not to run a company. I think there will be a chapter on the failure of the Board to transition from a "Mum and Dad family" type business to a serious profitable commercial entity.
So sadly, he has not left a great legacy. He, as part of the Board have made many, many serious errors along the way. The biggest of which I still think was the appointment of a now gone CEO.
I now look forward to see who will replace him. I wonder if A2 will advocate for a seat at the board.
I don't think it will be an easy hire. Who ever gets the seat will be inheriting a poisoned chalice. If it was me I'd be going through with a fine tooth comb the detail in the Director Liability Insurance.
And we shoudltn let the day go by without some comment on the appoinbtment of George Adams as chair.
I'll lay my cards on the table - I think he is totally unsuitable.
He is on the Board of Arborogen. A company who has consistently always promised to do more and have consistently failed to deliver. 10 years ago SP was 0.37. Shortly afterwards reached a short lived peak of $0.42 and its been downhill ever since. Closing yesterday at $0.16.
He is also Chair of the Business Leaders Health and Safety Forum. This was the precursor W#nk Fest to DEI forums and ESG values. They came up with such vainglorious ideals as "Zero Harm". A forum guaranteed to waste money and achieve nothing.
I think he is unsuitable as a Board appointment and even more unsuitable as chair.
The Board is in desperate need of talent in the Corporate Recovery space.
Quote from: Minimoke on May 01, 2024, 09:16 AMAnd we shoudltn let the day go by without some comment on the appoinbtment of George Adams as chair.
I'll lay my cards on the table - I think he is totally unsuitable.
He is on the Board of Arborogen. A company who has consistently always promised to do more and have consistently failed to deliver. 10 years ago SP was 0.37. Shortly afterwards reached a short lived peak of $0.42 and its been downhill ever since. Closing yesterday at $0.16.
He is also Chair of the Business Leaders Health and Safety Forum. This was the precursor W#nk Fest to DEI forums and ESG values. They came up with such vainglorious ideals as "Zero Harm". A forum guaranteed to waste money and achieve nothing.
I think he is unsuitable as a Board appointment and even more unsuitable as chair.
The Board is in desperate need of talent in the Corporate Recovery space.
You left off Chair of Bremworth
Another struggling company that never seems to recover out of the doldrums
Quote from: winner (n) on May 01, 2024, 09:20 AMYou left off Chair of Bremworth
Another struggling company that never seems to get better
I don't know much about Bremworth - so couldn't really comment.
Anyone with half a brain who is still holding either the bonds or shares should follow John Penno out the door and sell.
I'm not suggesting he was ever any good, but his resignation should be seen as a very clear sign of the hopelessness of the situation Synlait face.
I am sure there will be case studies on this at university for years to come, probably headlined something like this "How to completely destroy a perfectly good company with endless obsession about all things ESG". There's probably no better example of this in the whole world.
Quote from: Basil on May 01, 2024, 09:47 AMAnyone with half a brain who is still holding either the bonds or shares should follow John Penno out the door and sell.
I'm not suggesting he was ever any good, but his resignation should be seen as a very clear sign of the hopelessness of the situation Synlait face.
I am sure there will be case studies on this at university for years to come, probably headlined something like this "How to completely destroy a perfectly good company with endless obsession about all things ESG". There's probably no better example of this in the whole world.
The new Chair is a ESG champion ...thats good
You'd think that ESG mandated funds would be falling over each other to invest in Synlait .....that'll help share price ...or have they done their chipsxalready
Quote from: Basil on May 01, 2024, 09:47 AMAnyone with half a brain who is still holding either the bonds or shares should follow John Penno out the door and sell.
I'm not suggesting he was ever any good, but his resignation should be seen as a very clear sign of the hopelessness of the situation Synlait face.
I am sure there will be case studies on this at university for years to come, probably headlined something like this "How to completely destroy a perfectly good company with endless obsession about all things ESG". There's probably no better example of this in the whole world.
I agree with you beagle.......get out whilst you still can.
As for replacement for JP, surprised it was not Jenny Shipley
Quote from: snapiti on May 01, 2024, 10:20 AMI agree with you beagle.......get out whilst you still can.
As for replacement for JP, given the perilous status of the company it would be hard to attract high achievers, surprised it was not Jenny Shipley
I clearly remember some saying exactly the same thing about XRO when it fell from $45 to $12 before heading over to the ASX, how wrong they were.
Quote from: Breezy on May 01, 2024, 10:29 AMI clearly remember some saying exactly the same thing about XRO when it fell from $45 to $12 before heading over to the ASX, how wrong they were.
SM1 is already on the ASX - so no saviour there.
Quote from: Basil on May 01, 2024, 09:47 AMAnyone with half a brain who is still holding either the bonds or shares should follow John Penno out the door and sell.
I'm not suggesting he was ever any good, but his resignation should be seen as a very clear sign of the hopelessness of the situation Synlait face.
I am sure there will be case studies on this at university for years to come, probably headlined something like this "How to completely destroy a perfectly good company with endless obsession about all things ESG". There's probably no better example of this in the whole world.
Actually - I met John Penno several times and had as well a number of good chats with him. He was clearly one of the driving forces who brought Synlait up to the top (yes, these where the times) ... and some of the programs he introduced rewarding sustainable farming practises for their suppliers are top notch. He definitely is a good guy!
But Synlait was lucky in the beginning (riding the IF wave to China) and so they thought the luck will always stay with them. John was a highly motivated and inspirational leader for the cause, but he didn't had the skills and experiences to prepare the company for the inevitable more difficult times to come ... or to run the company with headwinds. I think he noticed himself that the company needs different skills to further grow ... and the classical mistake was that a board without a lot of relevant experience and skills (a bunch of directors with even insufficient language skills plus a political appointee without governance skills) thought they are able to pick a good CEO to take over from John. Recruiting good people requires either a lot of good luck (or better) good skills. Well, clearly they had been run out of good luck at that stage, and the recruiting skills have been lacking.
Not sure Leon was even an able salesman ... but he still managed to sell himself to the Synlait board as CEO candidate, which tells us a lot about the abilities of the board, doesn't it? Ah well, and with Leon things went steeply downhill (admittedly, not all his fault, some things (like Pokeno) decided before Leon started) - but spraying pink colour over everything clearly did not help.
Board (with John) either slept long and well after Leon's appointment - or more likely just did not know how to intervene. Nobody prepared to admit their mistakes and draw the consequences?
Anyway - very sad story, but agree, plenty of material to learn from.
Quote from: Minimoke on May 01, 2024, 10:48 AMSM1 is already on the ASX - so no saviour there.
Yes I know but that wasn't my point, point is never listen to this kind of advice on a random forum.
Quote from: Breezy on May 01, 2024, 10:52 AMYes I know but that wasn't my point, point is never listen to this kind of advice on a random forum.
I think even the most objective observer of Synlait can fairly conclude it is in a "perilous state"
Quote from: Minimoke on May 01, 2024, 04:15 PMI think even the most objective observer of Synlait can fairly conclude it is in a "perilous state"
It certainly is but holders will have a wide range of entry prices and don't need to be told to sell by some random dog and a fish on an internet forum even if they only have half a brain.
Quote from: Breezy on May 01, 2024, 04:24 PMIt certainly is but holders will have a wide range of entry prices and don't need to be told to sell by some random dog and a fish on an internet forum even if they only have half a brain.
No one is telling anyone to sell. AS far as I can see from the posts below it is a usual forum comment to quit - but of course it is a given everyone is free to do whatever they like to do with their shares and money based on whatever information they choose to accept or ignore.
For me - I reckon the exit point was a long long time ago.
And there is no acceptable entry point - risk is too high for "investors" thought this may appeal to gamblers.
Quote from: Minimoke on May 01, 2024, 04:28 PMNo one is telling anyone to sell. AS far as I can see from the posts below it is a usual forum comment to quit - but of course it is a given everyone is free to do whatever they like to do with their shares and money based on whatever information they choose to accept or ignore.
For me - I reckon the exit point was a long long time ago.
And there is no acceptable entry point - risk is too high for "investors" thought this may appeal to gamblers.
You must be reading different posts to me but yes the exit point was indeed long ago, couldn't see any point in selling now if I was a holder, im sure there are still holders that bought at much higher prices quite some time ago.
Quote from: Breezy on May 01, 2024, 04:24 PMIt certainly is but holders will have a wide range of entry prices and don't need to be told to sell by some random dog and a fish on an internet forum even if they only have half a brain.
happy with how my half brain is operating given it has meant I have stayed away from this dog, not sure I fully understand the ones with a full brain choosing to buy or hold this mutt
Interesting post made elsewhere.
I have had a look in the last half year announcement and the last full year results but I can find no reference to any risk associated with upcoming court action.
Yet here we find Synlait in the High Court at a settlement conference with with Life Health Foods.
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Quote from: snapiti on May 01, 2024, 04:44 PMhappy with how my half brain is operating given it has meant I have stayed away from this dog, not sure I fully understand the ones with a full brain choosing to buy or hold this mutt
Your getting your fish hooks mixed up, its holders with half a brain according to Basil.
Quote from: Breezy on May 01, 2024, 05:37 PMYour getting your fish hooks mixed up, its holders with half a brain according to Basil.
He is obviously talking about the other half :P ;
Glad I sold out years ago at $10+ My half brain seems to be working okay.
bond market pricing in a large haircut for bond holders.......eeeeeeeek 80% returns on offer
happy to watch this train wreck from the sidelines.
Pretty spectacular train wreck playing out in ultra slow motion...hard not to rubberneck and watch...so many free lessons about what not to do in business.
Quote from: Basil on May 01, 2024, 10:43 PMPretty spectacular train wreck playing out in ultra slow motion...hard not to rubberneck and watch...so many free lessons about what not to do in business.
Bonds now 85%. Tempted?
Quote from: Minimoke on May 02, 2024, 12:44 PMBonds now 85%. Tempted?
Not even in the slightest. At very best a 50/50 chance to get full repayment of bonds in my view, (probably a LOT lower than 50%) and to get to 50 cents on the dollar pricing last time I looked, the yield on these short duration bond needs to be 135%.
The way I am looking at the bonds is this.
They are deeply subordinated and only rank ahead of equity but because the whole situation is so clouded and uncertain and the realizable value of assets unknown it's probably better to think of them along the lines as ranking equally in security to equity. That line of thinking centers around a binary all or nothing outcome which is what I see as the most likely outcome here. My view is at this point the relative pricing on a risk reward basis, suggests the shares are better buying than the bonds. That said, just because one class of investment is arguably vastly overpriced (bonds) for the extreme risks apparent, doesn't of itself make a case for investing in the alternative, SML shares.
If we look at the share price at 48.5 cents that's just 15% of NTA which according to Jarden's website is $3.23. That underpins my thinking that the true value of the bonds in the current, (ostensibly binary future event horizon), environment is probably somewhere between 10-20 cents on the dollar, perhaps towards the top end of that given they technically rank ahead of equity. Just for the sake of interest, (excuse the pun), I loaded up a draft order for 10,000 bonds at a 500% yield at it came to 14.7 cents on the dollar. Could be worth a very small punt on the off chance it ever goes that high.
There's still quite some time before any possible resolution to their insolvent position and I expect that yield to track inexorably higher in the meantime. I'd wager it will be well over 100% before the end of May.
A very prudent post on the other channel about farmers giving notice to SML of change in supply.
Now if you fully understand dairy farming you would expect this to be happening.
I know if I was a dairy farmer and supplied SML I would be changing to Fonterra as soon as my contract allowed.
I would suggest this is the last nail in the coffin for SML.
I know A2 supply is somewhat different but you have to wonder about A2M share price should SML fall over(for the record I don't think it will completely fall over but will require a rescue package which won't support the current SP)
Quote from: snapiti on May 03, 2024, 08:22 AMA very prudent post on the other channel about farmers giving notice to SML of change in supply.
Now if you fully understand dairy farming you would expect this to be happening.
I know if I was a dairy farmer and supplied SML I would be changing to Fonterra as soon as my contract allowed.
I would suggest this is the last nail in the coffin for SML.
I know A2 supply is somewhat different but you have to wonder about A2M share price should SML fall over(for the record I don't think it will completely fall over but will require a rescue package which won't support the current SP)
The reasons SML is losing farmers is something that should be explored.
I suspect (with no evidence) that Synlait ESG requirements are too onerous on Farmers. Also Synlaits reckless drive into debt has seen their ability to pay competitive farm gate prices diminished. Clearly something is failing with farmer relations.
Dunsandel has value as stainless steel only for so long as it can get milk pumped through it. If A2 milk isn't going through there then its going to sit on the Canterbury plains as a decaying monument to Penno and Richardson egos. Fortunately A2 also has agreements with Fonterra - so the thing at risk remains the China Label
As for Pokeno - that appears to be an unmitigated disaster. Right from the very beginning with the dodgy land purchase, the covenant issues, the mystery "major international customer" (who still hasn't been named by Synlait) the sale of Auckland assets and now it appears the exodus of farmers.
My cunning plans (in posts below) did hinge on value in the stainless steel assets based on an assumed supply of milk. In light of information coming out that farmers appear to be leaving I think I may have over valued the purchase prices and split off of Pokeneo/Dunsandel to Bright and A2's mutual benefits.
The other, more pressing date, we should keep an eye on is 17 June.
This is the date the next interest payment on bonds is due.
This is $1,723,500.
Now this may not seem like a large amount of money. But it needs to be put in context.
As at 31 Jan, Synlait had $139,781,000 in cash and receivables. Which might seem like loads of loot to handle day to day operations and upcoming things like interest payments.
However they had trade and other payables of $286,634,000 in immediate trade and other payables.
This leaves a daily operating cash flow shortfall of $146,853,000. Soon they will be adding another $1,723,500 to this hole.
So what is Synlait to do? Well essentially they have to start running a ponzi scheme.
They have to convince new punters to loan them money so they can pay debts due to other punters. This will give those original punters a sense of security that their original loans are safe as houses.
Elsewhere there are other punters (banks) who are already up to their eyeballs in risk - and they are likely to have little appetite to lend more so that others can get paid off first.
So keep an eye out on activity before 17 June!
I don't think the 17th bond interest payment will be a problem....when companies are in this much shit they tend to prioritize what they choose to pay, trade debt/suppliers are usually the last to get paid, or in this case may not get payed at all.
I think JP resigning is another big sign of what is going on behind closed doors.
Really the biggest worry for the company going forward, even if it is saved, will be dairy farmers changing to Fonterra as they no longer have confidence in SML.
Quote from: snapiti on May 03, 2024, 09:40 AMI don't think the 17th bond interest payment will be a problem....when companies are in this much shit they tend to prioritize what they choose to pay, trade debt/suppliers are usually the last to get paid, or in this case may not get payed at all.
I think JP resigning is another big sign of what is going on behind closed doors.
Really the biggest worry for the company going forward, even if it is saved, will be dairy farmers changing to Fonterra as they no longer have confidence in SML.
Troubled relationship with your bankers
Trouble relationship with your biggest customer
Troubled relationships with your raw material suppliers.
As I said earlier, Synlait is totally uninvestable.
Quote from: snapiti on May 03, 2024, 09:40 AMI don't think the 17th bond interest payment will be a problem....when companies are in this much shit they tend to prioritize what they choose to pay, trade debt/suppliers are usually the last to get paid, or in this case may not get payed at all.
I think JP resigning is another big sign of what is going on behind closed doors.
Really the biggest worry for the company going forward, even if it is saved, will be dairy farmers changing to Fonterra as they no longer have confidence in SML.
Not sure it is so easy - farmers moved from Fonterra to Synlait because it freed up their capital (remember - Fonterra requires their farmers to hold a number of their shares proportionally to their milk production, Synlait does not).
Any farmers who wants to return needs to buy back Fonterra shares ... and while Fonterra did well this year, they had a lot of dry years before. Returning farmers might well experience a double whammy of needing to buy Fonterra shares while they are dear which then return to their previous dismal performance.
Anyway - interesting times for our agricultural sector. If we manage to throttle our dairy production that way, our environment might be the big winner!
Will we see a sad but momentous event today?
SP is currently at $0.46.
Next bid is at $0.455. If a sale goes through at this level the market will now value Synlait at less than $100m
good point BP, I will add a farmer needs his milk picked up every day(and payed for it) some risk for those supplying SML at the moment.
They can't just pick up the phone and get another company to collect if SML go belly up
Quote from: snapiti on May 03, 2024, 01:11 PMgood point BP, I will add a farmer needs his milk picked up every day(and payed for it) some risk for those supplying SML at the moment.
They can't just pick up the phone and get another company to collect if SML go belly up
I'm sure the industry would rally to the farmers aid if that did become the case. Peak flows might be a little harder. Especially those who have signaled to move and already discussed with an alternate processor....
Quote from: snapiti on May 03, 2024, 01:11 PMgood point BP, I will add a farmer needs his milk picked up every day(and payed for it) some risk for those supplying SML at the moment.
They can't just pick up the phone and get another company to collect if SML go belly up
When you look at Accounts Payable vs Account Receivable you can see why farmers would be very concerned.
And there we have it> SML worth less than $100m
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Quote from: Minimoke on May 03, 2024, 03:39 PMAnd there we have it> SML worth less than $100m
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Well yes by market cap but would someone be able to buy the whole outfit for under 100 mill, not very likely.
Quote from: Breezy on May 03, 2024, 03:51 PMWell yes by market cap but would someone be able to buy the whole outfit for under 100 mill, not very likely.
Very hard to value.
But (as rumoured) SML is losing farmer supply raw material the stainless steel may only be worth scrap metal value.
Now, obviously that's an extreme.
But clearly as each day goes by, it is becoming worth less and less.
(Note - another week gone by and still no buyer of Dairyworks. Which is arguably the first and easiest cab of the rank)
This whole fiasco is starting to look like an orchestrated litany of lies.
I find it hard to believe a half reasonable offer for Dairyworks has not already been tabled...it's just that certain shareholders want the company to end up in deep doggy doo which suits their end game. The bonds are arguably, worthless.
P.S. Closing share price only 44 cents !
https://www.ruralnewsgroup.co.nz/dai...t/takeover-bid
Takeover bid?
Written by Milking It
OPINION: Canterbury milk processor Synlait is showing no sign of bouncing back from its financial doldrums.
The listed company's share price has dropped to 50c/share, valuing the company at only around $100 million. The share price has been travelling south despite the company working hard to sell off under-utilised assets and reduce debt.
Milking It reckons all this means a takeover bid could be around the corner. Watch out for Bright Dairy of China; it already owns 39% of Synlait and could easily fork out a couple hundred million to buy the company outright.
The Chinese know how to run successful dairy companies in NZ; just look at Westland Milk, which reported a record revenue of over $1b last financial year.
Quote from: Teitei on May 09, 2024, 12:24 PMhttps://www.ruralnewsgroup.co.nz/dai...t/takeover-bid
Takeover bid?
Written by Milking It
OPINION: Canterbury milk processor Synlait is showing no sign of bouncing back from its financial doldrums.
The listed company's share price has dropped to 50c/share, valuing the company at only around $100 million. The share price has been travelling south despite the company working hard to sell off under-utilised assets and reduce debt.
Milking It reckons all this means a takeover bid could be around the corner. Watch out for Bright Dairy of China; it already owns 39% of Synlait and could easily fork out a couple hundred million to buy the company outright.
The Chinese know how to run successful dairy companies in NZ; just look at Westland Milk, which reported a record revenue of over $1b last financial year.
Is this an item from Sharsies?
If the measure of how to run a successful dairy company is the amount of revenue (in this case "over $1b") then we need to point the author to synlaits half year results which shows a revenue of $652m. Lets call it $1.3b annualised
Quote from: Minimoke on May 09, 2024, 01:17 PMIs this an item from Sharsies?
If the measure of how to run a successful dairy company is the amount of revenue (in this case "over $1b") then we need to point the author to synlaits half year results which shows a revenue of $652m. Lets call it $1.3b annualised
Clink on the link if you want to know where the article is sourced from.
As for Westland Milk, most of us can remember wondering (and then, laughing) at the Chinese company Yili paying $3.41 per share (vs independent valuation of $0.88 to $1.38) for the loss making company and taking over Westland's heavy debt burden of $342m.
Well, turned out Yili knew exactly what they were doing - turnover has increased by 52% to $1.065b from the $698m in 2019 when Yili took over the company. More importantly, Yili has turned Westland losses to profits - $38.9m in 2022 and $55.9m in 2023.
So a Chinese company with unequalled access to overseas markets (especially China) and deep pockets bought a NZ dairy company which was in financial distress and under its management and ownership, turned it into a highly profitable growth dairy company.
Sounds familiar?
Quote from: Teitei on May 10, 2024, 08:59 AMClink on the link if you want to know where the article is sourced from.
As for Westland Milk, most of us can remember wondering (and then, laughing) at the Chinese company Yili paying $3.41 per share (vs independent valuation of $0.88 to $1.38) for the loss making company and taking over Westland's heavy debt burden of $342m.
Well, turned out Yili knew exactly what they were doing - turnover has increased by 52% to $1.065b from the $698m in 2019 when Yili took over the company. More importantly, Yili has turned Westland losses to profits - $38.9m in 2022 and $55.9m in 2023.
So a Chinese company with unequalled access to overseas markets (especially China) and deep pockets bought a NZ dairy company which was in financial distress and under its management and ownership, turned it into a highly profitable growth dairy company.
Sounds familiar?
I agree. They paid a staggering premium and turned it around. The article would have made more sense if it said "The Chinese know how to run successful dairy companies in NZ; just look at Westland Milk, which reported a profits after suffering serious losses under their prior co-op model"
Quote from: Minimoke on May 10, 2024, 09:03 AMI agree. They paid a staggering premium and turned it around. The article would have made more sense if it said "The Chinese know how to run successful dairy companies in NZ; just look at Westland Milk, which reported a profits after suffering serious losses under their prior co-op model"
Do some research - it's a useful thing before one writes.
Quote from: Teitei on May 10, 2024, 09:09 AMDo some research - it's a useful thing before one writes.
A somewhat snarky response to my post that was essentially agreeing with yours. What have I written about Synlait do you dispute?
Quote from: Minimoke on May 10, 2024, 10:05 AMA somewhat snarky response to my post that was essentially agreeing with yours. What have I written about Synlait do you dispute?
Fair enough. I should have made it clearer that I was responding to your comments to my post #812.
Quote from: Minimoke on May 09, 2024, 01:17 PMIs this an item from Sharsies?
If the measure of how to run a successful dairy company is the amount of revenue (in this case "over $1b") then we need to point the author to synlaits half year results which shows a revenue of $652m. Lets call it $1.3b annualised
Firstly, it was clear you did not bother to clink on the link to ascertain that it is from RuralNewsGroup. Making reference to Sharesies is intended as an insult by you so don't try that snarky BS on me. I know of the low opinion Sharesies is held by certain individuals and I have never dealt through Sharesies or read any of their articles (assuming they offer such a service).
Secondly, you could not wait to insinuate that the author of the article did not know what they were writing about re your reference to 'revenue'. Best you do a bit of research, no? And you would understand that the author do know what they were writing about.
Anyway, interesting times ahead.
deleted ... double entry
Links have limited value.
RNG.png
Worked before so here's the link again :
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-opinion/milking-it/takeover-bid
Quote from: Teitei on May 10, 2024, 12:19 PMWorked before so here's the link again :
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-opinion/milking-it/takeover-bid
It says nothing that hasn't already been expressed many times on this thread already.
Quote from: Minimoke on May 10, 2024, 01:45 PMIt says nothing that hasn't already been expressed many times on this thread already.
Difference is that the opinion is expressed in a publication which reaches a big dairy & agricultural audience.
I am still trying to get my head around Fonterra's announcement to sell its consume brands and just go forward as an ingredients business.
I suppose this tellms me there isn't much money on retail product /brands
Which leaves me wondering where does this leave Dairyworks?
Perhaps it explains Synlaits inability to flog this off.
In January Synlait announced a forecast milk price for 23/24 of $7.50
In March Fonterra had a farm gate forecast of $7.50 - $8.30. When they announce this week it is expected to be at $8.00 or over.
Westland Dairy pay $0.10 more than Fonterra.
So the question is: How much will Synlait pay to keep their farmer suppliers happy. And how will they pay for this increased cost.
Would at least think they are selling inventory into an improving market??
Straws clutching at.....
Quote from: Minimoke on May 27, 2024, 06:52 AMIn January Synlait announced a forecast milk price for 23/24 of $7.50
In March Fonterra had a farm gate forecast of $7.50 - $8.30. When they announce this week it is expected to be at $8.00 or over.
Westland Dairy pay $0.10 more than Fonterra.
So the question is: How much will Synlait pay to keep their farmer suppliers happy. And how will they pay for this increased cost.
Fonterra announcment today
Opening forecast Farmgate Milk Price for 2024/25 season: $7.25-$8.75 per kgMS
with a mid-point of $8.00 per kgMS• Current season forecast Farmgate Milk Price:
midpoint maintained at $7.80 per kgMS, range narrowed to $7.70-$7.90 per kgMS
Quote from: Minimoke on May 29, 2024, 02:36 PMFonterra announcment today
Opening forecast Farmgate Milk Price for 2024/25 season: $7.25-$8.75 per kgMS with a mid-point of $8.00 per kgMS
• Current season forecast Farmgate Milk Price: midpoint maintained at $7.80 per kgMS, range narrowed to $7.70-$7.90 per kgMS
Synlait today confirms its forecast base milk price for the 2023/2024 season at $7.80 per kgMS. And opening forecast for the 2024/2025 season is $8.00 per kgMS.
So farmers can't be deserting Synlait on the basis of revenue.
Listing Rule 5.1.1 Disposal or Acquisition of Assets
5.1 Disposal or Acquisition of Assets
5.1.1 An Issuer must not enter into any transaction, or a related series of transactions, to
acquire, sell, lease (whether as lessor or lessee), exchange, or otherwise (except by
way of charge) dispose of assets where the transaction or related series of
transactions:
(a) would significantly change, either directly or indirectly, the nature of the
Issuer's business, or
(b) involves a Gross Value above 50% of the Average Market Capitalisation of the
Issuer,
unless the transaction, or related series of transactions, is:
(c) approved by an Ordinary Resolution, or a special resolution if approval by way
of special resolution is required under section 129 of the Companies Act 1993,
or
(d) conditional upon such approval required by paragraph (c) above.
SML now have a waiver to this rul on the basis of
"due solely to the recent material deterioration in SML's share price, contracts which are regularly
entered into by SML (and have been for many years as part of its ongoing operations) are now
being caught by Listing Rule 5.1.1. SML's shareholders have never previously been required to
approve these business as usual contracts, and the non-interested directors of SML do not
consider SML's shareholders would expect to have to approve those types of contracts, being
contracts for the sale of its manufactured goods (or for the supply to it of materials to allow the
manufacture and sale of those goods). There is also potential that certain counterparties would
express concern with details of the business as usual contracts being included in a notice of
meeting, such that certain Relevant Contracts may not be entered into if they were subject to
SML shareholder approval;
I'm not sure what to make of all that. But given they have applied for a waiver it can't be good news because its not business as ususal.
Quote from: Minimoke on May 31, 2024, 12:52 PMI'm not sure what to make of all that. But given they have applied for a waiver it can't be good news because its not business as ususal.
I suspect, and I'm guessing here, their normal sales of inventory to ATM would be considered "a related series of transactions" to sell assets (being inventory) with "a Gross Value above 50% of the Average Market Capitalisation" which means ongoing sales of stock to ATM are now caught by this clause. They also state:
Quotecontracts which are regularly entered into by SML (and have been for many years as part of its ongoing operations) are now being caught by Listing Rule 5.1.1. SML's shareholders have never previously been required to approve these business as usual contracts...[snip]....being contracts for the sale of its manufactured goods
which I think confirms it.
IOW it's an unintended consequence of a low market cap.
Quote from: Ferg on May 31, 2024, 09:59 PMI suspect, and I'm guessing here, their normal sales of inventory to ATM would be considered "a related series of transactions" to sell assets (being inventory) with "a Gross Value above 50% of the Average Market Capitalisation" which means ongoing sales of stock to ATM are now caught by this clause. They also state:
which I think confirms it.
IOW it's an unintended consequence of a low market cap.
Thanks. So Basically $50m worth of inventory for A2. Intersting accounting. This I presume would be finished goods. But may not include Work In Progress or raw material on hand.
Either way its cut, it is clear A2 is by far their largest customer. By a large margin. And not Bright related parties
According to Reuters a few minutes ago.
Synlait Milk Says Bright Dairy To Provide NZ$130 Million Facility
Reuters • BRIEF • 7 minutes ago
●BRIGHT DAIRY TO PROVIDE NZ$130 MILLION FACILITY
●AGREED ON TERMS OF A NZ$130 MILLION SHAREHOLDER LOAN WITH BRIGHT DAIRY
●NOW FORECASTING IT IS UNLIKELY TO MEET THREE OF ITS CURRENT BANKING COVENANTS AS AT 31 JULY 2024
●EXPECTS TO DRAW DOWN FULL NZ$130 MILLION TO MEET PREPAYMENT OBLIGATION TO CO'S SENIOR LENDERS, DUE ON 15 JULY
●EXPECTS ITS FY24 EBITDA TO BE WITHIN RANGE OF NZ$45 MILLION TO NZ$60 MILLION
●NOW FORECASTING FY24 EBITDA RESULT TO BE AT LOWER END OF RANGE
]●NOTES SIGNIFICANT MAJORITY OF COMPANY'S FARMER SUPPLIER BASE HAVE SUBMITTED CESSATION NOTICES
●DAIRYWORKS SALE PROCESS NO LONGER REMAINS FORMALLY OPEN Further company coverage: ((Reuters.Briefs@thomsonreuters.com;)) undefined
I have highlighted one item in particular.
The announcement on ASX
https://announcements.asx.com.au/asxpdf/20240603/pdf/064602vfzl9x3c.pdf
Desperate times. Still working on a capital raise...who in their right mind would throw good money after bad.
A reminder that the bonds listed on the NZX are subordinated to all other debt and are almost certain to be subordinated to the loan Bright Dairy is making. A breakup of the company that leaves subordinated debt holders hung out to dry still looks like the most likely outcome to me.
Quote from: Basil on Jun 03, 2024, 11:16 AMDesperate times. Still working on a capital raise...who in their right mind would throw good money after bad.
A reminder that the bonds listed on the NZX are subordinated to all other debt and are almost certain to be subordinated to the loan Bright Dairy is making. A breakup of the company that leaves subordinated debt holders hung out to dry still looks like the most likely outcome to me.
Yes, it's awful but (for now) a better outcome than has been long espoused on this board. Bright are continuing to keep the ship afloat.
Cessation notices as they say, in what was omitted from the blue font cut and paste, are not necessarily a mark of clear intention. The logistics of other processors picking up 50+% of Synlait's supply would be interesting. Swapping processors isn't as simple as say swapping your power company.
The guidance is at best beige when it really needs to be triple chocolate. How can there be yet more inventory issues?
A glaring omission is any mention of A2.
Those bonds now $65 for a $100
Taking duration and lower price that's a 93% return
I still believe the bonds are only worth a fraction of that.
So. No money coming in from Dairy works. No mention of sale of north island assets. No farmers after 2026. Risk of major customer (A2) departing by 2026.
And the Bright Dairy loan needs shareholder approval at vote that excludes Bright. A2 hold around 33% of this vote. How will Penno vote?
And it only gets them through to July. Zero mention of paying bonds back and no chance of Synlait generating cash to pay it back.
Nothing here to change my view that Synlait is totally uninvest able.
Ruth Richardson "retires" replaced by another Bright director.
Now lets look at the banking covenants. These cover $410m of net bank debt.
In spite of the $130m loan from Bright by 15 July, Synlait say they will still be in breach of covenants at 31 July.
Banks will be owed $280m. With no assets sales in view they have no chance of getting this money back form with asset sales or revenue.
Given Synlait say they will be in breach at 31 July then the Bond Holder supervisor has the right to call on the immediate repayment of the bonds.
Add into this two key pieces of the announcement are missing. Firstly, what is Bright securing the $130m against? Secondly what interest rate are they charging. Without knowing this information the banks and shareholders aren't in any sort of position to approve the loan and clear the covenants.
Looks to me like a takeover bid by Bright.
Last financial year was terrible for Synlait. They had an adjusted EBITDA of $95.6m
Now they are saying for 2024 it will be between $45 - $60m and likely at the lower end of the range. ("excluding a non-cash adjustment for the product costing method change of approximately $17 million. " . So, full year EBITDA of $61.2m down $34.4m
On Friday SP was $0.44 and a market cap of $96.18m. I expect SP to tank even further today.
I know some won't want to understand this however Brights move to take over the $130m bank debt is to strenghen it's position long term over the company.
Still, IMO, in Brights best interest to get the SP as low as possible before the cap raise.
Really the transfer of $130m of bank debt to Brights is akin to switching from the sharks to the devil.
Be interesting to see the terms of the new loan to Brights.
Quote from: snapiti on Jun 04, 2024, 10:16 AMI know some won't want to understand this however Brights move to take over the $130m bank debt is to strenghen it's position long term over the company.
Still, IMO, in Brights best interest to get the SP as low as possible before the cap raise.
Really the transfer of $130m of bank debt to Brights is akin to switching from the sharks to the devil.
Which begs the question. What doe s Bright actually want.
For the $130m they could have bought out completely profitable Dairyworks.
Given the Contracts waiver last week we can assume A2 have over 50 of Synlait business. So A2 + plus Dairyworks have to be, say in the region of 75% of synlaits business. Why would bright be prepared to stump up $130m for such a relatively small slice of the Synlait pie.
(I see market is absorbing the news. Opening at $0.42 now at $0.40. Which values the whole company at $87.4m)
it's all about control of the situation, As stated in some of my prior posts Bright can not let SML go into receivership as they lose all or any control so logical for them to take over a loan with security.
Of more concern for those invested is Bright have got another board set (I assume this was negotiated with the loan), I make that 4 directors now which is out of portion to their holdings.
Not being privy to the companies constitution so I don't know how voting works in the board room but I think they only need one friendly in the board room and they now have control, they might even have it already depending on who can vote in the board room.
I have said it a few times now, those holding are at the mercy of the next trading halt and whatever comes from that
Quote from: snapiti on Jun 04, 2024, 10:53 AMit's all about control of the situation, As stated in some of my prior posts Bright can not let SML go into receivership as they lose all or any control so logical for them to take over a loan with security.
Of more concern for those invested is Bright have got another board set (I assume this was negotiated with the loan), I make that 4 directors now which is out of portion to their holdings.
Not being privy to the companies constitution so I don't know how voting works in the board room but I think they only need one friendly in the board room and they now have control, they might even have it already depending on who can vote in the board room.
I have said it a few times now, those holding are at the mercy of the next trading halt and whatever comes from that
Ruth was a Bright appointees. So they are just swapping out one for another. But they are certainly bringing in a new guard.
Bright have 4 out of 8 Board positions.
Before the day gets away on us lets see how it plays out.
sml.png
Quote from: Minimoke on Jun 04, 2024, 11:03 AMRuth was a Bright appointees. So they are just swapping out one for another. But they are certainly bringing in a new guard.
Bright have 4 out of 8 Board positions.
what makes you think Ruth was a Brights appointee, not that it matters, fact remains they only need one friendly on the board and they have control.
Market can see what is going on.
I feel sorry for the ave jo punter, they will not doubt see Brights taking over the debt as a positive
@snapiti. This! (note who isnt there any more)
sm1.png
righto.... so that would indicate Bright already have control, unless the constitution says the chairs vote can be used as casting vote if the vote is even.
I wonder if Mr Penno left because of the board control issues.
Either way Brights have gained a lot more control of the company by taking on banks Debt the terms of which would be interesting reading
Bonds now at 99%. Not with a 40 foot barge pole is still how I see them
Quote from: snapiti on Jun 04, 2024, 11:25 AMrighto.... so that would indicate Bright already have control, unless the constitution says the chairs vote can be used as casting vote if the vote is even.
I wonder if Mr Penno left because of the board control issues.
Either way Brights have gained a lot more control of the company by taking on banks Debt the terms of which would be interesting reading
Im fascinated on what security they plan on holding.
Banks have first dibs on $410m of debt. Lets take off the $130, this still leaves $280m the banks can claim first.
Obviously Dairy works isn't worth the $130m Synlait reckon its worth. Lets call it $100m
That leaves $180m the banks have dibs on.
I reckon its fair to say that Pokeno is pretty much worthless as a trading concern. It appears to be a substantial loss maker and plant is grossly under utliised. Note how in the latest update no mention is made of this as an asset sale / balance sheet correction tool. So I reckon Synlait have figured out they aren't going to be able to sell it.
That leaves Dunsandel. Its profitable. But farmers are threatened to leave if they dont get paid. In the half year update there was $280m of accounts payable. I presume much of this is un/semi secured milk supply
So, presently Bright arent prepared to stump up with $130m + $280m to clear bank debt.
No mention made of how farmers are going to get paid. But these folk are ahead of bond holders. And that's another $180m duer at end of year - where is this going to come from and against what security?
basil as I see it if the bonds are not repaid the company goes into receivership, now with bright dairies having secured debt over the company they are in a much better position if receivership comes along right, or well they lose some control
Quote from: Minimoke on Jun 04, 2024, 11:44 AMIm fascinated on what security they plan on holding.
Banks have first dibs on $410m of debt. Lets take off the $130, this still leaves $280m the banks can claim first.
Obviously Dairy works isn't worth the $130m Synlait reckon its worth. Lets call it $100m
That leaves $180m the banks have dibs on.
I reckon its fair to say that Pokeno is pretty much worthless as a trading concern. It appears to be a substantial loss maker and plant is grossly under utliised. Note how in the latest update no mention is made of this as an asset sale / balance sheet correction tool. So I reckon Synlait have figured out they aren't going to be able to sell it.
That leaves Dunsandel. Its profitable. But farmers are threatened to leave if they dont get paid. In the half year update there was $280m of accounts payable. I presume much of this is un/semi secured milk supply
So, presently Bright arent prepared to stump up with $130m + $280m to clear bank debt.
No mention made of how farmers are going to get paid. But these folk are ahead of bond holders. And that's another $180m duer at end of year - where is this going to come from and against what security?
Just maybe Bright will take on all the secured debt and let the bonds fail, that gives them total control IMO
that's what the bond market is telling you
Quote from: snapiti on Jun 04, 2024, 11:45 AMbasil as I see it if the bonds are not repaid the company goes into receivership, now with bright dairies having secured debt over the company they are in a much better position if receivership comes along right, or well they lose some control
From half year update
"Without successful execution of an equity raise in combination with other deleveraging options by 31 July 2024, the Group will be in breach of its banking covenants and the banking syndicate will have the right to call on the full $410m of outstanding bank debt. The Supervisor for the $180m subordinated bond will also have the right to call on the bond which will become repayable on demand immediately due to the bank facilities being in default."
At this point there is zero news on an equity raise
Deleveraging options , like selling dairyworks and north island assets appear to be off the table.
And if that doesn't inform punters Synlait have today said "Synlait is now forecasting
it is unlikely to meet three of its current banking covenants as at 31 July 2024, the interest coverage ratio, leverage ratio, and senior leverage ratio. "
Nothing new in the announcement except Bright making their move, chess piece by chess piece.
Quote from: snapiti on Jun 04, 2024, 11:52 AMJust maybe Bright will take on all the secured debt and let the bonds fail, that gives them total control IMO
If Bright get more than 50% control of Synlait this triggers a bond change of control event at which point bond holders can ask for all their money back.
If they don't get all their money back (and where is this money going to come from?) then you are looking at a liquidation event.
Quote from: snapiti on Jun 04, 2024, 11:52 AMJust maybe Bright will take on all the secured debt and let the bonds fail, that gives them total control IMO
Starting to look that way.
Quote from: Teitei on Jun 04, 2024, 12:02 PMNothing new in the announcement except Bright making their move, chess piece by chess piece.
thats the one
Quote from: Minimoke on Jun 04, 2024, 12:05 PMIf Bright get more than 50% control of Synlait this triggers a bond change of control event at which point bond holders can ask for all their money back.
If they don't get all their money back (and where is this money going to come from?) then you are looking at a liquidation event.
control in this instance can be done via taking on secured debt, that won't trigger 50% control trigger, then let the bonds falter and who is in the box seat.....the secured debt holders, all others are screwed
Quote from: Minimoke on Jun 04, 2024, 11:57 AMAt this point there is zero news on an equity raise
What's this then, from today's market update? ""We are grateful for the support from Bright Dairy. We are actively working with Bright Dairy on the remaining work relating to this shareholder loan
and a future equity raise. The shareholder loan,
and the future equity raise, will enable Synlait to reduce its debt to a sustainable level."
Quote from: snapiti on Jun 04, 2024, 12:13 PMthats the one
control in this instance can be done via taking on secured debt, that won't trigger 50% control trigger, then let the bonds falter and who is in the box seat.....the secured debt holders, all others are screwed
And there are highly intelligent and individuals with reputations to lose who are willing to become directors to screw 'all others' when that means personal liabilities (refer Mainzeal)?
Wow!
Quote from: Buzz on Jun 04, 2024, 12:25 PMWhat's this then, from today's market update? ""We are grateful for the support from Bright Dairy. We are actively working with Bright Dairy on the remaining work relating to this shareholder loan and a future equity raise. The shareholder loan, and the future equity raise, will enable Synlait to reduce its debt to a sustainable level."
The first hurdle is getting shareholder approval of the loan. We have zero news on what the terms and conditions of that loan is. Bright arent allowed to vote on the loan.
Just because synlait say there is a future equity raise does not mean there will be an equity raise. They had already flagged the need for an equity raise earlier in the year.
("The letter includes a commitment to participate in a future equity raise and to extend a loan at the request of Synlait, subject to Synlait and Bright receiving all necessary approvals. ")This was at a tiime Synlait said they wer selling Dairyworks - but that is off the table now.
We have no detail on what that equity raise will look like - ergo no news on it.
Synlait also said back then "Synlait is progressing with an equity raise alongside its strategic review of the North Island assets.
Given that Synlait's share price is trading at a significant discount to its net tangible asset value, the Board believes that asset realisation should be progressed to produce maximum value for our shareholders. Equity raising remains an option under consideration by the Board in parallel to achieve deleveraging of Synlait's balance sheet."
Back then shareprice was double what it is today.
Lets face it.Synlait are in a whole pile of worsening trouble. Nothing they say can be taken as gospel truth. They are running out of places to shuffle deck chairs.
Casting my mind right back to when I first started investing in the early 80's I'm struggling to recall a company that's been in deeper doggy doo without actually being in receivership already?. Nothing comes to mind. Pretty clear Pokéno is worth pennies on the dollar compared to cost and Dairy works worth nothing like the written down value. An absolute ocean of debt and most assets worth very little. Most suppliers headed out the door. My goodness it looks extremely grim!
Feltex comes to mind
If we are going to talk about an equity raise, how much will it be?
At the moment lets say bank and bond debt = $590,000,000
And farmers/suppliers need to be kept happy. Payables exceed receivables by $177m
So basically by the end of the year they need to find $767,000,000.
Obviously they can't service this out of cash flow / excess profits. Because there is none.
There is no offer on the table for Dairy works. Pokeno doesn't seem to be on the table. Nor does the fresh milk processing facilities built for Foodstuffs. So no sign of fast cash on those fronts.
Could they try and totally clear the decks with a $767m equity raise. Lets say its done via a share issue at a 20% discount of current share price. Or $0.32 a share that would mean 2,393,375,000 new shares. Or 91.6% of total issued shares.
Gee, that's not going to work. What shareholder would accept that kind of dilution.
Trouble is, if we go for $359m cap rais at $0.32 that still over 1,093m shares or 83% of the company.
What about $310m ($130m for the banks/bright, $180m for the bonds) thats 968m new shares.
So just how is this equity raise going to work?
Quote from: snapiti on Jun 04, 2024, 01:54 PMFeltex comes to mind
As I recall Feltex kept saying it was fine until it wasn't. And then it was all over.
Quote from: Minimoke on Jun 04, 2024, 01:57 PMAs I recall Feltex kept saying it was fine until it wasn't. And then it was all over.
true that......
Quote from: Basil on Jun 04, 2024, 01:41 PMCasting my mind right back to when I first started investing in the early 80's I'm struggling to recall a company that's been in deeper doggy doo without actually being in receivership already?. Nothing comes to mind. Pretty clear Pokéno is worth pennies on the dollar compared to cost and Dairy works worth nothing like the written down value. An absolute ocean of debt and most assets worth very little. Most suppliers headed out the door. My goodness it looks extremely grim!
What about AirNZ in 2001. Avoided receivership via a govt bailout though (as it did more recently)
Yeap, great example but I think the chances of Chris Luxon bailing this out is nil.
https://businessdesk.co.nz/article/primary-sector/synlait-shareholder-bright-dairy-digging-its-heels-in-on-dunsandel-plant?utm_source=nzh&utm_medium=referral&utm_campaign=nzh-home
Can anyone share the guts of what's in here please.
Maybe Bright wants to secure their $130m load specifically as first mortgagee against the Dunsandel plant ?
If so, I think shareholders should tell them to go and get stuffed.
Quote from: Basil on Jun 05, 2024, 11:14 AMhttps://businessdesk.co.nz/article/primary-sector/synlait-shareholder-bright-dairy-digging-its-heels-in-on-dunsandel-plant?utm_source=nzh&utm_medium=referral&utm_campaign=nzh-home
Can anyone share the guts of what's in here please.
Maybe Bright wants to secure their $130m load specifically as first mortgagee against the Dunsandel plant ?
If so, I think shareholders should tell them to go and get stuffed.
And what other choice is on the table.
This is the problem when you run the company into this sort of position you have no power to negotiate.
Bright are excluded from voting on the $130m loan. If it turns out they want first mortgage security on Dunsandel, I don't think its likely that ATM would vote for that.
Quote from: Basil on Jun 05, 2024, 11:14 AMhttps://businessdesk.co.nz/article/primary-sector/synlait-shareholder-bright-dairy-digging-its-heels-in-on-dunsandel-plant?utm_source=nzh&utm_medium=referral&utm_campaign=nzh-home
Can anyone share the guts of what's in here please.
Maybe Bright wants to secure their $130m load specifically as first mortgagee against the Dunsandel plant ?
If so, I think shareholders should tell them to go and get stuffed.
I wrote a long response but it appears to have got lost.
So in short what sane compnay would do a debt for equity deal?
So it has to be debt for capital. Loans secured against assests.
Swap out bank debt for Bright debt. Secured against assets.
A2 need to be part of this game!
Quote from: Basil on Jun 05, 2024, 11:53 AMBright are excluded from voting on the $130m loan. If it turns out they want first mortgage security on Dunsandel, I don't think its likely that ATM would vote for that.
No other deal on the table and time has all but run out...please let us know what other options they have
Quote from: snapiti on Jun 05, 2024, 12:07 PMNo other deal on the table and time has all but run out...please let us know what other options they have
Frankly, receivership is looking more and more likely.
Quote from: Basil on Jun 05, 2024, 12:09 PMFrankly, receivership is looking more and more likely.
The banks have their loans secured over all current and future property. So lets look at this security.
According to the last Annual report
- Land worth = 55.4m
- Building = 276.4m
- Plant and equipment = 598.
- Fixtures and fitting = 10m
Lets call it $993m all up.
Now knock a years worth of depreciation (say $46m) and we are left with $947m
However, Synlait have dairworks in their books at $163.5m. But its clear no one is prepared to pay, say $100m (because they would have taken $130m to clear the bank pressure)
So clearly the value of the assets are over stated.
What would you get in a fire sale. Say 50% off. Obviously Pokeno isn't a going concern. Dairyworks isn't attractive despite making a profit. Who wants a milk processor. Really only leaves Dunsandel Infant formula as a valuable asset. And this only valuable for as long as farmers supply milk and A2 buys products. Lets say all up $450m worth of security.
Banks will be nervous. But should get out of this without losing any skin.
Earlier I suggested a debt for capital arrangement. Maybe it just makes sense for Bright and A2 to buy the assets now and do a lease back like Synlait did with parts of Auckland.
A payment due on those bonds this Friday
Quote from: winner (n) on Jun 05, 2024, 12:48 PMA payment due on those bonds this Friday
17 June. Another $1.723m going on the overdraft.
Bright in the box seat.
Who holds all the cards?
A2M will have to just swallow hard and accept what's on offer - cede control to Bright.
Or does A2M need reminder of who controls access of its infant formula into China?
Quote from: Teitei on Jun 05, 2024, 01:06 PMBright in the box seat.
Who holds all the cards?
A2M will have to just swallow hard and accept what's on offer - cede control to Bright.
Or does A2M need reminder of who controls access of its infant formula into China?
Arguably A2 has no control now. Just a 20% shareholder and no seat on the board.
Quote from: Minimoke on Jun 05, 2024, 01:18 PMArguably A2 has no control now. Just a 20% shareholder and no seat on the board.
A2M never had any real influence, save as a customer - let alone control!
But according to news articles & some of the postings, A2M could play itself into the game when imo, A2M is but a eunuch who is 100% dependent upon the Chinese to get access into the China market. A2M has no real card to play - that is really my point.
The future of SML will be determined and dictated by Bright & the Chinese - get used to the idea and the picture becomes very clear as to what happens next.
Quote from: Teitei on Jun 05, 2024, 01:54 PMA2M never had any real influence, save as a customer - let alone control!
But according to news articles & some of the postings, A2M could play itself into the game when imo, A2M is but a eunuch who is 100% dependent upon the Chinese to get access into the China market. A2M has no real card to play - that is really my point.
The future of SML will be determined and dictated by Bright & the Chinese - get used to the idea and the picture becomes very clear as to what happens next.
A2's relationship with china is via state owned enterprise China State Farm, A subsidiary of China National Agriculture Development Group. A2 has shown it is interested in providing security to Chinas food supply by buying 75% of Mataua off China Animal Husbandry Group. A subsidiary of China National Agriculture Development Group.
Where as Synlait is via Bright, a Shanghai Municipal company owned by local government
Quote from: Teitei on Jun 05, 2024, 01:54 PM........ A2M is but a eunuch who is 100% dependent upon the Chinese to get access into the China market. A2M has no real card to play - that is really my point.
Mmmm not so sure...
Very silly to piss off your largest customer and second biggest shareholder....not to mention ATM's Chinese interests as detailed by Mini, ATM's strong cash position, and ownership of alternative milk processing plants both in NZ and Aus.
Quote from: Minimoke on Jun 05, 2024, 02:33 PMA2's relationship with china is via state owned enterprise China State Farm, A subsidiary of China National Agriculture Development Group. A2 has shown it is interested in providing security to Chinas food supply by buying 75% of Mataua off China Animal Husbandry Group. A subsidiary of China National Agriculture Development Group.
Where as Synlait is via Bright, a Shanghai Municipal company owned by local government
They all report ultimately to the Ministry of Agriculture and Rural Affairs. Nothing happens without the nod from there.
Quote from: Teitei on Jun 05, 2024, 03:53 PMThey all report ultimately to the Ministry of Agriculture and Rural Affairs. Nothing happens without the nod from there.
I though State Farms was ultimately to State-owned Assets Supervision and Administration Commission. Though no doubt these organisations talk. But how much talk there would be on a piddly $130m loan to some hick company sitting on a wee island at the bottom of the south pacific who knows.
Quote from: Minimoke on Jun 05, 2024, 04:04 PMI though State Farms was ultimately to State-owned Assets Supervision and Administration Commission. Though no doubt these organisations talk. But how much talk there would be on a piddly $130m loan to some hick company sitting on a wee island at the bottom of the south pacific who knows.
The $130m + $80m invested in SML shares will (imo) soon grow to ultimately control SML. Call it $450m in total.
Now, the $80m was piddly indeed - rounding difference for Bright and they could have easily wrote it off against the US$500m+ they made selling Wheetabix. Why did they not do so? Obvious answer imo.
Quote from: Teitei on Jun 05, 2024, 04:40 PMThe $130m + $80m invested in SML shares will (imo) soon grow to ultimately control SML. Call it $450m in total.
Now, the $80m was piddly indeed - rounding difference for Bright and they could have easily wrote it off against the US$500m+ they made selling Wheetabix.
Bright originally spent $82m in 2010 for an 51% holding in Synlait. But had this holding diluted to 39% on IPO listing.
They then popped in another $78m in the 2020 capital raise. So, so far $160m for a 39% stake in a company today worth $85.2m
So they have managed to turn $160m into $33m. I bet their bosses aren't too happy. And I bet they won't be keen on a $130m debt for equity arrangement.
John Penno to get a knighthood for services to business next year ?
I mean if it good enough for Joan Withers with all the "wonderful' value she's created for WHS shareholders...
Quote from: Minimoke on Jun 05, 2024, 05:01 PMBright originally spent $82m in 2010 for an 51% holding in Synlait. But had this holding diluted to 39% on IPO listing.
They then popped in another $78m in the 2020 capital raise. So, so far $160m for a 39% stake in a company today worth $85.2m
So they have managed to turn $160m into $33m. I bet their bosses aren't too happy. And I bet they won't be keen on a $130m debt for equity arrangement.
You are assuming that the investment is permanently impaired while as they have a different perspective and investment horizon.
Bit like saying Yili managed to lose 60% of their money in Westland after paying the huge 100%+ premium to the then sp and independent valuation to take control of the company.
Quote from: Basil on Jun 05, 2024, 05:12 PMJohn Penno to get a knighthood for services to business next year ?
I mean if it good enough for Joan Withers with all the "wonderful' value she's created for WHS shareholders...
Didn't Gatting get one as well ( I don't follow that kind of thing).
But to her credit. Withers did manage to flog Torpedo 7 off for a $1. Probably a bit more value than Synlait will have when the dust settles.
Quote from: Minimoke on Jun 05, 2024, 05:17 PMDidn't Gatting get one as well ( I don't follow that kind of thing).
But to her credit. Withers did manage to flog Torpedo 7 off for a $1. Probably a bit more value than Synlait will have when the dust settles.
And China will give you a medal if that happens for your fine services to the greater glory of China's ever expanding global dairy industry! 8)
Quote from: Teitei on Jun 05, 2024, 05:13 PMYou are assuming that the investment is permanently impaired while as they have a different perspective and investment horizon.
Bit like saying Yili managed to lose 60% of their money in Westland after paying the huge 100%+ premium to the then sp and independent valuation to take control of the company.
Absolutely I agree the Chinese have a far different investment horizon.
Westland was a different proposition. Run by a co-op. In much the same way that saw Fonterra have problems. But Synlait is Private ownership at its best.
Yili bought the whole thing lock stock and barrel. There hasn't been a suggestion (yet) that Bright will do that. And if they propose it A2 might not be so keen.
Reading these posts, I get the impression some of you think Synlait is doomed. On the contrary I am almost certain that it will survive, and eventually prosper again. Only question on my mind is who will eventually own Synalit, and whether there's an opportunity to get in on some massively discounted CR.
Anyone read the new Chair's comments in the Herald today? Seems pretty confident the business can be turned around, with the current deleveraging in play just the beginning. Couldn't imagine someone with his experience, at this stage in his career, taking on the Chair of something that is doomed.
Quote from: Buzz on Jun 05, 2024, 05:42 PMReading these posts, I get the impression some of you think Synlait is doomed. On the contrary I am almost certain that it will survive, and eventually prosper again. Only question on my mind is who will eventually own Synalit, and whether there's an opportunity to get in on some massively discounted CR.
Anyone read the new Chair's comments in the Herald today? Seems pretty confident the business can be turned around, with the current deleveraging in play just the beginning. Couldn't imagine someone with his experience, at this stage in his career, taking on the Chair of something that is doomed.
Not only that, Buzz but this too :
Quote from: Teitei on Jun 04, 2024, 12:53 PMAnd there are highly intelligent and individuals with reputations to lose who are willing to become directors to screw 'all others' when that means personal liabilities (refer Mainzeal)?
Wow!
Deafening silence from the doom merchants to my post above. I wonder why!
Quote from: Teitei on Jun 05, 2024, 07:18 PMNot only that, Buzz but this too :
Deafening silence from the doom merchants to my post above. I wonder why!
I get the strong impression that there is a lot more interest in the spectacle of a distressed company, than the opportunity that it may present.
By the time the opportunity emerges, their mindset is so entrenched "uninvestable" that they miss the opportunity completely and wonder WTF happened! Not only did it not die an ignominious death, they've missed the turnaround and easy capital gains. If it does die, so what, we're not invested.
Not worth spending untold hours every day, month after month commentating on the spectacle. Just let the spectacle run it's course, hopefully with enough open mindedness when it does, to recognise whether an opportunity has emerged.
You mentioned SKT as an example, I agree. Like who would have thought it was a 2-3 bagger unless they were looking for the opportunity and not getting too entertained and so emotionally involved in the unfolding saga that they missed the turnaround and the deeply discounted value on offer, that has since paid off very nicely, and still does.
Quote from: Buzz on Jun 05, 2024, 07:37 PMI get the strong impression that there is a lot more interest in the spectacle of a distressed company, than the opportunity that it may present.
By the time the opportunity emerges, their mindset is so entrenched "uninvestable" that they miss the opportunity completely and wonder WTF happened! Not only did it not die an ignominious death, they've missed the turnaround and easy capital gains. If it does die, so what, we're not invested.
Not worth spending untold hours every day, month after month commentating on the spectacle. Just let the spectacle run it's course, hopefully with enough open mindedness when it does, to recognise whether an opportunity has emerged.
You mentioned SKT as an example, I agree. Like who would have thought it was a 2-3 bagger unless they were looking for the opportunity and not getting too entertained and so emotionally involved in the unfolding saga that they missed the turnaround and the deeply discounted value on offer, that has since paid off very nicely, and still does.
SKT is an excellent example indeed as the doomsday merchants went on and on, pages after pages, commenting on its imminent demise.
One on the other site (bull ...) even tried to change his story yesterday but was caught out with his BS when confronted with his posts at the time.
Even when the Chairman bought shares, the doomsday merchants laughed at his (perceived) stupidity instead of taking his buying as a vote of confidence!
SKT has rewarded and delivered in excess of 50%+ return for those who bought, especially during the CR.
We now have the doomsday merchants here completely ignoring the commitment of Bright (deeds rather than words) and the willingness of new directors to direct the turnaround of the company. The new directors must be the dumbest individuals in the world to risk reputations and personal liabilities to 'screw everyone else'!!!!
But yes, I would not touch SML sp with a 10 ft pole until a CR is underway.
Quote from: Buzz on Jun 05, 2024, 05:42 PMReading these posts, I get the impression some of you think Synlait is doomed. On the contrary I am almost certain that it will survive, and eventually prosper again. Only question on my mind is who will eventually own Synalit, and whether there's an opportunity to get in on some massively discounted CR.
Anyone read the new Chair's comments in the Herald today? Seems pretty confident the business can be turned around, with the current deleveraging in play just the beginning. Couldn't imagine someone with his experience, at this stage in his career, taking on the Chair of something that is doomed.
I'm wondering what makes you think it is investable.
The earlier capital raise didn't get Synait where it wanted to be.
The bond issue didn't get where synlait where it wanted to be
Building Pokeno didn't get where synlait where it wanted to be
Buying Talabot cheese didn't get where synlait where it wanted to be
Introducing recyclable milk bottles didn't get where synlait where it wanted to be
Staying tight with key customer didn't get where synlait where it wanted to be.
Staying tight with Farmers didn't get where synlait where it wanted to be
Lactoferin didn't get where synlait where it wanted to be
Munchkin didn't get where synlait where it wanted to be
Selling dairyworks didn't get where synlait where it wanted to be
Losses are increasing.
Zero sign of it ever paying a dividend
Mired in debt.
Just what is the bright light at the end of the tunnel I am missing?
Quote from: Minimoke on Jun 05, 2024, 09:24 PMI'm wondering what makes you think it is investable.
The earlier capital raise didn't get Synait where it wanted to be.
The bond issue didn't get where synlait where it wanted to be
Building Pokeno didn't get where synlait where it wanted to be
Buying Talabot cheese didn't get where synlait where it wanted to be
Introducing recyclable milk bottles didn't get where synlait where it wanted to be
Staying tight with key customer didn't get where synlait where it wanted to be.
Staying tight with Farmers didn't get where synlait where it wanted to be
Lactoferin didn't get where synlait where it wanted to be
Munchkin didn't get where synlait where it wanted to be
Selling dairyworks didn't get where synlait where it wanted to be
Losses are increasing.
Zero sign of it ever paying a dividend
Mired in debt.
Just what is the bright light at the end of the tunnel I am missing?
Nice summary, but you're so invested in SML failing outright that you cannot conceive any outcome that they can continue and will surely miss the opportunity to invest if they do. You're so afraid of Synlait getting through this, you lack any objectivity that they might, and the opportunity for investors if they do.
Quote from: Teitei on Jun 05, 2024, 05:13 PMYou are assuming that the investment is permanently impaired while as they have a different perspective and investment horizon.
Bit like saying Yili managed to lose 60% of their money in Westland after paying the huge 100%+ premium to the then sp and independent valuation to take control of the company.
Many people also forget that in addition to the huge premium for the loss-making, heavily indebted Westland, they also committed to a huge hike in the cost base of the business by at least matching Fonterra's milk price. The status quo was staying afloat by paying significantly less. This has been extended with a commitment to pay a ~10c premium.
Some really dodgy maths on this thread, but if you look at the incentives of all the major parties no one wants to see a bankruptcy. There would seem to be no read into the $130m from bright that isn't incrementally positive (atleast for the bondholders).
Disc: Small long position in the VERY unpopular bonds.
Quote from: Buzz on Jun 05, 2024, 09:32 PMNice summary, but you're so invested in SML failing outright that you cannot conceive any outcome that they can continue and will surely miss the opportunity to invest if they do. You're so afraid of Synlait getting through this, you lack any objectivity that they might, and the opportunity for investors if they do.
I suspect there is no forum member anywhere that has been "invested" in synlait longer than I have. Possibly because I live nearby and I try to invest in local companies if I think there is a value proposition there. I can trace my interest back to when Dunsandel was bare land and rumours were circulating that someone was going to build an adventure park there. I have followed them pretty closely ever since.
I have bought and sold shares in Synlait over the years.
I remember very well attending Leons first AGM. Lets say no more on that!
I remain invested in milk as I still hold A2 shares and I have Fonterra Anchor branded A2 in my fridge.
If you read my posts, you will see I think it pretty clear there is no future for Synlait. That does not mean I don't think there remains a future for Dunsandel, and to a lesser extent Pokeno.
So I ask again - just what is the the light at the end of the tunnel that makes Synlait investable? Because its worth noting that Westland (that I have an interest in due to my interest in the coast) wasn't investible when they were going broke and today you can't invest in them. So I don't see how that can be used as an exemplar.
I look at the current trading in Synlait and I wonder if anyone understands what share dilution means.
Quote from: Gerald on Jun 05, 2024, 10:13 PMMany people also forget that in addition to the huge premium for the loss-making, heavily indebted Westland, they also committed to a huge hike in the cost base of the business by at least matching Fonterra's milk price. The status quo was staying afloat by paying significantly less. This has been extended with a commitment to pay a ~10c premium.
Some really dodgy maths on this thread, but if you look at the incentives of all the major parties no one wants to see a bankruptcy. There would seem to be no read into the $130m from bright that isn't incrementally positive (at least for the bondholders).
Disc: Small long position in the VERY unpopular bonds.
NZ Govt dodged a bullet when the Chinese bought out Westland. It is arguably the largest employer on the coast.
If I could have I would have put money into them. In the same way I put money into AirNZ when it was going bust. I couldn't see how a government would let it fail.
You could hear the sighs of relief from parliament from here when the Westland offer came through.
But even today we can't invest in it.
Quote from: Minimoke on Jun 06, 2024, 06:38 AMNZ Govt dodged a bullet when the Chinese bought out Westland. It is arguably the largest employer on the coast.
If I could have I would have put money into them. In the same way I put money into AirNZ when it was going bust. I couldn't see how a government would let it fail.
You could hear the sighs of relief from parliament from here when the Westland offer came through.
But even today we can't invest in it.
And why would the Chinese accord you the privilege of investing in Westland when there was bugger all support to rescue the co-op when it was in trouble?
To those who take the risks, the rewards surely. Likewise, the losses obviously.
Quote from: Teitei on Jun 06, 2024, 09:03 AMAnd why would the Chinese accord you the privilege of investing in Westland when there was bugger all support to rescue the co-op when it was in trouble?
To those who take the risks, the rewards surely. Likewise, the losses obviously.
Westland was a co-op. It was for the co-op member to get themselves out of trouble. They are the ones that capitalised their profits and didnt expect to socialise their losses.
They had choices. They could either continue with the co-op model (so we were excluded from investing), they could have sought a cornerstone investor (so we were excluded from investing), they could have merged, with say Fonterra (So we were excluded from investing - and Synlait wasn't in a position then to help) or they could have sold (so we were excluded from investing).
Westland basically needed a lot more capital - and they had the support of Farmers. Synlait Farmers are threatening to leave.
And what did the chinese do when they took over Westland. Basically they improved quality (it appears there are quality issues with A2 and who knows who else). And they cut waste and they cut costs - something Synlait management are totally inept at doing. There was also a coincidental increase in commodity prices.
With this strategy Westland managed to turn a loss in 2022 into a profit in 2023 and a larger profit in 2024. Synlait on the other hand made a loss in 2023 after making a profit in 2022 and will make a larger loss in 2024.
Westland also focussed on high value products. What did synlait do - set up a liquid milk processing plant for bargain basement "pams" milk at your local supermarket. (Fonterra gets the high value A2 liquid milk)
Milk is milk. That Westland can make profits and Synlait can't isn't a reflection on milk. Its a reflection on poor management. Unless you change management (and not just debt levels) then I don't think anything will change.
So, on what basis could someone be tempted to take a risk on Synlait. No one seems keen on posting just what that encouraging light actually is.
Quote from: Minimoke on Jun 06, 2024, 09:50 AMWestland was a co-op. It was for the co-op member to get themselves out of trouble. They are the ones that capitalised their profits and didnt expect to socialise their losses.
They had choices. They could either continue with the co-op model (so we were excluded from investing), they could have sought a cornerstone investor (so we were excluded from investing), they could have merged, with say Fonterra (So we were excluded from investing - and Synlait wasn't in a position then to help) or they could have sold (so we were excluded from investing).
Westland basically needed a lot more capital - and they had the support of Farmers. Synlait Farmers are threatening to leave.
And what did the chinese do when they took over Westland. Basically they improved quality (it appears there are quality issues with A2 and who knows who else). And they cut waste and they cut costs - something Synlait management are totally inept at doing. There was also a coincidental increase in commodity prices.
With this strategy Westland managed to turn a loss in 2022 into a profit in 2023 and a larger profit in 2024. Synlait on the other hand made a loss in 2023 after making a profit in 2022 and will make a larger loss in 2024.
Westland also focussed on high value products. What did synlait do - set up a liquid milk processing plant for bargain basement "pams" milk at your local supermarket. (Fonterra gets the high value A2 liquid milk)
Milk is milk. That Westland can make profits and Synlait can't isn't a reflection on milk. Its a reflection on poor management. Unless you change management (and not just debt levels) then I don't think anything will change.
So, on what basis could someone be tempted to take a risk on Synlait. No one seems keen on posting just what that encouraging light actually is.
The encouraging light is precisely what happened with Westland - a recapitalisation supported by Bright and the opening of distribution channels and markets via Bright, just as was the case with Westland/Yili.
But as has been mentioned enough times before, wait for the CR to come before making any investment decision.
Meanwhile, you have yet to comment on why new directors would join a company heading into (in your opinion) receivership? Are they really that dumb and foolhardy to risk reputation and incur personal liability?
Mini-M and Balance-Teitei, I've been enjoying reading your SML posts.
Good discussions of differing viewpoints ....thank you!
Quote from: Teitei on Jun 06, 2024, 10:26 AMThe encouraging light is precisely what happened with Westland - a recapitalisation supported by Bright and the opening of distribution channels and markets via Bright, just as was the case with Westland/Yili.
But as has been mentioned enough times before, wait for the CR to come before making any investment decision.
Meanwhile, you have yet to comment on why new directors would join a company heading into (in your opinion) receivership? Are they really that dumb and foolhardy to risk reputation and incur personal liability?
How can Westland be a positive light - its a dark stain for investors. Farmers were shareholders. Now they arent.Profits go to Yili. Farmers get paid.
And if people insist on using Westland as the exemplar it only serves to confirm that Synlait is univestible. Current shareholders will not be future shareholders.
Any smart buy out (as I have said before) will look after the banks so there is no challenge from them. It will also look after farmers by making sure they are paid. Bond holders know they are unsecured so nothing is owed to them and nothing is gained by paying them off because they don't have voting rights. And if bond holders aren't paid shareholders get zip.
Quote from: Minimoke on Jun 06, 2024, 10:48 AMHow can Westland be a positive light - its a dark stain for investors. Farmers were shareholders. Now they arent.Profits go to Yili. Farmers get paid.
And if people insist on using Westland as the exemplar it only serves to confirm that Synlait is univestible. Current shareholders will not be future shareholders.
Any smart buy out (as I have said before) will look after the banks so there is no challenge from them. It will also look after farmers by making sure they are paid. Bond holders know they are unsecured so nothing is owed to them and nothing is gained by paying them off because they don't have voting rights. And if bond holders aren't paid shareholders get zip.
Westland's shareholders were paid very handsomely for their worthless shares (according to many) and they go back into what they are good at - farming. What is wrong with that?
But back to the new directors risking their reputations and incurring personal liabilities to 'screw everyone else." How so?
Buzz rightly highlights just how invested & obsessed you are in SML falling over that you cannot perceive of any outcome other than receivership for SML. The new directors and Bright obviously have a different view from you and they are the ones at the coldface.
Quote from: Teitei on Jun 06, 2024, 10:54 AMBack to the new directors risking their reputations and incurring personal liabilities to 'screw everyone else."
I don't know where that notion has come from but it certainly isn't me.
But since you raise it lets look at the board from the last Annual report
Simon Robertson Independent Chair. Gone. Resigned with Immediate effect
Ryan Reubing Gone Resigned with immediate effect
John Penno. Gone Resigned with immediate effect
Ruth Richardson Gone (retired)
That's 5 out of 8 gone.
Leaving long termers Independents Paul Mcgilvary and Paul Washer. I'm quite sure they have read the fine print in their Directors insurance
Quote from: Teitei on Jun 06, 2024, 10:54 AMBuzz rightly highlights just how invested & obsessed you are in SML falling over that you cannot perceive of any outcome other than receivership for SML. The new directors and Bright obviously have a different view from you and they are the ones at the coldface.
I' have explained my "investment" and I am not obsessed with SML falling over. I am just stating the facts as I see them based on the current evidence. I'm still waiting for reason from forum members on what convinces them there are other possible out comes. The westalnd argument has obviously been torpedoed.
We don't know what the new direcotres and Brights views are. They clearly have responsibilities to shareholders. But that does not mean they arent considering receivership and pondering how to extract as much value as they can for creditors. Because if creditors don't get paid shareholders get nothing.
It seems timely to remind oursleves of wha tteh directors said in the last 1/2 year Reports
"Although the Directors have concluded that it is appropriate to prepare these interim financial statements on a going concern basis, they have concluded that there are material uncertainties which
may cast significant doubt over the Group's ability to continue trading as a going concern"
and
"At 31 January 2024,
the Group's current liabilities exceed current assets by $204.9m, driven by the classification of $514.1m of the Group's total net debt of $559m as repayable within 12 months of balance date" Since then there has been a further down grade.
Quote from: Teitei on Jun 06, 2024, 10:54 AMWestland's shareholders were paid very handsomely for their worthless shares (according to many) and they go back into what they are good at - farming. What is wrong with that?
Absolutely nothing. Good on them. Saved the tax payer from bailing them out.
But its a completely different ownership model to Synlait so you are trying to compare apples with sausages to support your position. But fact remains - they are no longer owners.
Lets face it. What do I know. Just some random on an internet forum. Perhaps we should rely on the greater wisdom of the Mr Market to inform us.
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Quote from: Minimoke on Jun 06, 2024, 11:21 AMI don't know where that notion has come from but it certainly isn't me.
But since you raise it lets look at the board from the last Annual report
Simon Robertson Independent Chair. Gone. Resigned with Immediate effect
Ryan Reubing Gone Resigned with immediate effect
John Penno. Gone Resigned with immediate effect
Ruth Richardson Gone (retired)
That's 5 out of 8 gone.
Leaving long termers Independents Paul Mcgilvary and Paul Washer. I'm quite sure they have read the fine print in their Directors insurance
What has that got to do with the new directors taking on the responsibility of turning around SML?
The retiring and fired directors surely deserved their 'fate' but why would new directors risk reputations and incur personal liabilities to take up their positions?
Quote from: Teitei on Jun 06, 2024, 11:32 AMWhat has that got to do with the new directors taking on the responsibility of turning around SML?
The retiring and fired directors surely deserved their 'fate' but why would new directors risk reputations and incur personal liabilities to take up their positions?
You keep asking the question so it must be important to you. I can't answer on behalf of the directors. But my observation would be:
Risk reputations: - there is no risk. Everyone knows SML is a total and utter basket case. It says so in the reports. No one is going to say "Oh you are the director that drove Synlait into the ground". They will say "Gee you took the hospital pass and did the best you can for a terminal cancer patient"
Personal Liabilities: - I am sure they will have fully paid up comprehensive director insurance. It becomes moot if they can be liable for the actions of prior Board members.
Quote from: Minimoke on Jun 06, 2024, 11:46 AMYou keep asking the question so it must be important to you. I can't answer on behalf of the directors. But my observation would be:
Risk reputations: - there is no risk. Everyone knows SML is a total and utter basket case. It says so in the reports. No one is going to say "Oh you are the director that drove Synlait into the ground". They will say "Gee you took the hospital pass and did the best you can for a terminal cancer patient"
Personal Liabilities: - I am sure they will have fully paid up comprehensive director insurance. It becomes moot if they can be liable for the actions of prior Board members.
No risk?
Hardly the case as there are many stakeholders (staff, creditors, suppliers, customers, financiers, shareholders etc) who would certainly remember just who lost them monies by tipping the company into receivership. Amazing that you think reputable individuals take their directorships & responsibilities so lightly.
Personal Liabilities - Insurance will only cover directors to a certain extent as the directors of Mainzeal found to their cost. Which individual will be a director heading into no future and receivership for sure? Again, it amazes me how lightly you think these individuals take their responsibilities and potential liabilities!
Quote from: Teitei on Jun 06, 2024, 12:09 PMNo risk?
Hardly the case as there are many stakeholders (staff, creditors, suppliers, customers, financiers, shareholders etc) who would certainly remember just who lost them monies by tipping the company into receivership. Amazing that you think reputable individuals take their directorships & responsibilities so lightly.
Personal Liabilities - Insurance will only cover directors to a certain extent as the directors of Mainzeal found to their cost. Which individual will be a director heading into no future and receivership for sure? Again, it amazes me how lightly you think these individuals take their responsibilities and potential liabilities!
I think you are talking up directors way to much, I suspect half of them don't even reside in NZ and I am also confident Bright dairies interest are at the forefront of mind of many of them rather than the long list of other stakeholders you mention
Quote from: Teitei on Jun 06, 2024, 12:09 PMNo risk?
Hardly the case as there are many stakeholders (staff, creditors, suppliers, customers, financiers, shareholders etc) who would certainly remember just who lost them monies by tipping the company into receivership. Amazing that you think reputable individuals take their directorships & responsibilities so lightly.
I think you are over emphasising this and it is distracting you. Staff, creditors, suppliers, customers, financiers, shareholders etc ( I note you have left unsecured bond holders off your list) already know Synlait is in an extremely precarious position. They know they will get little or no money if Synlait goes belly up. They have a well flagged debt default day of 15 July. There is zero hope of trading out of the debts due in the next 12 months. Whatever happens next will be subject to shareholder approval, or not. And that's not on the new Directors.
Quote from: Teitei on Jun 06, 2024, 12:09 PMPersonal Liabilities - Insurance will only cover directors to a certain extent as the directors of Mainzeal found to their cost. Which individual will be a director heading into no future and receivership for sure? Again, it amazes me how lightly you think these individuals take their responsibilities and potential liabilities!
Directors should worry if they allow the company to trade recklessly or if they fail to act with due dillignce and care.
But it worth noting that a Director needs to work in the companies best interests. Not Brights best interests. So consider that when we see the terms and conditions of the laon.
I have no idea where you get the notion I think they directors are taking their responsibilities lightly. I'm quite sure they are taking them very seriously. But they are new and Synlait is a basket case. Good luck to anyone trying to sue them (I can't say the same about the remaining long termers)
Quote from: snapiti on Jun 06, 2024, 12:29 PMI think you are talking up directors way to much, I suspect half of them don't even reside in NZ and I am also confident Bright dairies interest are at the forefront of mind of many of them rather than the long list of other stakeholders you mention
Of course Bright is foremost in their mind - only reason why they accepted the directorships in the first place. Now you are getting the picture.
Quote from: Minimoke on Jun 06, 2024, 12:37 PMI have no idea where you get the notion I think they directors are taking their responsibilities lightly. I'm quite sure they are taking them very seriously. But they are new and Synlait is a basket case. Good luck to anyone trying to sue them (I can't say the same about the remaining long termers)
No risk?
No personal liabilities?
Those are your assertions, not mine.
Quote from: Teitei on Jun 06, 2024, 12:39 PMOf course Bright is foremost in their mind - only reason why they accepted the directorships in the first place. Now you are getting the picture.
Gee. I'm very confused now. On one hand you say Director's are reputable people and won't risk their reputation or expose themselves to liabilities by joining the Synlait board.
And on the other hand you seem to ignore the key responsibility of a director which is to "act in good faith and in what the director believes to be the best interests of the company"
Quote from: Teitei on Jun 06, 2024, 12:42 PMNo risk?
No personal liabilities?
See post 915
Quote from: Minimoke on Jun 06, 2024, 12:47 PMGee. I'm very confused now. On one hand you say Director's are reputable people and won't risk their reputation or expose themselves to liabilities by joining the Synlait board.
And on the other hand you seem to ignore the key responsibility of a director which is to "act in good faith and in what the director believes to be the best interests of the company"
See post 915
Think a bit harder. It will become clear.
Bonds eh. What do I know. Lets see what Mr Market thinks. No bids at all this morning but someone is keen
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Quote from: Minimoke on Jun 06, 2024, 12:51 PMBonds eh. What do I know. Lets see what Mr Market thinks. No bids at all this morning but someone is keen
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And where are the shares trading at?
They should be close to zero, right if bondholders stand to lose anything.
No risk & no personal liabilities at all according to you for the new directors, right?
Quote from: Teitei on Jun 06, 2024, 12:53 PMAnd where are the shares trading at?
They should be close to zero, right if bondholders stand to lose anything.
Currently under $0.40. Maybe just day traders. Maybe Mr Market isn't that smart after all.
Quote from: Teitei on Jun 06, 2024, 12:53 PMNo risk & no personal liabilities at all according to you for the new directors, right?
I am struggling to think of any situation that is fully risk free. But in this case I reckon risk is as close to zero as any new Director would like to be (other than the risk associated with looking after Brights interests and not Synlaits interests)
Quote from: Minimoke on Jun 06, 2024, 12:56 PMCurrently under $0.40. Maybe just day traders. Maybe Mr Market isn't that smart after all.
Just like Mr Market wasn't that smart when SKT was trading down below 20c?
And Yili wasn't that smart paying a huge premium to takeover Westland?
Quote from: Teitei on Jun 06, 2024, 01:00 PMJust like Mr Market wasn't that smart when SKT was trading down below 20c?
And Yili wasn't that smart paying a huge premium to takeover Westland?
I don't recall when SKT was at below $0.20. Its a while since I have held them and been interested in following them.
I haven't said Yili wernt smart. And I don't know why you keep referencing them. Apples / Sausages! Good on them. Obviously they got in "cheap" - they could see the opportunity and made the most of it. Same as a new owner of Dunsandle and Pokeno will do.
Eidt. Since you are highliting unrtealted compnaies as a sound resond behind your poison. I'l ljus tcheery pick one or two sa well.
Crafer Farms. Went bust owing over $200m
Waitonui Holdings dairy fans gone bust owing $43.5m (used to be valued oat over $120m
Dairy Nutraceuticals went bust after having more liabilities than assets.
Van Leuween Dairy in receivership. $122m of assets sold. And then leased back to the Van Leuweens
McVitty Properties and Patoka Dairies go bust owing more than $70m
Organic Dairy Hub in liquidation
Quote from: Minimoke on Jun 06, 2024, 01:09 PMI don't recall when SKT was at below $0.20. Its a while since I have held them and been interested in following them.
I haven't said Yili wernt smart. And I don't know why you keep referencing them. Apples / Sausages! Good on them. Obviously they got in "cheap" - they could see the opportunity and made the most of it. Same as a new owner of Dunsandle and Pokeno will do.
SKT current sp is post 10 for 1 consolidation. Many of us loaded up at 17c during the CR (which everyone but everyone expected) and it has been a most pleasurable experience.
And imo, Bright sees the opportunity with SML just as Yili did with Westland. A bit more complex with SML due to its listed company status but end result, given the way Bright has played its chess pieces so far, will be the same. Up to existing shareholders what they want to do when the CR is underway.
Quote from: Teitei on Jun 06, 2024, 01:19 PMSKT current sp is post 10 for 1 consolidation. Many of us loaded up at 17c during the CR (which everyone but everyone expected) and it has been a most pleasurable experience.
Good for you
Quote from: Teitei on Jun 06, 2024, 01:19 PMAnd imo, Bright sees the opportunity with SML just as Yili did with Westland. A bit more complex with SML due to its listed company status but end result, given the way Bright has played its chess pieces so far, will be the same. Up to existing shareholders what they want to do when the CR is underway.
So we both agree Synlait, as we currently know it is a gone burger.
Quote from: Minimoke on Jun 06, 2024, 01:28 PMGood for youSo we both agree Synlait, as we currently know it is a gone burger.
How so?
Like SKT or Sir NZ were gone burgers before their CRs? Then we are indeed in agreement.
Quote from: Teitei on Jun 06, 2024, 01:29 PMHow so?
Like SKT or Sir NZ were gone burgers before their CRs? Then we are indeed in agreement.
As mentioned I can't comment on SKT. But AirNZ got bailed out by tax payer money (incidentally I did very, very nicely out of that Ansett kerfuffle), but really they should have been put into receivership and allowed to clear the books of the debt.
You can't have been following my posts.
So very quickly
- they have flagged the need to sell dairyworks and are looking at the sale of Pokeno. Those are major changes
- theres over $500m of debt to be paid off in the next 12 months. And cash flow won't do it.
- I don't see a debt for equity plan working (you may and if you do please explain)
- I see a debt for security over capital working. And when Synlait eventually goes bust the capital will transfer hands
- Any equity raise has to involve massive share dilution and will require approval from shareholders.
Basically if Bright have control Synlait is not the synlait of the past.
Quote from: Minimoke on Jun 06, 2024, 01:44 PMAs mentioned I can't comment on SKT. But AirNZ got bailed out by tax payer money (incidentally I did very, very nicely out of that Ansett kerfuffle), but really they should have been put into receivership and allowed to clear the books of the debt.
You can't have been following my posts.
So very quickly
- they have flagged the need to sell dairyworks and are looking at the sale of Pokeno. Those are major changes
- theres over $500m of debt to be paid off in the next 12 months. And cash flow won't do it.
- I don't see a debt for equity plan working (you may and if you do please explain)
- I see a debt for security over capital working. And when Synlait eventually goes bust the capital will transfer hands
- Any equity raise has to involve massive share dilution and will require approval from shareholders.
Basically if Bright have control Synlait is not the synlait of the past.
But of course, SML will not be the SML of the past - just it has not been since the ill-fated $400m spent on Pokeno.
But Synlait getting access to Bright's distribution channels under Bright's control (just like Westland under Yili) will gain huge leverage to the Chinese market. Not hard to see why Bright has not played that card just yet as a 39% shareholder - why give up 60% of the upside to others?
Re your other points :
1. SML under Bright will keep Dairyworks & Pokeno.
2. SML do not need to pay off all $500m of debt - $130m Bright loan + CR of $120m will bring debt to a bankable level (read China banks). Have a look at Westland's financials and you will see what I mean. Banks are in the business of lending to good credit and yes, they are fair weather sailors. As is often said, banks will lend you an umbrella on a sunny day but ask for it back when it rains.
3. I wrote a while back that I believed Bright will do a convertible note issue and I still hold that view - $130m. Will require other shareholders' approval as the note will allow Bright to increase its stake in the event of conversion. The lower the SML sp, the more favourable for Bright.
4. Debt for security will not pass as it cuts A2M completely out of contention so hard to see A2M voting for it.
5. Any CR (whether highly diltuive or not) requires shareholders' approval - refer SKT's 2.83 for 1 at 12c to raise $157m when its market cap was $85m.
Quote from: Teitei on Jun 06, 2024, 08:48 PMBut of course, SML will not be the SML of the past - just it has not been since the ill-fated $400m spent on Pokeno.
But Synlait getting access to Bright's distribution channels under Bright's control (just like Westland under Yili) will gain huge leverage to the Chinese market. Not hard to see why Bright has not played that card just yet as a 39% shareholder - why give up 60% of the upside to others?
Re your other points :
1. SML under Bright will keep Dairyworks & Pokeno.
2. SML do not need to pay off all $500m of debt - $130m Bright loan + CR of $120m will bring debt to a bankable level (read China banks). Have a look at Westland's financials and you will see what I mean. Banks are in the business of lending to good credit and yes, they are fair weather sailors. As is often said, banks will lend you an umbrella on a sunny day but ask for it back when it rains.
3. I wrote a while back that I believed Bright will do a convertible note issue and I still hold that view - $130m. Will require other shareholders' approval as the note will allow Bright to increase its stake in the event of conversion. The lower the SML sp, the more favourable for Bright.
4. Debt for security will not pass as it cuts A2M completely out of contention so hard to see A2M voting for it.
5. Any CR (whether highly diltuive or not) requires shareholders' approval - refer SKT's 2.83 for 1 at 12c to raise $157m when its market cap was $85m.
Lets test my logic and math.
Lets say the note converts at 90% of the VWAP over 5 days. And the VWAP = $0.40
This would give a price of $0.36
Which means Bright would get 361,111,111 new shares
Which would lift the registry to 597,692,772 issued shares.
Which would give Bright a 77% holding. A2 with 7.48% (was 19.38%), ACC with 1.36% (was 3.61% and John Penno 0.88% (was 2.34%)
And if pre conversion Synlait had a market cap of $87.432m. Market cap remains the same. So share price post conversion would be $0.151
Quote from: Minimoke on Jun 07, 2024, 08:46 AMLets test my logic and math.
Lets say the note converts at 90% of the VWAP over 5 days. And the VWAP = $0.40
This would give a price of $0.36
Which means Bright would get 361,111,111 new shares
Which would lift the registry to 597,692,772 issued shares.
Which would give Bright a 77% holding. A2 with 7.48% (was 19.38%), ACC with 1.36% (was 3.61% and John Penno 0.88% (was 2.34%)
And if pre conversion Synlait had a market cap of $87.432m. Market cap remains the same. So share price post conversion would be $0.151
A few points to note, assuming I am correct about a convertible note issue.
1. The conversion price is usually much higher than prevailing market sp due to the embedded conversion option in the note. Also, it could be based upon the share price closer to the note maturity date. Reference point however will be existing market sp which is why the lower it is now, the better for the holder.
2. The very fact that a shareholder with deep pockets and commitment is pumping in money and support will tend to lift the sp and market cap. In this case, unlikely as there is a CR to come.
3. Market cap will not remain the same after the conversion - it will depend on the state of the company at the time of conversion.
There's more water to flow under the bridge with SML and while Bright holds the cards, there are quite a number of regulatory and compliance issues and requirements which will have to be settled.
Quote from: Teitei on Jun 07, 2024, 09:35 AMA few points to note, assuming I am correct about a convertible note issue.
1. The conversion price is usually much higher than prevailing market sp due to the embedded conversion option in the note. Also, it could be based upon the share price closer to the note maturity date. Reference point however will be existing market sp which is why the lower it is now, the better for the holder.
2. The very fact that a shareholder with deep pockets and commitment is pumping in money and support will tend to lift the sp and market cap. In this case, unlikely as there is a CR to come.
3. Market cap will not remain the same after the conversion - it will depend on the state of the company at the time of conversion.
There's more water to flow under the bridge with SML and while Bright holds the cards, there are quite a number of regulatory and compliance issues and requirements which will have to be settled.
Thanks. I only used $0.40 as it seemed a simple number given that's the current approx SP.
But lets look a scenario that the market loves what is happening and the SP doubles to $0.80 (I Think this is highly un-realistic - but lets run with it)
I end up with 399,137,217 shares . And Bright with 66.6%, A2 with 10.86%, ACC with 1.97% and John penno with 1.28%
I've left out the Cap raise, because quite frankly my head is starting to melt. What would this do to the share registry and share price. Some much is variable with how much the cap raise is for - I reckon it needs to be at least $180m to put to bed the bonds but it could just be $50m. And at what price. I assume it would have to be at a discount to current share price.
So who would enter into a convertible note with this swinging brick of variables?
Geez - its very complicated (or Am I over complicating it?)
Quote from: Minimoke on Jun 07, 2024, 09:59 AMThanks. I only used $0.40 as it seemed a simple number given that's the current approx SP.
But lets look a scenario that the market loves what is happening and the SP doubles to $0.80 (I Think this is highly un-realistic - but lets run with it)
I end up with 399,137,217 shares . And Bright with 66.6%, A2 with 10.86%, ACC with 1.97% and John penno with 1.28%
I've left out the Cap raise, because quite frankly my head is starting to melt. What would this do to the share registry and share price. Some much is variable with how much the cap raise is for - I reckon it needs to be at least $180m to put to bed the bonds but it could just be $50m. And at what price. I assume it would have to be at a discount to current share price.
So who would enter into a convertible note with this swinging brick of variables?
Geez - its very complicated (or Am I over complicating it?)
Ball park, your numbers are correct - I get Bright ending up with 65% and A2M with 11.4% of SML if the notes convert to shares at 80c per share.
Existing # shares = 218.6m
Convertible @80c = 162.5m
Total # shares after conversion = 381.1m
As an aside, if the notes convert at 60c, Bright will end up with 70% and A2M 10%.
Bright would enter into the convertible note as it will deliver majority control. Requires other shareholders (especially A2M) to approve such an arrangement.
But hi, you could be right and the loan is simply a loan secured against an asset. That will require the waiver & agreement of the banks.
CR should be relatively simple - assuming it's pro-rata to all shareholders, the shareholdings of all shareholders will be maintained if all shareholders take up their rights. Realistically there will be a shortfall so if Bright is the underwriter, then Bright's stake will increase again depending on what is the shortfall.
Quote from: Teitei on Jun 07, 2024, 12:47 PMBall park, your numbers are correct - I get Bright ending up with 65% and A2M with 11.4% of SML if the notes convert to shares at 80c per share.
Existing # shares = 218.6m
Convertible @80c = 162.5m
Total # shares after conversion = 381.1m
As an aside, if the notes convert at 60c, Bright will end up with 70% and A2M 10%.
Bright would enter into the convertible note as it will deliver majority control. Requires other shareholders (especially A2M) to approve such an arrangement.
But hi, you could be right and the loan is simply a loan secured against an asset. That will require the waiver & agreement of the banks.
CR should be relatively simple - assuming it's pro-rata to all shareholders, the shareholdings of all shareholders will be maintained if all shareholders take up their rights. Realistically there will be a shortfall so if Bright is the underwriter, then Bright's stake will increase again depending on what is the shortfall.
So we are basically in agreement. No matter how we cut it Bright become a Majority shareholder and A2 a minnow shareholder.
Given Bright is already a more than 20% shareholder, if they increase their stake from their current position then this is a Change of Control event so the Takeover Code applies. And it takes them well over the 50% threshold
Thus shareholders have to approve both the loan arrangements and the increase in control.
Now, back to your scenario. If Bright end up with 70% through a 0.60 conversion and say another 10% as an underwriter of rights (would that happen??) they are on 80%. Which isn't far from the 90% compulsory takeover provisions. It wouldn't take much of a turn in the share price to increase the convertible allocation and thus over 90% and full takeover happens.
I think I said this earlier - Synlait is no more.
It seems people here either are not aware or ignore the fact that Bright already has ultimate control over Synlait since 2010 when it became a major shareholder with 51% and by way of special arrangement since IPO with 39%. They won't gain any more control by increasing their shareholding. But what will happen if they decide to do so, their special arrangement will be canceled and by standard rules they would have to make full takeover offer and if such offer accepted by other shareholders Bright will end up solely responsible for half a billion dollars debt which Synlait currently has and production capacity no-one needs. I don't think they are really keen on that.
Also you need to review long standing assumption that A2M have no choice and have no say in all of that. DB is on record as saying that the need for A2M of having a blocking stake in Synlait is no longer the case. It was some years ago but not any longer. Without A2M orders Synlait is worthless as it accounts for about 40-50% of revenue. Supply agreement between A2M and Synlait will stand regardless of who is the owner (probably except bankruptcy case) and no owner in their right mind will cancel it. By not participating in possible CR A2M will either force Bright to make full takeover offer (see above) or find someone else to replace A2M as shareholder. A2m in that case could have some advantages to negotiate removal of "exclusivity clause" in exchange for maintaining its stake. This is what I would do.
Quote from: CG on Jun 07, 2024, 01:58 PMIt seems people here either are not aware or ignore the fact that Bright already has ultimate control over Synlait since 2010 when it became a major shareholder with 51% and by way of special arrangement since IPO with 39%.
The special arrangement has been mentioned before below.
This changed in 2013 with a new constitution that provided for Bright having up to 4 directors for so long as their shareholding was between 37 and 50%.
If their ownership level drops below the initial level then they risk losing a director. Hence they can be guaranteed to participate in a capital raise where new equity comes into play. But. If they get more than 50% of the company then they right to the 4 board member ceases all together. At which point there has to be at least 3 and no more than 8 directors.
There also needs to be at least 3 independent directors.
Quote from: CG on Jun 07, 2024, 01:58 PMThey won't gain any more control by increasing their shareholding. But what will happen if they decide to do so, their special arrangement will be canceled and by standard rules they would have to make full takeover offer and if such offer accepted by other shareholders Bright will end up solely responsible for half a billion dollars debt which Synlait currently has and production capacity no-one needs. I don't think they are really keen on that.
Also you need to review long standing assumption that A2M have no choice and have no say in all of that. DB is on record as saying that the need for A2M of having a blocking stake in Synlait is no longer the case. It was some years ago but not any longer. Without A2M orders Synlait is worthless as it accounts for about 40-50% of revenue. Supply agreement between A2M and Synlait will stand regardless of who is the owner (probably except bankruptcy case) and no owner in their right mind will cancel it. By not participating in possible CR A2M will either force Bright to make full takeover offer (see above) or find someone else to replace A2M as shareholder. A2m in that case could have some advantages to negotiate removal of "exclusivity clause" in exchange for maintaining its stake. This is what I would do.
A2, as I recall is still a bit limited in getting Chinese Label produced locally. I think they can get some out of Yashelli in auckland (as they have SAMR) but doubt this will meet market needs. Mataura is still a way form being fully functional.
As an aside A2, given the recent waiver A2 might now be more than 50% of Synlaits revenue.
All that said, I'm still not sure what Bright gets out of the synlait ownership.
Quote from: Minimoke on Jun 07, 2024, 02:36 PMA2, as I recall is still a bit limited in getting Chinese Label produced locally. I think they can get some out of Yashelli in auckland (as they have SAMR) but doubt this will meet market needs. Mataura is still a way form being fully functional.
As an aside A2, given the recent waiver A2 might now be more than 50% of Synlaits revenue.
All that said, I'm still not sure what Bright gets out of the synlait ownership.
Platinum Chinese label will be produced by Synlait for long time. A2M have no intentions to cancel the contract, not at this stage anyway. Contract can be terminated by either party on three years' notice. Whoever will own Synlait would have to supply a2 platinum for at least another 3 years.
Yashelli's SAMR or anyone's SAMR for that matter has nothing to do with anything. SAMR is "attached" to production facility + product. A2M would have to obtain a new SAMR for any new Chinese label product produced by Synlait at Dunsandel or any new or existing product produced by anyone else including Synlait at Pokeno. I understand A2M currently getting ready to introduce another ultra premium product for Chinese market and I suspect they will apply for new SAMR for that product, I just don't know where production will be.
From full ownership Bright will get more headache.
Crikey, it's interesting..... and complicated. Thanks all for your contributions.
Quote from: CG on Jun 07, 2024, 03:18 PMPlatinum Chinese label will be produced by Synlait for long time. A2M have no intentions to cancel the contract, not at this stage anyway. Contract can be terminated by either party on three years' notice. Whoever will own Synlait would have to supply a2 platinum for at least another 3 years.
The SAMR will be for Synlait Ltd Dunsandel. If Synlait no longer exists what then? The new owner of Dunsandel can't be forced into a contractual relationship with A2.
I wonder how long it would take for a new SAMR with new owners name on it.
Quote from: CG on Jun 07, 2024, 03:18 PMYashelli's SAMR or anyone's SAMR for that matter has nothing to do with anything. SAMR is "attached" to production facility + product. A2M would have to obtain a new SAMR for any new Chinese label product produced by Synlait at Dunsandel or any new or existing product produced by anyone else including Synlait at Pokeno. I understand A2M currently getting ready to introduce another ultra premium product for Chinese market and I suspect they will apply for new SAMR for that product, I just don't know where production will be.
From full ownership Bright will get more headache.
I mentioned Yashili because they are already processing A2 protein only milk. Which means they have production lines geared to keep A1 protein out.
I wouldn't be surprised if A2 are introducing a new product. They are not very good at letting the market know of these things and they are usually discovered through social media.
A2M has contracted Yashili to produce A2 Gentle Gold from its Pokeno plant. Scheduled to be launched in 2H2024.
Quote from: Teitei on Jun 07, 2024, 03:50 PMA2 Gentle Gold
A2 Gentle Gold is not ultra premium and has been on the shelves in AU and China (online) for a couple of months now. I was talking about new ultra premium product (I don't think it has been named yet) due 1H25FY
Quote from: Left Field on Jun 07, 2024, 03:20 PMCrikey, it's interesting..... and complicated. Thanks all for your contributions.
There really will be text books written about Synlait.
Quote from: Minimoke on Jun 07, 2024, 03:27 PMThe SAMR will be for Synlait Ltd Dunsandel. If Synlait no longer exists what then? The new owner of Dunsandel can't be forced into a contractual relationship with A2.
I wonder how long it would take for a new SAMR with new owners name on it.
If production facility changing hands in sale/purchase agreement reconfirming SAMR is usually a part of that agreement and confirmation itself is usually a matter of signing up relevant papers by Chinese authorities. So far I haven't heard that somebody had any problems with that.
Also, usually with the purchase new owner takes on all obligations (unless business is a bankrupt) including (but not limited) contracts and debt repayments. They can cancel contract as stated above, but as I said before no owner in their right mind would do that in this situation.
Quote from: Minimoke on Jun 07, 2024, 04:26 PMThere really will be text books written about Synlait.
.... and A2. My interest has been in the whole A2 story right from the initial research and then the big step via a 'capital light' marketing brand based approach.
The key for A2 now is how it transitions from 'capital light' to 'dedicated A2 production.'.... or a mix of the two with contracted production still playing a role (well at least for the next 3 yrs or so.)
One thing that may have been overlooked in your discussions is ATM's ongoing litigation with SML. Not a major card.... but still an interesting card yet to be played..... and possibly worth a few $ million extra costs to SML.
FWIW I still hold some 'free-hold' ATM and am keen to ramp my ATM up again if/when I see which way the wind blows in the possible deals you and Teitei (and more recently CG) outline so well.
Why Bright Dairy Can't and Won't let Synlait fail
https://businessdesk.co.nz/article/primary-sector/why-bright-dairy-cant-and-wont-let-synlait-fail
paywalled
Quote from: Left Field on Jun 07, 2024, 05:02 PMOne thing that may have been overlooked in your discussions is ATM's ongoing litigation with SML. Not a major card.... but still an interesting card yet to be played..... and possibly worth a few $ million extra costs to SML.
Afaik there is no ongoing
litigation between A2M and Synlait. I suspect what you meant was "confidential binding
arbitration process to determine the validity of the notice of cancellation of the exclusivity arrangements under the NPMSA". To be honest, I do not see it as some major event that could significantly change course of direction for either company in the near term. If the notice stands A2M will have their hands untied with ability to source a2 platinum for China and AU/NZ markets from any other supplier. It might and will reduce Synlait's involvement in production but it will not happen overnight. If Synlait wins - it's pretty much business as usual for now and A2M will need to find a way how to overcome that exclusivity and this is what they are working on now by developing new products with new partners, looking to apply for another SAMR and possibly will give notice of cancelation to Synlait later down the track
How odd. Bright don't have approval from their baord yet to advance the loan.
"As the specific matters of this loan are still in the negotiation process, there are uncertainties, and they still need to be submitted to the board of directors of the company, the board of directors of New Zealand Synlaite and the general meeting of shareholders for deliberation, there is a risk of failure to pass the approval, please pay attention to the investment risks. The company will fulfill the information disclosure obligation in a timely manner according to the progress of the loan, and investors are requested to refer to the announcement issued by the company. 1 2 Notice is hereby made. Board of Directors of Bright Dairy Co., Ltd. 4 June 2024
Quote from: Minimoke on Jun 09, 2024, 10:05 AMHow odd. Bright don't have approval from their baord yet to advance the loan.
"As the specific matters of this loan are still in the negotiation process, there are uncertainties, and they still need to be submitted to the board of directors of the company, the board of directors of New Zealand Synlaite and the general meeting of shareholders for deliberation, there is a risk of failure to pass the approval, please pay attention to the investment risks. The company will fulfill the information disclosure obligation in a timely manner according to the progress of the loan, and investors are requested to refer to the announcement issued by the company. 1 2 Notice is hereby made. Board of Directors of Bright Dairy Co., Ltd. 4 June 2024
Nothing odd at all.
Need to read the whole article to get an appreciation of why Bright issued the warning.
Businessweek is particularly vigilant about protecting the copyright of its articles so if you want to know more, you are simply going to have to subscribe.
Quote from: Teitei on Jun 10, 2024, 10:11 AMNothing odd at all.
Need to read the whole article to get an appreciation of why Bright issued the warning.
Businessweek is particularly vigilant about protecting the copyright of its articles so if you want to know more, you are simply going to have to subscribe.
Its a quote from a stock exchange announcement. Not a businessweek article.
Quote from: Minimoke on Jun 10, 2024, 10:40 AMIts a quote from a stock exchange announcement. Not a businessweek article.
The official announcement is available from the SSE here (http://english.sse.com.cn/markets/equities/announcements/detail.shtml?seq/1437201/date/20240605), in Chinese.
Here's a translation, courtesy of ChatGPT (not proofread for accuracy):
QuoteStock Code: 600597
Stock Abbreviation: Bright Dairy
Announcement Number: Temporary 2024-021
Bright Dairy & Food Co., Ltd.
Indicative Announcement on Providing Loans to Subsidiary Synlait in New Zealand
The board of directors and all directors of the company guarantee that the content of this announcement does not contain any false records, misleading statements, or major omissions, and bear legal responsibility for the truthfulness, accuracy, and completeness of its content.
Important Risk Alerts:
The matter of providing loans to the subsidiary Synlait in New Zealand needs to be submitted to the company's board of directors, the board of directors of Synlait in New Zealand, and the shareholders' meeting for review. There is a risk of not passing the approval, and investors are advised to pay attention to the investment risk.
The matter of providing loans to the subsidiary Synlait in New Zealand needs to be filed with the Shanghai State-owned Assets Supervision and Administration Commission (SASAC).
Bright Dairy & Food Co., Ltd. (hereinafter referred to as "the company") subsidiary Synlait Milk Limited in New Zealand (hereinafter referred to as "Synlait in New Zealand") released an announcement titled "Market Update: Deleveraging Plan, Bank Covenants, and Guidance" on the Australian Securities Exchange on June 3, 2024. This announcement mentioned that the company plans to provide a loan of NZD 130 million to Synlait in New Zealand.
The company intends to provide a loan of NZD 130 million to Synlait in New Zealand (hereinafter referred to as "this loan"). Specific matters are still under negotiation. According to relevant regulations, this loan needs to be submitted to the company's board of directors, the board of directors of Synlait in New Zealand, and the shareholders' meeting for review. In accordance with relevant regulations, this loan needs to be filed with the Shanghai SASAC.
As specific matters regarding this loan are still under negotiation and need to be submitted to the company's board of directors, the board of directors of Synlait in New Zealand, and the shareholders' meeting for review, there is a risk of not passing the approval. Investors are advised to pay attention to the investment risk. The company will timely fulfill its information disclosure obligations according to the progress of this loan matter. Investors are advised to refer to the announcements issued by the company.
Hereby announced.
Board of Directors of Bright Dairy & Food Co., Ltd.
June 4, 2024
BTW, it's interesting that Bright seems to be referring to Synlait as their subsidiary.
Not sure if that's a mistranslation, a misunderstanding on their part, or if they're tipping their hand as to where they see this heading.
Quote from: bulltrap on Jun 10, 2024, 11:47 AMBTW, it's interesting that Bright seems to be referring to Synlait as their subsidiary.
Not sure if that's a mistranslation, a misunderstanding on their part, or if they're tipping their hand as to where they see this heading.
Lost in translation?
Quote from: bulltrap on Jun 10, 2024, 11:24 AMThe official announcement is available from the SSE here (http://english.sse.com.cn/markets/equities/announcements/detail.shtml?seq/1437201/date/20240605), in Chinese.
Here's a translation, courtesy of ChatGPT (not proofread for accuracy):
Yup. Just as I said.
Quote from: bulltrap on Jun 10, 2024, 11:47 AMBTW, it's interesting that Bright seems to be referring to Synlait as their subsidiary.
Not sure if that's a mistranslation, a misunderstanding on their part, or if they're tipping their hand as to where they see this heading.
A subsidiary is (according to Dr. Google) "a company controlled by a holding company"
Bright Dairy does control Synlait, i.e. - the text only describes the facts.
Note: control does not mean fully owned ...
Quote from: BlackPeter on Jun 10, 2024, 12:32 PMA subsidiary is (according to Dr. Google) "a company controlled by a holding company"
Bright Dairy does control Synlait, i.e. - the text only describes the facts.
Note: control does not mean fully owned ...
Majority ownership is generally a condition for a company being considered a subsidiary. (Which makes sense, considering a company can only be a subsidiary of at most one holding company.)
Can you cite anything official not from Bright, that claims Synlait is a subsidiary of Bright?
This page (https://www.synlait.com/history/) on Synlait's website is curious - it mentions Bright taking a 51% stake, but not that it no longer holds a majority stake. Good information is hard to come by.
Quote from: bulltrap on Jun 10, 2024, 02:36 PMMajority ownership is generally a condition for a company being considered a subsidiary. (Which makes sense, considering a company can only be a subsidiary of at most one holding company.)
Can you cite anything official not from Bright, that claims Synlait is a subsidiary of Bright?
This page (https://www.synlait.com/history/) on Synlait's website is curious - it mentions Bright taking a 51% stake, but not that it no longer holds a majority stake. Good information is hard to come by.
Have a look at the NZX exemption Synlait has. Bright always kept board control, even after they gave up their 51% majority. 4 of 8 board seats are determined by Bright.
The following is a link to Synlait's waiver application ... looks however NZX purged it in its database (its 11 years old):
https://www.nzx.com/regulators/NZXR/announcements/237725
Clearly - dataspace is more expensive than full disclosure :). Better don't rely on the NZX, a good memory is priceless :);
Anyway - I found a newer copy of the waiver ... here it is:
https://www.nzx.com/announcements/420643
The document that nobody read but has information everyone wants to know is here https://www.synlait.com/wp-content/uploads/2018/10/Synlait-Milk-Investment-Statement-and-Prospectus_Make-More-From-Milk.pdf
You all might be interested in section 1.3 in particular.
Quote from: bulltrap on Jun 10, 2024, 02:36 PMMajority ownership is generally a condition for a company being considered a subsidiary. (Which makes sense, considering a company can only be a subsidiary of at most one holding company.)
Can you cite anything official not from Bright, that claims Synlait is a subsidiary of Bright?
This page (https://www.synlait.com/history/) on Synlait's website is curious - it mentions Bright taking a 51% stake, but not that it no longer holds a majority stake. Good information is hard to come by.
Bright used to hold 51% of Synlait.
But in 2013 synalit listed via IPO on stock exchange as part of a capital raise exercise.
Bright Choose not to keep its 51% holding.
But part of the deal was that Bright would hold 39.01% of the company. Obviously not a majority.
Also part of the deal was that Bright would be entitled to have up to 4 Directors on a Board that could have up to 8 Directors.
This was subject to Brights holding not dipping below 37%. If it did then they would loose a proportional board seat. This is one reason why Bright will have participated in recent capital raises. And why they will continue to do so.
It can't go over 50% because that then starts to trigger take-over rules.
Bright does not have control over Synlait. Ultimately Shareholders do as they are the ones that vote the Resolutions. And as mentioned above Bright only have 39>01% of the vote. Nore do they hold a majority on the Board. For ages there has been 8 Board members - 4 Bright and then a mix of Independent and/or Board nominated.
Synlait is neither a subsidiary of Bright not majority owned but Bright nor Controlled by Bright.
China however may have a different interpretation of what a "subsidiary" means. It could be as simple as something like "holding more than 10 % in a company". (Who knows - sorry I cant be bothered looking up chinese company law)
Edit - to add from the post below "will give Bright Dairy significant influence over the Board". This does not mean control.
Quote from: CG on Jun 10, 2024, 03:21 PMThe document that nobody read but has information everyone wants to know is here https://www.synlait.com/wp-content/uploads/2018/10/Synlait-Milk-Investment-Statement-and-Prospectus_Make-More-From-Milk.pdf
You all might be interested in section 1.3 in particular.
Thanks, I had a look, and confirmed that it isn't stated that Synlait post-IPO (or even pre-IPO) would be a subsidiary company, or that Bright Dairy would be the parent entity/company, or words to that effect.
It does however say that Bright has the special power of appointing 4 of up to 8 directors (hence the NZX waivers), and that there would actually be 7 directors. (I'm still not clear to what extent having a majority of 4/7 directors gives Bright 'control' of Synlait.)
It also says that Synlait's accounts would continue to roll up into Bright's. Perhaps it's this accounting concern that motivates the use of the word 'subsidiary' in the SSE releases.
Quote from: bulltrap on Jun 10, 2024, 03:47 PMThanks, I had a look, and confirmed that it isn't stated that Synlait post-IPO (or even pre-IPO) would be a subsidiary company, or that Bright Dairy would be the parent entity/company, or words to that effect.
It does however say that Bright has the special power of appointing 4 of up to 8 directors (hence the NZX waivers), and that there would actually be 7 directors. (I'm still not clear to what extent having a majority of 4/7 directors gives Bright 'control' of Synlait.)
It also says that Synlait's accounts would continue to roll up into Bright's. Perhaps it's this accounting concern that motivates the use of the word 'subsidiary' in the SSE releases.
As I pointed out in a post below the board was made up of 8 directors and has been for ages.
At the moment it only has 7 board members due to the resignation of John Penno. The Board has publicly stated they are searching for a replace of John. Thus bringing it back up to 8 again.
Maybe the "subsidiary" confusion comes from Bright Dairy Holding Limited being a subsidiary of Bright Dairy and Food Co Limited
Interpretation of written statements is also important.
A company is a subsidiary if another company:
(i) controls the make-up of its board
(ii) controls more than half of the maximum number of votes at company meetings
(iii)holds more than half of the shares, or
(iv) is entitled to receive more than half of every share dividend.
Companies Act 1993 — Section 5
New Zealand Legislation
Bright used to own 51% of shares (iii) So, by definition Synlait was a subsidiary.
Now, Bright effectively controls the make-up of its board (i). This is from document I posted above
1)
Non-standard Constitution on listing:
On listing, Synlait Milk will have a non-standard
Constitution for a listed company and Bright
Dairy will have the constitutional rights described
in Section 4.2 (Board, Management and Corporate
Governance). As a consequence, while Synlait
Milk has a non-standard Constitution, Bright
Dairy may have the ability to control the outcome
of Board decisions on certain matters. However,
all Directors, including those appointed by Bright
Dairy, must, under the Companies Act, act in the
best interests of Synlait Milk. The interests of
Bright Dairy as a Shareholder may not necessarily
coincide with those of other Shareholders.
However, as a major Shareholder it may be able to
block or exercise a large degree of infl uence over
resolutions put to Shareholders (whether that be
an ordinary or special resolution)
2) Appointment / Removal of Managing Director
Appointed by the Board but Bright Dairy appointees to the
Board will have four (4) out of seven (7) votes on the Board
regarding the appointment or removal of a Managing Director
(as the Managing Director will be disqualifi ed from voting).
Accordingly, Bright Dairy will, in practice, have the ability to
control the appointment / removal of the Managing Director.
John Penno was Managing Director and/or Board Appointed Director which means he was appointed (and most likely removed) by Bright. So, effectively Bright control the Board. And now Bright have four (4) out of seven (7) which is means they still in control. Appointment of another (8th) director will be decided by Bright as well.
Well, maybe it looks like not a clear cut with (i) but I'd say Synlait is still a subsidiary.
It's not like it's any matter to the current situation. Just pointing out.
Quote from: CG on Jun 10, 2024, 05:01 PMInterpretation of written statements is also important.
A company is a subsidiary if another company:
(i) controls the make-up of its board
(ii) controls more than half of the maximum number of votes at company meetings
(iii)holds more than half of the shares, or
(iv) is entitled to receive more than half of every share dividend.
Companies Act 1993 — Section 5
New Zealand Legislation
Bright used to own 51% of shares (iii) So, by definition Synlait was a subsidiary.
Now, Bright effectively controls the make-up of its board (i). This is from document I posted above
1)
Non-standard Constitution on listing:
On listing, Synlait Milk will have a non-standard
Constitution for a listed company and Bright
Dairy will have the constitutional rights described
in Section 4.2 (Board, Management and Corporate
Governance). As a consequence, while Synlait
Milk has a non-standard Constitution, Bright
Dairy may have the ability to control the outcome
of Board decisions on certain matters. However,
all Directors, including those appointed by Bright
Dairy, must, under the Companies Act, act in the
best interests of Synlait Milk. The interests of
Bright Dairy as a Shareholder may not necessarily
coincide with those of other Shareholders.
However, as a major Shareholder it may be able to
block or exercise a large degree of infl uence over
resolutions put to Shareholders (whether that be
an ordinary or special resolution)
2) Appointment / Removal of Managing Director
Appointed by the Board but Bright Dairy appointees to the
Board will have four (4) out of seven (7) votes on the Board
regarding the appointment or removal of a Managing Director
(as the Managing Director will be disqualifi ed from voting).
Accordingly, Bright Dairy will, in practice, have the ability to
control the appointment / removal of the Managing Director.
John Penno was Managing Director and/or Board Appointed Director which means he was appointed (and most likely removed) by Bright. So, effectively Bright control the Board. And now Bright have four (4) out of seven (7) which is means they still in control. Appointment of another (8th) director will be decided by Bright as well.
Well, maybe it looks like not a clear cut with (i) but I'd say Synlait is still a subsidiary.
It's not like it's any matter to the current situation. Just pointing out.
S5(1)(a) (i) is what I think you are referring to which says
"controls the composition of the board of the company"I think you are referring to the IPO document. The more relevant and up to date document for referral is the company constitution (which is a non standard constitution because of this clause) which says (in brief)
"From the time the Company is Listed, for so long as the Bright Shareholder continues to hold between the Initial Percentage and
50% of the ordinary Shares of the Company and is a Bright Group Company, subject to the Initial Percentage being not less than
37% of the ordinary Shares of the Company at the time the Company is Listed, the following provisions of this Part A of Schedule 1 shall apply: 1.
The Bright Shareholder has the right to appoint four (4) Directors to the Board (the Bright Directors), and to remove such Directors from time to time by notice in writing to the Company.
And
" the minimum number of Independent Directors shall be three (3)"
So basically up to 4 Bright Directors (subject to Bright not dropping below 37%) and a minimum of 3 Independent directs. Plus more. Which is why there has been 8 Directors and the intention has been stated to restore back to 8 post Pennos resignation.
Quote from: CG on Jun 10, 2024, 05:01 PMInterpretation of written statements is also important.
A company is a subsidiary if another company:
(i) controls the make-up of its board
(ii) controls more than half of the maximum number of votes at company meetings
(iii)holds more than half of the shares, or
(iv) is entitled to receive more than half of every share dividend.
Companies Act 1993 — Section 5
New Zealand Legislation
Bright used to own 51% of shares (iii) So, by definition Synlait was a subsidiary.
Now, Bright effectively controls the make-up of its board (i).
IANAL, but as there are required to be independent directors on the board, it's not evident to me that Bright 'controls the make-up of the board'.
That being the case, it appears Synlait was, but ceased to be, a subsidiary in the course of the IPO.
You'd think the offer document would be clearer on whose company this is :o
Quote from: Minimoke on Jun 10, 2024, 05:14 PMS5(1)(a) (i) is what I think you are referring to which says "controls the composition of the board of the company"
I think you are referring to the IPO document. The more relevant and up to date document for referral is the company constitution (which is a non standard constitution because of this clause) which says (in brief)
"From the time the Company is Listed, for so long as the Bright Shareholder continues to hold between the Initial Percentage and 50% of the ordinary Shares of the Company and is a Bright Group Company, subject to the Initial Percentage being not less than 37% of the ordinary Shares of the Company at the time the Company is Listed, the following provisions of this Part A of Schedule 1 shall apply: 1. The Bright Shareholder has the right to appoint four (4) Directors to the Board (the Bright Directors), and to remove such Directors from time to time by notice in writing to the Company.
And
" the minimum number of Independent Directors shall be three (3)"
So basically up to 4 Bright Directors (subject to Bright not dropping below 37%) and a minimum of 3 Independent directs. Plus more. Which is why there has been 8 Directors and the intention has been stated to restore back to 8 post Pennos resignation.
I did not check word by word but seems the company constitution and IPO document state exactly the same about directors appointment.
Are you saying that because Bright can not elect/remove three (3) independent directors they can't control the board of 8? Well, as I pointed out Penno was elected by them and probably removed. So, that situation with directors is open to interpretation. This is why I said it's not a clear cut but in the real world I'd say Bright in a driver seat.
Quote from: bulltrap on Jun 10, 2024, 05:23 PMIANAL, but as there are required to be independent directors on the board, it's not evident to me that Bright 'controls the make-up of the board'.
That being the case, it appears Synlait was, but ceased to be, a subsidiary in the course of the IPO.
You'd think the offer document would be clearer on whose company this is :o
Pre IPO Bright was the majority shareholder of Synlait. This gave them the right to appoint and remove 4 directors. This was when the board had to contain no fewer than 4 directors and up to 7. So bright could essentially control the Board. But Synlait (as the Significant Shareholder) was also entitled to appoint 3 Directors. These were the only 2 shareholders back then.
Post IPO they still had this right but it was refined so it was up to 4 directors within that 37% - 50% shareholding. Synlait lost the right to have directors. But there was the opportunity to have up to 8 directors - 4 being Bright's.
Quote from: CG on Jun 10, 2024, 05:39 PMI did not check word by word but seems the company constitution and IPO document state exactly the same about directors appointment.
Are you saying that because Bright can not elect/remove three (3) independent directors they can't control the board of 8? Well, as I pointed out Penno was elected by them and probably removed. So, that situation with directors is open to interpretation. This is why I said it's not a clear cut but in the real world I'd say Bright in a driver seat.
This kind of begs the question. Who actually was in real control.
Was it indeed Bright. Or was it Penno. Or was it the CEO.
I'm not convinced it was Bright - as I have said earlier I think Synlait have struggled from being a Mom and Pop family type business to a proper corporate.
Because it seems to me these past few years has lacked any sort of control at all. Just whims to build and borrow more.
Quote from: bulltrap on Jun 10, 2024, 05:23 PMIANAL, but as there are required to be independent directors on the board, it's not evident to me that Bright 'controls the make-up of the board'.
That being the case, it appears Synlait was, but ceased to be, a subsidiary in the course of the IPO.
You'd think the offer document would be clearer on whose company this is :o
Neither am I. But such situation helps to understand why a lawyer is one of the highest paid profession in the world ;D
Quote from: Minimoke on Jun 10, 2024, 05:44 PMThis kind of begs the question. Who actually was in real control.
Was it indeed Bright. Or was it Penno. Or was it the CEO.
I'm not convinced it was Bright - as I have said earlier I think Synlait have struggled from being a Mom and Pop family type business to a proper corporate.
Because it seems to me these past few years has lacked any sort of control at all. Just whims to build and borrow more.
I never was interested in Synlait from an investment point of view and currently looking at it just out of curiosity. This is what I found and maybe this can help to understand Synlait - Bright relationship up untill now.
Penno talking about Bright 10 years ago
"They invested as a major shareholder in a privately-owned company. They then supported the company to grow and develop, didn't intervene in management at all, just allowed it to carry on and execute its strategy, and then allowed themselves to be diluted though an IPO process. And in the meantime quite happy to never take a dividend.
"Forget about the fact they are Chinese. They have been the perfect financial investor. New Zealand financial investors could learn one hell of a lot from watching how they have behaved."
"Synlait had been looking for a patient, long-term investor, not demanding returns immediately and willing to pour the profits back into the company year after year.
"And we happened to find it in China," Penno says.
Bright Dairy had proven "a jolly good choice".https://www.stuff.co.nz/business/farming/dairy/10522246/Synlait-focused-on-future
Quote from: CG on Jun 10, 2024, 06:24 PMI never was interested in Synlait from an investment point of view and currently looking at it just out of curiosity. This is what I found and maybe this can help to understand Synlait - Bright relationship up untill now.
Penno talking about Bright 10 years ago
"They invested as a major shareholder in a privately-owned company. They then supported the company to grow and develop, didn't intervene in management at all, just allowed it to carry on and execute its strategy, and then allowed themselves to be diluted though an IPO process. And in the meantime quite happy to never take a dividend.
"Forget about the fact they are Chinese. They have been the perfect financial investor. New Zealand financial investors could learn one hell of a lot from watching how they have behaved."
"Synlait had been looking for a patient, long-term investor, not demanding returns immediately and willing to pour the profits back into the company year after year.
"And we happened to find it in China," Penno says.
Bright Dairy had proven "a jolly good choice".
https://www.stuff.co.nz/business/farming/dairy/10522246/Synlait-focused-on-future
Intersting. When he says "didn't intervene in management at all," seems to confirm what I have thought.
And also seems to indicate Bright havent / don't actually control the company
Quote from: Minimoke on Jun 10, 2024, 06:49 PMIntersting. When he says "didn't intervene in management at all," seems to confirm what I have thought.
And also seems to indicate Bright havent / don't actually control the company
It appears you firmly have blinkers on with this investment..how is that working out for you
@snapati Feel free to share your investment argument in favour of Synlait.
In the mean time, heres a chart of A2 and Synlait. Who do we reckon is in the behind the scenes driving seat?
sm1.png
Quote from: snapiti on Jun 11, 2024, 12:40 PMIt appears you firmly have blinkers on with this investment..how is that working out for you
I started this thread nearly 2 years ago. SP then was $3.36. Today its $0.355. So Id say "exceptionally well!"
I have nothing positive to say about the company,just making an observation
Now trades are getting down to the pennies in the pound level, interesting that each $0.005 drop in SP wipes another $1,000,000 off the market value. Which might not seem like much. But it is when you are only now worth $74 million
Chris Lee rips the bandaid off. Worth a read https://www.chrislee.co.nz/taking-stock
Quote from: Buzz on Jun 13, 2024, 07:17 PMChris Lee rips the bandaid off. Worth a read https://www.chrislee.co.nz/taking-stock
I guess Teitei/Balance will be happy that Chris Lee agrees that SML bondholders are likely to get their money back.... though maybe delayed. Gutsy call by Balance.
Quote from: Buzz on Jun 13, 2024, 07:17 PMChris Lee rips the bandaid off. Worth a read https://www.chrislee.co.nz/taking-stock
He a bit late to the party. Things we have been discussing here for ages. I don't share his view on the bonds. But really. Who knows?
What are bonds telling us today?
sm1.png
And who or what is keeping the SP propped up. Every day there are loads of these 1,000 parcels being traded.
sm1.png
Closed today down to $0.32. Which make market cap now worth less than $70m
And bonds crossed at close on 160%
At what point does the market regulator step in?
Big question now is: Does Synlait have the money to pay the interest due on Monday?
Why does the regulator need to step in? The market is aware of Synlait's financial position, including its ability to continue as a going concern, its covenants, and some are more bullish than others.
In my opinion, for now, it remains buyer beware.
Quote from: Left Field on Jun 13, 2024, 09:00 PMI guess Teitei/Balance will be happy that Chris Lee agrees that SML bondholders are likely to get their money back.... though maybe delayed. Gutsy call by Balance.
Through what path do bond holders get their money back other than if there is a change of control event? I would not expect the banks to want to reach a deal to sell Synlait's assets fairly quickly, ie, a fire sale. I can see them getting something back, but perhaps not all.
Quote from: SemiStrongForm on Jun 14, 2024, 06:11 PMWhy does the regulator need to step in? The market is aware of Synlait's financial position, including its ability to continue as a going concern, its covenants, and some are more bullish than others.
In my opinion, for now, it remains buyer beware.
But the market isn't informed. On 3rd April Synlait announced a $130m rescue package. But they still haven't told the market what the terms of that deal are. In the absence of this information Synlait has lost 25% value in 2 weeks. If they had gained 25% over this time in a vacuum of information questions would be asked.
Quote from: Minimoke on Jun 15, 2024, 09:03 AMBut the market isn't informed. On 3rd April Synlait announced a $130m rescue package. But they still haven't told the market what the terms of that deal are. In the absence of this information Synlait has lost 25% value in 2 weeks. If they had gained 25% over this time in a vacuum of information questions would be asked.
The answer of course is that SML is cum-CR.
Everybody but everybody knows that a pending CR results in a sp falling - refer Sky TV, Air NZ and Ryman.
Ryman imo should have been suspended from trading as the market was definitely two tiered leading to the CR - instos in the know vs retail investors blissfully unaware.
As Synlait today dips below $0.30 we are in the Final Countdown. 8 working days left to update market on details of $130m loan so shareholder approval can be gained.
Edit - Market closed today at $0.30 giving it a market cap of $65.5m
Quote from: Minimoke on Jun 17, 2024, 03:39 PMAs Synlait today dips below $0.30 we are in the Final Countdown. 8 working days left to update market on details of $130m loan so shareholder approval can be gained.
Edit - Market closed today at $0.30 giving it a market cap of $65.5m
Banks will give another extension if required.
Just chill and enjoy the drama.
Quote from: Teitei on Jun 17, 2024, 05:59 PMBanks will give another extension if required.
Just chill and enjoy the drama.
Back in September the banks wanted their $130m ( or more) back by 31 March. Back then the SP was $1.13
Then on 2 April banks extended time frame out to 15 July. Back then SP was $0.70.
I reckon banks patience is wearing out, and they are a bit more relaxed now Bright is apparently coming to the party.
Quote from: Minimoke on Jun 18, 2024, 06:38 AMBack in September the banks wanted their $130m ( or more) back by 31 March. Back then the SP was $1.13
Then on 2 April banks extended time frame out to 15 July. Back then SP was $0.70.
I reckon banks patience is wearing out, and they are a bit more relaxed now Bright is apparently coming to the party.
Sp is cum-CR.
And it will continue to drop until the CR is announced.
Just like Sky TV, FBU and Ryman.
Simple, no need to look too hard for answers.
Quote from: Teitei on Jun 18, 2024, 09:19 AMSp is cum-CR.
And it will continue to drop until the CR is announced.
Just like Sky TV, FBU and Ryman.
Simple, no need to look too hard for answers.
Well. Yes and no.
Yes we know they need a large amount of new capital.
But no because we have no idea on what a capital raise will look like.
All we do know is they have a few days to release details of a loan.
Then we know, assuming that loan is approved Synlait will still be in breach of 3 banking covenants.
And we can assume, perhaps, banks will work on waivers to the covenants. But still fast looming is the need for another $180m in November. Making it around a minimum of $310m needed for a cap raise.
Maybe CR at 10 cents owed by a 1 for 20 consolidation and hey ho share price back over 2 bucks
Quote from: Minimoke on Jun 18, 2024, 10:06 AMWell. Yes and no.
Yes we know they need a large amount of new capital.
But no because we have no idea on what a capital raise will look like.
All we do know is they have a few days to release details of a loan.
Then we know, assuming that loan is approved Synlait will still be in breach of 3 banking covenants.
And we can assume, perhaps, banks will work on waivers to the covenants. But still fast looming is the need for another $180m in November. Making it around a minimum of $310m needed for a cap raise.
Did anyone know what the capital raisings of Sky TV, FBU or Ryman were looking like before they were announced? No - because that is the nature of capital raisings and the reason why share prices of companies cum-CR always drop and drop until such time as the CRs are announced.
Re your countdown towards when SML needs to release details of the loan, I have already posted that the banks can & will extend the loan repayment date if necessary (as they had before). It all comes down to whether they accept the commitment of Bright. And breach of banking covenants can be waived or changed - happens often enough.
They do not need to raise $310m of new capital - probably $200m once the $130m loan from Bright is in place. Again, I suggest you go and have a look at Westland's balance sheet and financial position post Yili takeover. Banks are in the business of lending to good credits and SML, post debt & capital restructuring, will have a different financial profile than it is now.
Did Ryman have to pay back all of its debts? Or FBU?
Not sure how you do a capital raise of several hundred million when market cap is about $70m but I guess we will see shortly. Some multiple like 10:1 at 20 cents I suppose. Bonds are 160-170% indicating a lot of stress there. I do hope you get out of this okay Balance.
@teitei.
I'm not familiar with those cap raises. But if I have a look at Sky, for example, they were in a long term well established down trend. Nothing there that suggests a cum-cap raise created a fall in SP
SKT.png
Ryman - they were at least profitable at 2023 half year
There was talk of a Fletcher cap Raise in Feb - did this actually happen?
Quote from: Teitei on Jun 18, 2024, 12:54 PMDid anyone know what the capital raisings of Sky TV, FBU or Ryman were looking like before they were announced? No - because that is the nature of capital raisings and the reason why share prices of companies cum-CR always drop and drop until such time as the CRs are announced.
Re your countdown towards when SML needs to release details of the loan, I have already posted that the banks can & will extend the loan repayment date if necessary (as they had before). It all comes down to whether they accept the commitment of Bright. And breach of banking covenants can be waived or changed - happens often enough.
There little point in having a deadline if the deadline doesn't stimulate a commitment to meeting that deadline. But I agree - I don't think they banks will want a messy situation so will likely extend. Again.
Trouble is Synlait have a few bank deadlines. From 31 July 2024 there $230m revolving credit facility has to begin a step down through to 1 Oct 2025. The $270m working capital facility runs to 1 October 2024. In July the strategic review of Pokeno will be complete - who knows what that will turn up. November they expect the A2/Synlait arbitration decision which could be who knows what.
And then there is the risk arounfd the $130m which includes involvement with the Shangahai State-owned Assets Supervision and Administration Commission
Quote from: Teitei on Jun 18, 2024, 12:54 PMThey do not need to raise $310m of new capital - probably $200m once the $130m loan from Bright is in place.
The $130m isn't new equity it is just swapping one loan for another so does noting to deleverage the balance sheet.
They obviously need $180m in november. So I reckon a capital raise has to be fro at least this amount.
The $130m from Bright is to shore them up fro short term liquidity purposes. So that's how I get to the $310m
Currently they have $514m net classified as due for repayment in the next 12 months. I don't think $200m wil cut it.
Quote from: Teitei on Jun 18, 2024, 12:54 PMAgain, I suggest you go and have a look at Westland's balance sheet and financial position post Yili takeover.
Westlands has certainly improves. But Yil's investment in Oceania isn't looking so rosy - they recorded a $19.1m loss for the year. It was a 3.9m loss the prior year.
Quote from: Teitei on Jun 18, 2024, 12:54 PMBanks are in the business of lending to good credits and SML, post debt & capital restructuring, will have a different financial profile than it is now.
I agree. So how good a risk is Synlait.?
We can't argue the fact that they are not making a profit and the outlook looks grim.
They have over valued Dairyworks and no one is interested in buying it for what they want for it.
Pokeno is grossly underutilized. Farm gate supply sounds to me like it might be around peak,. They won't get top dollar for Pokeno in a sale.
Farmers can see the credit risk - that's why they are posting withdrawal notices. Its all well and good banks thinking they have security over assets - but famers might prefer to go to somewhere where they think their chances of getting paid are better.
Quote from: Teitei on Jun 18, 2024, 12:54 PMDid Ryman have to pay back all of its debts? Or FBU?
I have nowhere suggested Synlait needs to pay back all it's debt. That simply wouldn't make good use of the balance sheet
QuoteThere little point in having a deadline if the deadline doesn't stimulate a commitment to meeting that deadline
Yes, that's the theory. I remember however from my work in the industry (pick one, they are all the same) that often nothing seems to move faster than a deadline :);
I always wondered why the English choose to pick the expression "dead line" for a fast moving target, but maybe it is related to "dead cat bounces" ... they can be quite agile as well.
A great summary of the underlying mess that SML is in irrespective of a capital raise minimoke:
Quote from: Minimoke on Jun 18, 2024, 02:30 PMI agree. So how good a risk is Synlait.?
We can't argue the fact that they are not making a profit and the outlook looks grim.
They have over valued Dairyworks and no one is interested in buying it for what they want for it.
Pokeno is grossly underutilized. Farm gate supply sounds to me like it might be around peak,. They won't get top dollar for Pokeno in a sale.
Farmers can see the credit risk - that's why they are posting withdrawal notices. Its all well and good banks thinking they have security over assets - but famers might prefer to go to somewhere where they think their chances of getting paid are better.
This business is seriously screwed. Why take such a big risk when current operational performance is so bad? Totally sunk cost for Synlait. Dairy works is also an awkward value. Had they been able to secure the $125m that would have been enough to repay the loan but obviously its worth substantially less than that. Probably doesn't help that Fonterra has put its dairy assets up for sale.
It's classic capital structure mismanagement. An equity raise when valuations were higher could have saved this business.
Quote from: BlackPeter on Jun 18, 2024, 03:03 PMYes, that's the theory. I remember however from my work in the industry (pick one, they are all the same) that often nothing seems to move faster than a deadline :);
I always wondered why the English choose to pick the expression "dead line" for a fast moving target, but maybe it is related to "dead cat bounces" ... they can be quite agile as well.
In the 1860s, a 'dead line' was a line within or around a prison.
Prisoners would be shot for crossing the 'dead line'. The sense of deadline that is most commonly found today ("a date or time before which something must be done") did not begin to see use until the early 20th century.
Interesting huh?
Quote from: Teitei on Jun 18, 2024, 09:27 PMIn the 1860s, a 'dead line' was a line within or around a prison.
Prisoners would be shot for crossing the 'dead line'. The sense of deadline that is most commonly found today ("a date or time before which something must be done") did not begin to see use until the early 20th century.
Interesting huh?
Interesting - I learned something new ...
Quote from: winner (n) on Jun 18, 2024, 11:25 AMMaybe CR at 10 cents owed by a 1 for 20 consolidation and hey ho share price back over 2 bucks
It is conceivable that SML's CR will be along the lines of a 6 for 1 at 15c to raise $200m - highly dilutary for any shareholder choosing not to particpate.
Would be similar to Sky TV's 2.83 for 1 at 12c to raise $157m, $100m of which was required to repay the $100m bond which was maturing in 6 months' time. Sounds familiar?
The devil will be in the details of the underwrite agreement as Bright will require other shareholders to approve any underwrite by Bright (or for that matter, ATM).
Quote from: Teitei on Jun 19, 2024, 09:08 AMIt is conceivable that SML's CR will be along the lines of a 6 for 1 at 15c to raise $200m - highly dilutary for any shareholder choosing not to particpate.
Would be similar to Sky TV's 2.83 for 1 at 12c to raise $157m, $100m of which was required to repay the $100m bond which was maturing in 6 months' time. Sounds familiar?
The devil will be in the details of the underwrite agreement as Bright will require other shareholders to approve any underwrite by Bright (or for that matter, ATM).
A cap raise of this magnitude would see Bright spending $78m and A2 $39.6m or $117.6 in total
What about instead Bright and A2 did a JV and offered shareholder 3x current SP (based on your reference to the Westland takeover). This would cost Bright and A2 $81m. Leaving them with $36.7n change.
They then throw another $93.2 m between them into the pot and this will pay off the banks $130m
So all up the 2 of them have spent $211m (which is only a bit more than Bright shareholders are up for = $130m + $78m) to buy Synlait lock stock and barrel. Shareholders are happy (They haven't seen $0.90 for ages and there is zero chance it will ever get to this level with the cap raise dilution effects). Banks are happy - their debt exposure is significantly reduced. Farmers are happy because now they are supplying to credible owners.
A2's share based on their relative holding with Bright would be $$71m - and I don't think A2 shareholders would have any difficulty with this. Much better to spend this than $39m on a capital raise.
That of course leaves bond holders. Flog off dairyworks for $100m. Means Bright and A2 only have to find $80m between them. Chicken feed.
So for around $290m Bright and A2 get Dunsandle infant formula. And liquid milk processing. And canning / blending.
As well as Pokeono. Say they flogged that off for $200m all up they get dunsandel for the princely sum of $90m
Alternatively Bright and A2 could just let the receivers in and buy the assets at fire sale prices.
I might need to keep a closer eye on the ASX.
Trades there now dropped down to AU$0.255 which converts to NZ$0.277 (NZX showing $0.295 trades)
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3 days to let market know terms of Bright Deal.
Its taking a while - is it no going to plan?
Quote from: Minimoke on Jun 24, 2024, 05:06 PM3 days to let market know terms of Bright Deal.
Its taking a while - is it no going to plan?
Who knows, we might see a takeover offer in 3 days' time. There are 'brave' buyers picking up stock daily and bond price is heading the other way in recent days. Does not make sense if things are apparently not going to plan?
Here it is folks..... Let's have a meeting.....
https://www.nzx.com/announcements/433341
Synlait Milk Limited's (Synlait) Special Shareholders' Meeting will be held on Thursday 11 July 2024 at 2.00pm, in person at Synlait's Dunsandel facility, located at 1028 Heslerton Road, RD13 Rakaia, Canterbury, New Zealand, and online at: www.meetnow.global/nz
The meeting is to vote on the resolution to approve the proposed entry into a $130 million shareholder loan to be made available to Synlait by Bright Dairy International Investment Limited, a related company of Bright Dairy Holding Limited, Synlait's 39.01% shareholder. If the resolution is approved, Synlait will fully draw down the loan to meet the $130 million payment due to its banks on 15 July 2024.
Importance of the resolution to Synlait's future
Synlait will only be able to meet its $130 million payment obligation to its banks on 15 July 2024 if the resolution is approved by shareholders other than Bright Dairy by way of an ordinary resolution. An ordinary resolution is a resolution that is approved by a simple majority of the votes of those shareholders entitled to vote and voting on the question.
If the $130 million payment is not made and the banks do not agree to alternative arrangements, the Board believes Synlait will need to cease trading or initiate a formal insolvency process.
.............Whilst as at the date of the notice of meeting Synlait and The a2 Milk Company Limited have engaged in discussions, The a2 Milk Company Limited has not determined how it will vote on the resolution. If Synlait is advised of a change of status of The a2 Milk Company Limited's voting intentions, it will update shareholders by way of market announcement............
(Be great to be a fly on the wall watching the meeting.)
Key highlights
"If the $130 million payment is not made and the banks do not agree to alternative arrangements, the Board believes Synlait will need to cease trading or initiate a formal insolvency process."
A2 holds 32.52% of the vote. Very interesting they haven't yet committed to the loan
John Penno (assuming he hasn't sold down, holds 3.83% of the vote. But fair to say he is no friend of A2's
ACC holds 5.91% of the vote
And of course this only gets Synlait out of the $130m hole. No mention at all of how they are going to get out of the November $180m hole.
Even if shareholders approve the loan there are 2 further hurdles to get over by 15 July - because banks seen very insistent the 15th is the very last day..
- an internal resolution of Bright Dairy & Food Co., Ltd., approving the Shareholder Loan. As at the date of this
Notice of Meeting, this approval remains outstanding;
- evidence that the Shareholder Loan has been approved by the State-owned Assets Supervision and Administration Commission of Shanghai (SASAC) or any institution authorised by it. As at the date of this Notice of Meeting, this approval remains outstanding
These institutions may not be so keen on it being a second ranking loan. But at least it ranks above bond holders.
Can bond holders take any comfort.
Clearly an equity raise is on the horizon - if this loan goes through.
Synlait are anticipating Bright wil hold more than 50%. Which will trigger a bond redemption event.
And Synlait are anticipating this and hope to repay bonds for a new bank facility.
So I thank we can conclude there is a glimmer of a hope for bond holders.
And zero hope for small shareholders as their shareholding is going to be so diluted it will be worth nothing. So why vote in the upcoming loan vote.
Which leaves everything in A2's hands.
Quote from: Minimoke on Jun 25, 2024, 10:57 AMWhich leaves everything in A2's hands.
It sure does. I reckon 9 times out of 10 when there's a big vote like this, the party who has the most influence, (which is clearly A2 in this case) indicates they will support it before it goes to the vote. My read on this...the fact they haven't means there's more than a 50% chance the vote fails and SML goes into receivership. I think ATM wants to buy the Dunsandel plant off the receivers for pennies on the dollar.
Quote from: Basil on Jun 25, 2024, 11:29 AMIt sure does. I reckon 9 times out of 10 when there's a big vote like this, the party who has the most influence, (which is clearly A2 in this case) indicates they will support it before it goes to the vote. My read on this...the fact they haven't means there's more than a 50% chance the vote fails and SML goes into receivership. I think ATM wants to buy the Dunsandel plant off the receivers for pennies on the dollar.
My take on it is, and please excuse the metaphor, A2 have Synlaits balls in a vice. And they are turning the handle.
A2 have had plenty of time to consider the $130m loan and its implications along with the prospect of an equity raise. That they aren't in clear support of the loan today tells me they have a few turns of the handle left to go.
So are seeing the good old Good Cop/Bad Cop play out. Because I reckon at the end of the day, A2 product will still be produced and China will still be fed.
In the ATM v SML match I'm picking ATM.
In addition this from Hotcopper by CarlosG.
Update from StatNZ. Last month export to Australia, China, Hong Kong was [well] above average. Vietnam was alright. Surprisingly Korea hit a record level. Interesting developments in the US direction. For the first time (excluding initial shipments last year) there was two consecutive months of shipment (April and May) with increasing volume. I'll remind you A2M is the only NZ company that allowed to export to US.
I've added to my holding today.
Quote from: Minimoke on Jun 25, 2024, 11:36 AMMy take on it is, and please excuse the metaphor, A2 have Synlaits balls in a vice. And they are turning the handle.
A2 have had plenty of time to consider the $130m loan and its implications along with the prospect of an equity raise. That they aren't in clear support of the loan today tells me they have a few turns of the handle left to go.
So are seeing the good old Good Cop/Bad Cop play out. Because I reckon at the end of the day, A2 product will still be produced and China will still be fed.
Hahahaha
A2 is the eunuch here, not SML/Bright.
SML goes under and A2 can kiss its exports to China goodbye.
Hahahaha
Quote from: Teitei on Jun 25, 2024, 12:38 PMHahahaha
A2 is the eunuch here, not SML/Bright.
SML goes under and A2 can kiss its exports to China goodbye.
Hahahaha
Key things to look for are A2's inventory holdings as well as Synlaits inventory of finished product. This is part of a deliberate short term market volatility risk management process.
Then there is A2's further mitigation with its enhanced relationships with China State Farm Agribusiness and China Animal Husbandry Group.
On top of the recent Chinese delegation visit to NZ announcement that China wishes to free/speed up registration processes of infant formula.
Synlait (and therefor SAMR) has been precarious for quite some time. I would expect A2 wil have Plan B in play.
I'm unfamiliar with the re-registration process in the event of a change of ownership. But I presume operations / processes / quality etc at Dunsandel would not change with a change of ownership. And I also presume China will foresee global companies holding SAMR changing hands and won't impose processes that threaten food security. Synlait won't be unique.
Quote from: Teitei on Jun 25, 2024, 12:38 PMHahahaha
A2 is the eunuch here, not SML/Bright.
SML goes under and A2 can kiss its exports to China goodbye.
Hahahaha
Wrong and simplistic. Lol
Quote from: Minimoke on Jun 25, 2024, 01:05 PMKey things to look for are A2's inventory holdings as well as Synlaits inventory of finished product. This is part of a deliberate short term market volatility risk management process.
Then there is A2's further mitigation with its enhanced relationships with China State Farm Agribusiness and China Animal Husbandry Group.
On top of the recent Chinese delegation visit to NZ announcement that China wishes to free/speed up registration processes of infant formula.
Synlait (and therefor SAMR) has been precarious for quite some time. I would expect A2 wil have Plan B in play.
I'm unfamiliar with the re-registration process in the event of a change of ownership. But I presume operations / processes / quality etc at Dunsandel would not change with a change of ownership. And I also presume China will foresee global companies holding SAMR changing hands and won't impose processes that threaten food security. Synlait won't be unique.
China is a command economy.
Understand that and you will understand why A2 is a eunuch.
Quote from: Teitei on Jun 25, 2024, 12:38 PMSML goes under and A2 can kiss its exports to China goodbye.
Not quite...... A2M get to vote on the $130m loan.....while Bright are excluded from voting....
Plus consider the following from Werdplayer on HC
A2M has more leverage in this situation. Synlait needs A2M's vote or they are going to cease trading:
"If the $130 million payment is not made and the banks do not agree to alternative arrangements, the Board believes Synlait will need to cease trading or initiate a formal insolvency process."
At the very least, Synlait need to drop any and all objection to A2M's termination of exclusive supply rights. It's beyond the point of absurdity for Synlait to be in arbitration dispute with A2M about this while simultaneously requiring A2M's support to continue to exist. Synlait really need to stop kidding themselves.
To the broader point about leverage. People always seem to imply that the A2M-Synlait relationship is one of equal co-dependency, and conversely, mutually assured destruction. But that is not entirely true. Without A2M, Synlait is nothing. But even in a worst case scenario, without Synlait, A2M would take a huge hit but continue operating and eventually recover.
Dare I say it, there may even be a scenario where A2M allow Synlait to go insolvent in order to bring the whole situation to a head. Insolvency would force the various takeover scenarios that have been endlessly discussed on here to a head. As well as opening up Synlait's assets, including Dunsandel that A2M wants, to possible acquisition.
And here's the kicker. At the end of the day, whoever ends up owning and operating Dunsandel - whether it is Synlait, Bright, A2 Milk, administrators, China Mengniu, Nestle, etc. - for WHOEVER it is, it will continue to make a lot of financial sense for them to retain the facility's main customer, A2M, at least for the remainder of the current SAMR license period, as the SAMR registration is tied to the A2 Platinum product, and this is what ultimately gives the asset a large chunk of its value.
Quote from: Teitei on Jun 25, 2024, 01:09 PMChina is a command economy.
Understand that and you will understand why A2 is a eunuch.
Babies need feeding and they command ample amounts of IF.
Quote from: Teitei on Jun 25, 2024, 01:09 PMChina is a command economy.
Understand that and you will understand why A2 is a eunuch.
Bright is part of that. Along with CSFA and CAHG.
If china wants foreign IF (which they obviously do) then they have a number of ways of achieving that.
I don't foresee a scenario where Dunsandel closes down.
Quote from: Breezy on Jun 25, 2024, 01:14 PMBabies need feeding and they command ample amounts of IF.
Quite right, there's nothing like a hungry crying baby to command your attention lol
Its going to be interesting to see how this plays out. I'm happy to watch from the sidelines with a lot of popcorn.
Quote from: Left Field on Jun 25, 2024, 01:12 PMDare I say it, there may even be a scenario where A2M allow Synlait to go insolvent in order to bring the whole situation to a head. Insolvency would force the various takeover scenarios that have been endlessly discussed on here to a head. As well as opening up Synlait's assets, including Dunsandel that A2M wants, to possible acquisition.
This is a great point that I had potentially underweighted until now. This is a great opportunity for A2M to put some serious business issues behind them and allow them to refocus on their core business issues.
As an aside I note Synlait debt reported at 31 Jan 2024 was $559m. In today's announcement it is $585M
NBR's Tim Hunter thinks "A2 Milk has SML's future in its hands" (paywalled article out today)
"The NZX listed milk processor faces bankruptcy if special meeting does not approve $130 million shareholder loan from Bright Dairy....."
Quote from: Left Field on Jun 25, 2024, 07:04 PMNBR's Tim Hunter thinks "A2 Milk has SML's future in its hands" (paywalled article out today)
"The NZX listed milk processor faces bankruptcy if special meeting does not approve $130 million shareholder loan from Bright Dairy....."
Bankruptcy?
He needs to get the terminology right - bankruptcy refers to individuals.
Companies go into receivership or liquidation when they become insolvent.
Quote from: Teitei on Jun 25, 2024, 07:13 PMBankruptcy?
He needs to get the terminology right - bankruptcy refers to individuals.
Companies go into receivership or liquidation when they become insolvent.
And that's the level of quality reporting from NBR? No wonder they struggle to get and maintain subscribers.
Quote from: Buzz on Jun 25, 2024, 08:20 PMAnd that's the level of quality reporting from NBR? No wonder they struggle to get and maintain subscribers
Language aside Tim Hunter is the real deal.
Quote from: SemiStrongForm on Jun 25, 2024, 08:51 PMLanguage aside Tim Hunter is the real deal.
Tim is indeed one of the best investigative business journos around.
His article though is nothing insightful beyond regurgitating what SML itself stated and what other news media reporters were saying.
Just to update on the market. SP opened at $0.28. Now trading at $0.27 which values the company at $59,000,000
Bonds 135%
Oops. $0.265, $57.9m
Oops $0.26 $$56.8m
Opps $0.255 $55.7m
Quote from: Minimoke on Jun 26, 2024, 10:57 AMJust to update on the market. SP trading at $0.27 which values the company at $59,000
Bonds 135%
$59 mill.
Quote from: Minimoke on Jun 25, 2024, 02:30 PMAs an aside I note Synlait debt reported at 31 Jan 2024 was $559m. In today's announcement it is $585M
No doubt about it, strong growth there, debt growing at more than $5m per month !
Quote from: Left Field on Jun 26, 2024, 11:00 AM$59 mill.
Edited to correct, though would have been obvious in following lines. But now $0.25 or $54.6m
Quote from: Basil on Jun 26, 2024, 11:09 AMNo doubt about it, strong growth there, debt growing at more than $5m per month !
Had to pay that bond interest - and it was patently obvious they didn't have the cash for that.
Quote from: Minimoke on Jun 26, 2024, 11:58 AMEdited to correct, though would have been obvious in following lines. But now $0.25 or $54.6m
Sp is cum-CR.
Looking forward to an even lower sp and the CR - going to be some serious $$$ to be made, just like with Sky TV.
Quote from: Teitei on Jun 26, 2024, 12:02 PMSp is cum-CR.
Looking forward to an even lower sp and the CR - going to be some serious $$$ to be made, just like with Sky TV.
You've been saying that for ages. But the capital raise isn't a new idea. Market has had plenty of time to adapt. I reckon the market is finally realising its better to get $0.25 in the hand now than $0.0025 on the books after the cap raise.
Quote from: Minimoke on Jun 26, 2024, 12:12 PMYou've been saying that for ages. But the capital raise isn't a new idea. Market has had plenty of time to adapt. I reckon the market is finally realising its better to get $0.25 in the hand now than $0.0025 on the books after the cap raise.
I'm still waiting for the OCA CR he predicted yonks ago, broken clock mentality.
On a totally different side note. I wonder who had the wisdom and foresight to sell on 15 Dec, a week before the 22 Dec announcement. I bet the new owner isn't so happy now. Next Annual report will be interesting to see if Pennos name is still on the list of top shareholders.
sm1.png
Quote from: Breezy on Jun 26, 2024, 12:25 PMI'm still waiting for the OCA CR he predicted yonks ago, broken clock mentality.
CR which OCA avoided by stopping dividends, putting assets for sale and stalling developments.
You should have taken note and saved yourself a lot of grief because the sp then was over 70c at the time.
What is OCA's sp now?
Ouch!
Ouch!
Quote from: Minimoke on Jun 26, 2024, 12:12 PMYou've been saying that for ages. But the capital raise isn't a new idea. Market has had plenty of time to adapt. I reckon the market is finally realising its better to get $0.25 in the hand now than $0.0025 on the books after the cap raise.
Have a look at Sky TV CR - the answer is there for those with eyes to see.
Going to be plenty of money to be made in SML when they announce the CR (as indicated by SML to be in July/August) - as was the case with Sky TV.
Quote from: Teitei on Jun 26, 2024, 01:08 PMHave a look at Sky TV CR - the answer is there for those with eyes to see.
Going to be plenty of money to be made in SML when they announce the CR (as indicated by SML to be in July/August) - as was the case with Sky TV.
Sorry - I'm more interested in Synlait.
So. How much will the cap raise be. Amd at what price.
I see $180m payable in 6 months and another $130m in a year. In a loss making company.
Quote from: Teitei on Jun 26, 2024, 01:06 PMCR which OCA avoided by stopping dividends, putting assets for sale and stalling developments.
You should have taken note and saved yourself a lot of grief because the sp then was over 70c at the time.
What is OCA's sp now?
Ouch!
Ouch!
My avg buy price is $1.40 so just over 70c no go from my viewpoint and basically no grief saved.
Quote from: Breezy on Jun 26, 2024, 01:14 PMMy avg buy price is $1.40 so just over 70c no go from my viewpoint and basically no grief saved.
$1.40!
Writing was on the wall and you held all the way to now?
Could have still sold at 70c and bought back 25% more shares at 53c.
Ouch!
Quote from: Minimoke on Jun 26, 2024, 01:10 PMSorry - I'm more interested in Synlait.
So. How much will the cap raise be. Amd at what price.
I see $180m payable in 6 months and another $130m in a year. In a loss making company.
History repeating itself.
And I am more interested in Synlait now too.
I gave my answer already in a previous post.
Quote from: Teitei on Jun 26, 2024, 01:19 PM$1.40!
Writing was on the wall and you held all the way to now?
Could have still sold at 70c and bought back 25% more shares at 53c.
Ouch!
I think you take great pleasure in other peoples sufferings, not the person I am or want to be.
Quote from: Teitei on Jun 26, 2024, 01:20 PMHistory repeating itself.
And I am more interested in Synlait now too.
I gave my answer already in a previous post.
Thats not very helpful - you have 346 posts to trawl through.
Quote from: Minimoke on Jun 26, 2024, 01:24 PMThats not very helpful - you have 346 posts to trawl through.
Cannot be clearer about the CR than from the announcement yesterday :
Proposed equity capital raising to help reset Synlait's
balance sheet
To ensure that Synlait's balance sheet is reset, Synlait is
planning to undertake an equity capital raising. Bright
Dairy has indicated it fully supports Synlait raising equity
capital, subject to terms being finalised, and all necessary
approvals being received, to more substantially re-set the
company's equity and debt position to provide a platform
to return to sustainable growth for Synlait farmer suppliers
and all shareholders. The Synlait Board and its advisers are
continuing to progress the structure, terms and conditions
of a proposed equity raising and will further update
shareholders by the end of August, possibly earlier, by
market announcement.
In connection with the proposed equity raising, Synlait
is also proposing to concurrently refinance its Bank
Facilities. As part of that refinancing Synlait will be
seeking amended facilities that, upon the completion of
the equity raising, will be available to be drawn to meet
Synlait's expected working capital and other corporate
requirements as well as allowing for the repayment of
the Bonds. Further information will be provided about the
refinancing once arrangements have been agreed with
the banks.
Quote from: Breezy on Jun 26, 2024, 01:23 PMI think you take great pleasure in other peoples sufferings, not the person I am or want to be.
Your reply says more about you than it does about me.
I don't take great pleasure in other people's suffering but if anyone chooses to take me on, expect an appropriately factual, truthful and direct reply.
Which part of my reply regarding OCA did you disagree with?
Quote from: Teitei on Jun 26, 2024, 01:26 PMCannot be clearer about the CR than from the announcement yesterday :
Proposed equity capital raising to help reset Synlait's
balance sheet
To ensure that Synlait's balance sheet is reset, Synlait is
planning to undertake an equity capital raising. Bright
Dairy has indicated it fully supports Synlait raising equity
capital, subject to terms being finalised, and all necessary
approvals being received, to more substantially re-set the
company's equity and debt position to provide a platform
to return to sustainable growth for Synlait farmer suppliers
and all shareholders. The Synlait Board and its advisers are
continuing to progress the structure, terms and conditions
of a proposed equity raising and will further update
shareholders by the end of August, possibly earlier, by
market announcement.
In connection with the proposed equity raising, Synlait
is also proposing to concurrently refinance its Bank
Facilities. As part of that refinancing Synlait will be
seeking amended facilities that, upon the completion of
the equity raising, will be available to be drawn to meet
Synlait's expected working capital and other corporate
requirements as well as allowing for the repayment of
the Bonds. Further information will be provided about the
refinancing once arrangements have been agreed with
the banks.
That goes nowhere near answering at what price and how much. Both critical so current holders can get their head around the amount of dilution they have to look forward to.
Another respected view from HC thread and Werdplayer.....
What is the best outcome for salvaging some value for Synlait's minor shareholders?
If the loan is approved, they avoid liquidation but will have the value of their holdings more or less wiped anyway by equity raising. By my calculation, any equity raising would probably push the SP sub 10c.
By contrast, if the loan isn't approved and Synlait misses the $130M payment, the company will cease trading and begin an insolvency process.
Sounds bad, but in Bright and A2 Milk you have two parties with a vested interest in the company and its assets. One or both of them will step in, and there's a good chance that would require buying out the minor shareholders at a much higher price then if equity raising were to occur.
When I think it through, I can't see any rational reason why shareholders would want to approve this loan.
Quote from: Teitei on Jun 26, 2024, 01:33 PMYour reply says more about you than it does about me.
I don't take great pleasure in other people's suffering but if anyone chooses to take me on, expect an appropriately factual, truthful and direct reply.
Which part of my reply regarding OCA did you disagree with?
Well yes I hope it does, compassion and mercy are two qualities I'm happy to own. Continually putting words like Ouch at the end of your posts says it all.
I found the bit about the banks wanting to see minimum ebitda of $45m for FY24 interesting ...hope they meet guidance then
Quote from: Teitei on Jun 26, 2024, 01:26 PMCannot be clearer about the CR than from the announcement yesterday :
Proposed equity capital raising to help reset Synlait's
balance sheet
To ensure that Synlait's balance sheet is reset, Synlait is
planning to undertake an equity capital raising. Bright
Dairy has indicated it fully supports Synlait raising equity
capital, subject to terms being finalised, and all necessary
approvals being received, to more substantially re-set the
company's equity and debt position to provide a platform
to return to sustainable growth for Synlait farmer suppliers
and all shareholders. The Synlait Board and its advisers are
continuing to progress the structure, terms and conditions
of a proposed equity raising and will further update
shareholders by the end of August, possibly earlier, by
market announcement.
In connection with the proposed equity raising, Synlait
is also proposing to concurrently refinance its Bank
Facilities. As part of that refinancing Synlait will be
seeking amended facilities that, upon the completion of
the equity raising, will be available to be drawn to meet
Synlait's expected working capital and other corporate
requirements as well as allowing for the repayment of
the Bonds. Further information will be provided about the
refinancing once arrangements have been agreed with
the banks.
Lets dissect this part of your post for a moment.
"As part of that refinancing Synlait will be seeking amended facilities that, upon the completion of the equity raising, will be available to be drawn to meet Synlait's expected
working capital and
other corporate requirements as well as allowing for the
repayment of the Bonds."
Current working capital facilities are $270m
Current bonds are $180m
That's $450m of debt just there. And it excludes "other corporate requirements"
But reflect for a moment on the current situation. The banks are most uncomfortable with having $409m worth of exposure (from half year report $180.836m working capital liability + $230m revolving credit liability - see Note 12).
So what makes you think the banks will agree to increasing htir banking facilities?
Especially after they have just nabbed $130m of cash. Which incidentally still remains a debt repayable in 12 months.
Ergo the cap raise at it very minimum needs to be $130m.
At say a 10% discount on today's SP of $0.25.
That is another 589,000,000 shares to be issued. Bringi total shares to 808,000,000
And say the market loves the deal and now values Synlait at $100m (rather than today's piddly $54m) I end up with a best case scenario of shares that you buy at $0.22 being worth $0.12
Quote from: Left Field on Jun 26, 2024, 01:38 PMAnother respected view from HC thread and Werdplayer.....
What is the best outcome for salvaging some value for Synlait's minor shareholders?
If the loan is approved, they avoid liquidation but will have the value of their holdings more or less wiped anyway by equity raising. By my calculation, any equity raising would probably push the SP sub 10c.
By contrast, if the loan isn't approved and Synlait misses the $130M payment, the company will cease trading and begin an insolvency process.
Sounds bad, but in Bright and A2 Milk you have two parties with a vested interest in the company and its assets. One or both of them will step in, and there's a good chance that would require buying out the minor shareholders at a much higher price then if equity raising were to occur.
When I think it through, I can't see any rational reason why shareholders would want to approve this loan.
So vote against the loan and let SML go into receivership = zero $ for shareholders.
Bright can rightly assert that they have delivered on their commitment but minorities voted against the bailout.
Bright is then free to buy the assets and businesses as cheaply as they can - and they will.
Quote from: Teitei on Jun 26, 2024, 02:36 PMSo vote against the loan and let SML go into receivership = zero $ for shareholders.
Bright can rightly assert that they have delivered on their commitment but minorities voted against the bailout.
Bright is then free to buy the assets and businesses as cheaply as they can - and they will.
The Machiavellian machinations are endless.... and your opinion is just one of many..... and just as likely is wrong.
Whatever our opinions and bias, It's fascinating to watch and I'm looking forward to hearing ATM's stance on the proposed loan.
Quote from: Left Field on Jun 26, 2024, 04:42 PMThe Machiavellian machinations are endless.... and your opinion is just one of many..... and just as likely is wrong.
Whatever our opinions and bias, It's fascinating to watch and I'm looking forward to hearing ATM's stance on the proposed loan.
So far, Bright has delivered on their commitment and I believe that they will honour their commitment.
The doomsayers? Heck, Synlait was long gone according to them. Lol.
Quote from: Left Field on Jun 26, 2024, 04:42 PMThe Machiavellian machinations are endless.... and your opinion is just one of many..... and just as likely is wrong.
Whatever our opinions and bias, It's fascinating to watch and I'm looking forward to hearing ATM's stance on the proposed loan.
We won't know anything for sure until the fat lady sings
But in the meantime I see shares have crossed at $0.235 valuing the company at $51.3m. Maybe Mr market knows best.
Quote from: Teitei on Jun 26, 2024, 04:46 PMSo far, Bright has delivered on their commitment and I believe that they will honour their commitment.
The doomsayers? Heck, Synlait was long gone according to them. Lol.
I've been calling Synlait out since I observed the prior disastrous CEO at the AGM. And its been downhill ever since.
Quote from: Minimoke on Jun 26, 2024, 05:03 PMI've been calling Synlait out since I observed the prior disastrous CEO at the AGM. And its been downhill ever since.
And do you see anyone disagreeing with you about Synlait going downhill?
But that's a different call altogether from the imminent demise of Synlait which the doomsayers have been on and on about.
Like I wrote before, Synlait has been dead several times over according to the doomsayers. LOl.
Quote from: Minimoke on Jun 26, 2024, 04:56 PMWe won't know anything for sure until the fat lady sings
But in the meantime I see shares have crossed at $0.235 valuing the company at $51.3m. Maybe Mr market knows best.
Agreed - only a fool would buy any stock cum-CR. Mr market knows best indeed.
Quote from: Teitei on Jun 26, 2024, 05:08 PMAnd do you see anyone disagreeing with you about Synlait going downhill?
But that's a different call altogether from the imminent demise of Synlait which the doomsayers have been on and on about.
Like I wrote before, Synlait has been dead several times over according to the doomsayers. LOl.
I liken Synlait to a cancer suffer.
The cancer was first identified at that fateful AGM. I now reckon it has now spread and is now stage 4 and terminal.
I have yet to read anything that gives me convinced Synlait is survivable.
They will however leave a legacy - and that will be a text book.
And the estate will be fought over by the relatives.
Quote from: Minimoke on Jun 26, 2024, 02:36 PMLets dissect this part of your post for a moment.
"As part of that refinancing Synlait will be seeking amended facilities that, upon the completion of the equity raising, will be available to be drawn to meet Synlait's expected working capital and other corporate requirements as well as allowing for the repayment of the Bonds."
Current working capital facilities are $270m
Current bonds are $180m
That's $450m of debt just there. And it excludes "other corporate requirements"
But reflect for a moment on the current situation. The banks are most uncomfortable with having $409m worth of exposure (from half year report $180.836m working capital liability + $230m revolving credit liability - see Note 12).
So what makes you think the banks will agree to increasing htir banking facilities?
Especially after they have just nabbed $130m of cash. Which incidentally still remains a debt repayable in 12 months.
Ergo the cap raise at it very minimum needs to be $130m.
At say a 10% discount on today's SP of $0.25.
That is another 589,000,000 shares to be issued. Bringi total shares to 808,000,000
And say the market loves the deal and now values Synlait at $100m (rather than today's piddly $54m) I end up with a best case scenario of shares that you buy at $0.22 being worth $0.12
Who in their right mind would buy a share which is cum-CR? One would only consider investing during the CR period when details are available to assess the proposition. Again, just like Sky TV.
Quote from: Teitei on Jun 27, 2024, 09:06 AMWho in their right mind would buy a share which is cum-CR? One would only consider investing during the CR period when details are available to assess the proposition. Again, just like Sky TV.
Buying a share during a CR period is not always possible (eg the recent IFT CR ....) Usually CR's are only available to current holders at a certain date (usually after the CR is announced) ...... ie you need to already be a SML shareholder, and then the CR participation is usually proportionally based on your current (SML) holding???
For us poor ignorant souls who may not even read the SKY threads or be aware or your great success in that investment, it may be helpful if you outline what your intended strategy is for SML and how you anticipate it will work?
Thanks.
Sky, at time of capital raise expected FY20 EBITDA of $155–175m and NPAT of $20–25m
Synlait at last announcement expect EBITDA $45m ($19.9m at half year) and will make a loss (half year = $96.2m) and half year gross profit was down 47%.
I'm not seeing the relevance of a SKY comparison.
Another day, another Synlait! This thing has been great entertainment to watch from the side lines.
I don't see how any regular shareholder comes out ahead after a CR. But that's just my ignorance probably.
Quote from: Teitei on Jun 27, 2024, 09:06 AMWho in their right mind would buy a share which is cum-CR? One would only consider investing during the CR period when details are available to assess the proposition. Again, just like Sky TV.
The difference imo is:
- SKT were already showing signs that the turnaround was working, SML is showing no signs that they can recover
- SKT Cum-CR definitely crashed the SP, but we knew the terms of the CR, whereas for SML we don't, yet
- We didn't have to be SKT shareholders, or partake in the CR, the market gifted us low SP, whereas the market SP for SML hasn't bottomed yet
Quote from: SemiStrongForm on Jun 27, 2024, 09:57 AMAnother day, another Synlait! This thing has been great entertainment to watch from the side lines.
I don't see how any regular shareholder comes out ahead after a CR. But that's just my ignorance probably.
I was getting very tempted to buy just so I can attend the meeting! Unfortunately I'l be out of the country - but gee it would be interesting to be there.
Quote from: Buzz on Jun 27, 2024, 09:59 AMThe difference imo is:
- SKT were already showing signs that the turnaround was working, SML is showing no signs that they can recover
- SKT Cum-CR definitely crashed the SP, but we knew the terms of the CR, whereas for SML we don't, yet
- We didn't have to be SKT shareholders, or partake in the CR, the market gifted us low SP, whereas the market SP for SML hasn't bottomed yet
Quite right. Market opened at $0.23 but already is at $0.225. Now worth less than $50m
Oops. Down to $0.22
Ops down to $0.215
The way the share price is tanking it looks like the capital raise will be 30 billion shares at 1 cent each raising $300m.
Cathy Gamlen, head of People is off after lasting less than a year.
In the meantime this is interesting "Huang said Bright and a2 Milk — which derives all its infant milk formula from Synlait — "exchange views on critical matters, from time to time, and in a friendly and co-operative way".
Quote from: Minimoke on Jul 01, 2024, 11:11 AMCathy Gamlen, head of People is off after lasting less than a year.
In the meantime this is interesting "Huang said Bright and a2 Milk — which derives all its infant milk formula from Synlait — "exchange views on critical matters, from time to time, and in a friendly and co-operative way".
.....in the meantime SML on the leader board at the time of writing today....SP at $ 0.2450
up $0.0200 a huge increase of 8.89%!!
Crikey!
Bright has spoken and it's as clear as can be.
https://www.nzherald.co.nz/business/synlait-can-recover-chinas-bright-dairy/CD4OAZYKZVGVDISAFWATJIWKN4/
Paywalled
Quote from: Left Field on Jul 01, 2024, 11:47 AM.....in the meantime SML on the leader board at the time of writing today....SP at $ 0.2450
up $0.0200 a huge increase of 8.89%!!
Crikey!
Buyers piling up to buy the bonds and the sellers backing off. Only 1 small seller on the screen.
I wonder what that means.
Quote from: Teitei on Jun 25, 2024, 01:09 PMChina is a command economy.
Understand that and you will understand why A2 is a eunuch.
Repeat again.
Quote from: Teitei on Jul 01, 2024, 02:41 PMRepeat again.
Quote from: Teitei on Jun 27, 2024, 09:06 AMWho in their right mind would buy a share which is cum-CR? One would only consider investing during the CR period when details are available to assess the proposition. Again, just like Sky TV.
Quote from: Left Field on Jun 27, 2024, 09:28 AMBuying a share during a CR period is not always possible (eg the recent IFT CR ....) Usually CR's are only available to current holders at a certain date (usually after the CR is announced) ...... ie you need to already be a SML shareholder, and then the CR participation is usually proportionally based on your current (SML) holding???
For us poor ignorant souls who may not even read the SKY threads or be aware or your great success in that investment, it may be helpful if you outline what your intended strategy is for SML and how you anticipate it will work?
Thanks.
Talk about repeat again.......Still waiting for you to share your wisdom.
Quote from: Left Field on Jul 01, 2024, 02:54 PMTalk about repeat again.......Still waiting for you to share your wisdom.
I am sure you can do some research on SKT?
The thread is there and the answer is rather simple.
CR was at 12c and today it is the equivalent of 23.5c (been a 10 for 1 share consolidation). One could buy as many rights as one wanted during the CR period at 17c (which I did) and the sp post CR has been as high as 34.8c.
And SKT has been paying dividends too. And there was also the capital return (via 1 for 6 share cancellation of 40c per share).
Obviously have to wait for details of the CR to strategise. If the rights to the CR is not tradable, the game changes again.
Quote from: Minimoke on Jun 14, 2024, 02:55 PMWhat are bonds telling us today?
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And what are the bonds telling you today, Minimoke?
Here's why A2M is a eunuch :
In the interview with the Herald, Bright's Chairman said:
"Both a2 and Bright Food want to Synlait to stabilise. Without Synlait, there would not be prosperity for a2 Milk".
Resident doomsday merchants have gone very very quiet?
Quote from: Teitei on Jul 02, 2024, 10:11 AMResident doomsday merchants have gone very very quiet?
That's because the commentary from Bright around bankrolling Synlait has strengthened compared to the last few weeks. It's not because people have realised that you are a genius.
Quote from: SemiStrongForm on Jul 02, 2024, 11:19 AMThat's because the commentary from Bright around bankrolling Synlait has strengthened compared to the last few weeks. It's not because people have realised that you are a genius.
Hahahaha - me a genius?
Just go back through my posts and what Bright has said is what I have been posting.
It's about getting the big picture right - not the daily grind of finding every morsel of news and making them sound as bad as possible.
Quote from: Teitei on Jul 02, 2024, 11:33 AMgo back on my posts and what Bright has said is what I have posted.
It's all about getting the big picture right - not the daily grind of finding every morsel of news and making them sound as bad as possible
Not correct - you have hindsight bias. The market yield on the bonds has collapsed from 170% from 65% in the last 10 days. Perceptions have changed as news has come out from a market perspective. It's not just people on this forum staying quiet.
Separately, it is not about the 'big picture' for a firm in financial distress. The 'big picture' doesn't always hold for a firm going down the gurgler.
Quote from: SemiStrongForm on Jul 02, 2024, 11:41 AMNot correct - you have hindsight bias. The market yield on the bonds has collapsed from 170% from 65% in the last 10 days. Perceptions have changed as news has come out from a market perspective. It's not just people on this forum staying quiet.
Separately, it is not about the 'big picture' for a firm in financial distress. The 'big picture' doesn't always hold for a firm going down the gurgler.
Hindsight? Who has been posting about keeping an eye on what Synlait means to Bright? The news you refer to simply confirms what I have been posting - nothing new actually. Now that's foresight.
Versus those (including in the media) who believed A2M held Synlait's fate in its hands? What a joke!
A2M can kiss the China market goodbye and watch its business evaporate into thin air if it does not co-operate with Bright!
Here's why A2M is a eunuch :
In the interview with the Herald, Bright's Chairman said:
"Both a2 and Bright Food want to Synlait to stabilise.
Without Synlait, there would not be prosperity for a2 Milk".
Crikey, please tone it down folks......
Quote from: Left Field on Jul 02, 2024, 12:15 PMCrikey, please tone it down folks......
Is this a full 12 round match?
Quote from: Breezy on Jul 02, 2024, 12:19 PMIs this a full 12 round match?
Looking forward to 15 rounds myself.
Maybe the ref should intervene and maybe we should just wait and see what the vote is on 11 July. Its not that far away.
Quote from: Basil on Jul 02, 2024, 12:32 PMMaybe the ref should intervene and maybe we should just wait and see what the vote is on 11 July. Its not that far away.
Why a ref?
Aren't we here, Beagle, to debate and argue different points of views with the aim of seeing what are the likely scenarios and outcomes from developments in a company's situations?
Yes we certainly are mate and I enjoy your posts but maybe it's been really comprehensively argued each way already ?
Quote from: Basil on Jul 02, 2024, 01:01 PMYes we certainly are mate and I enjoy your posts but maybe it's been really comprehensively argued each way already ?
Not when SSF accuses me of being a hindsight poster.
When I am wrong on something, I always front up. It is of course better to be right but who is always right?
And there should be no shame in being wrong - as long as we all learn something as we go along, wrong or right.
Quote from: Left Field on Jul 02, 2024, 12:15 PMCrikey, please tone it down folks......
No mate what we need is more open, frank discussion.
Synlait Milk has now put forward its plan, guiding the company to a crossroads and handing the decision to its shareholders.
Bright Dairy is proposing to lend Synlait Milk $130million to repay its bankers. As Bright Dairy is a major shareholder, shareholders other than Bright Dairy must now vote to agree, with a simple majority (50%) required to institute the plan. Following this vote, Synlait intends to announce a capital raising from its shareholders.
A meeting will take place on 11 July and all shareholders (except Bright Dairy) will have the right to vote to determine which path the company is sent down.
All shareholders - particularly those who also own also Synlait bonds – should exercise their right to vote. Shareholders who have elected others to vote for them should communicate with their proxy leading into the vote.
The terms of the loan agreement are crucial for shareholders to understand.
The loan facility exists for either one or two years - at Synlait's discretion - and will cost 8% for the first year. If Synlait chooses to extend the loan to a second year, it will be refinanced at a rate based on the underlying interest rates at the time, with an added margin.
The cost of the debt, including the margin, is clearly much lower than market rates, especially for the security associated with the loan.
The $130 million being lent by Bright Dairy is subordinated behind bank debt but ranks ahead of the listed bonds (SML010) in the event of default. Bondholders are effectively ceding $130 million of priority, should the company default.
This means a shareholder with $2,000 worth of shares and $20,000 of face value of the bonds may have a more difficult decision to make than the same shareholder without a holding in the bonds.
If the proposal fails to achieve the necessary shareholder support, Synlait has indicated that the company will need to immediately enter into negotiations with its banks. If these negotiations fail, Synlait's board believes the company may need to begin the insolvency process.
Getting to a 50% threshold in either direction may largely hinge on how its largest eligible voter – a2 Milk with 33% - chooses to vote.
A2 Milk's priority will be making a decision that adds the most value to its own shareholders. At the current share price of Synlait, a2 Milk has about $10 million worth of Synlait shares. A2 Milk is worth $5.1 billion dollars, at current pricing. A2 Milk has not yet provided any clues as to its intentions.
Accompanying the announcement was confirmation that a rights issue is likely to follow the vote and may be announced as early as August.
No shareholder should be surprised by this. The company has been very transparent regarding the need to raise capital, and those who have remained shareholders to this day should be well prepared for a further capital injection.
The terms of this offer will be important. The current share price of around 20 cents leaves little room for incentivisation, unless the offer is creative in its structure.
There is another aspect to a potential rights issue that warrants discussion.
Bright Dairy has confirmed it will participate if a rights issue proceeds. A2 Milk has made no such public commitment. If a2 Milk does not participate, and investor participation is poor, there is a possibility that the Bright Dairy shareholding drifts over 50% of the total company. It is currently 39%.
If this occurs, it will trigger a ''Change of Control Event'', and grant bondholders the right to immediately call the debt. Synlait has publicly stated that it expects bondholders to take this option if it is presented to them, and Synlait will take steps to prepare for such an outcome.
Synlait did not mention any OIO implications involved with such an outcome.
Both Bright Dairy and a2 Milk will be aware that this is a probable eventuality if a capital raising plays out as described.
The market reaction to the announcement by Synlait was interesting and diverged significantly between the two investor classes.
The share price fell to fresh lows, falling to 20 cents and a market capitalisation of 45 million.
Meanwhile, the bonds saw a resurgence of support, with a flurry of buyers emerging. With the bonds trading at around 65 cents in the dollar and sentiment seemingly changing week to week, the situation remains very volatile.
The first step for shareholders will be the vote. Bright Dairy cannot participate in the vote, and a2 Milk's intentions are, as yet, unknown. If a2 Milk does not vote in favour, the vote can still pass. However, it would require significant support from ordinary shareholders.
Shareholders have been warned that failure to pass the measure could result in insolvency, and total loss of value.
Bondholders without any shares will simply have to watch from the sidelines, as a new lender jumps the queue.
If the vote passes, the conversation will then turn to a potential capital raising. Shareholders should also be preparing for this outcome in the months ahead.
_ _ _ _ _ _ _ _ _ _ _ _
Chris Lee website yesterday
Banks helping SML to a CR
https://api.nzx.com/public/announcement/433862/attachment/421998/433862-421998.pdf
Quote from: Left Field on Jul 03, 2024, 08:47 AMBanks helping SML to a CR
https://api.nzx.com/public/announcement/433862/attachment/421998/433862-421998.pdf
Forgone conclusion, I would have thought?
Synlait has been as transparent about its financial issues as any company could ever be!
Quote from: Clearasmud on Jul 02, 2024, 06:28 PMNo mate what we need is more open, frank discussion.
Open and frank fact based discussion about issues is good.
What we don't need is mudslinging and attacks on the player instead of kicking the ball.
Some people find it difficult to distinguish between hitting the ball and kicking the player.
SML sp on the move - 27c vs low of 20c last week.
Must hand it to SB888 who braved the doomsday merchants and bought last week.
Not for me - I prefer to wait for the CR.
Only issue is that the CR rights may not be tradable and that would be a bummer.
Quote from: Teitei on Jul 04, 2024, 01:08 PMSML sp on the move - 27c vs low of 20c last week.
Must hand it to SB888 who braved the doomsday merchants and bought last week.
Not for me - I prefer to wait for the CR.
Only issue is that the CR rights may not be tradable and that would be a bummer.
If you want to participate in the capital raise isn't it better to buy a position early.
Quote from: Clearasmud on Jul 04, 2024, 08:34 PMIf you want to participate in the capital raise isn't it better to buy a position early.
The share prices of most CR companies tend to gravitate lower towards the CR price during the CR trading period.
That's what I hope will happen here as well.
Need obviously to see the details of the CR.
SML may surprise and do a 2 for 1 at 50c instead of a 5:1 at 20c !!!!
Let's see what happens.
Quote from: Teitei on Jul 05, 2024, 08:21 AMThe share prices of most CR companies tend to gravitate lower towards the CR price during the CR trading period.
That's what I hope will happen here as well.
Need obviously to see the details of the CR.
SML may surprise and do a 2 for 1 at 50c instead of a 5:1 at 20c !!!!
Let's see what happens.
True but it's the rights you need to have but not at 50c.
A2 keeping quiet over voting intentions
Maybe not going to vote ...sometimes a good strategy
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/434095/422255.pdf
Quote from: winner (n) on Jul 08, 2024, 08:41 AMA2 keeping quiet over voting intentions
Maybe not going to vote ...sometimes a good strategy
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/434095/422255.pdfOca
Link does not work because you have tagged oca to the link.
OCA occupying your thoughts day, night and in every post W69? ;D
Quote from: Teitei on Jul 08, 2024, 08:56 AMLink does not work because you have tagged oca to the link.
OCA occupying your thoughts day, night and in every post W69? ;D
No idea how that happened lol
http://nzx-prod-s7fsd7f98s.s3-website-ap-southeast-2.amazonaws.com/attachments/SML/434095/422255.pdf
The plot thickens. Normally a major shareholder in a position to heavily influence the outcome, would have indicated one way or the other by now. I'd say that's a bit ominous for Synlait's future.
Quote from: Basil on Jul 08, 2024, 09:21 AMThe plot thickens. Normally a major shareholder in a position to heavily influence the outcome, would have indicated one way or the other by now. I'd say that's a bit ominous for Synlait's future.
Unless A2 vote NO it's a done deal, even if they don't vote
Amongst other shareholders Whose going to vote NO ..hardly any I'd say.
Quote from: winner (n) on Jul 08, 2024, 09:26 AMUnless A2 vote NO it's a done deal, even if they don't vote
Amongst other shareholders Whose going to vote NO ..hardly any I'd say.
Actually I'm very surprised that A2M haven't announced their intention. surely this should be considered as price sensitive information (for ATM shares).
If they intend to vote 'no' then there is a high chance that SML will be put into receivership which will have uncertain (but definitely price moving) impacts on ATM.
Maybe their silence implies that they will vote 'yes'
Personally, for my smallish, but not insignificant holding. I'm voting a definite 'no' working on the assumption that whatever Bright dairy wants the small shareholder to do probably won't be of benefit to the small shareholder. I'd rather take my chances with receivership than willingly aid and abet Bright to whatever final game plan they have in mind.
Post receivership, I can certainly see a credible scenario where ATM makes a decent offer for the Dunsandel asset(with price tension provided from Bright and possibly Fonterra).
A2M can wave goodbye to its China IF business if it votes no to the loan.
Anyone who believes that should be shorting the hell out of A2M (and SML). Plenty of $$$ to be made.
https://www.nzherald.co.nz/business/synlait-can-recover-chinas-bright-dairy/CD4OAZYKZVGVDISAFWATJIWKN4/
In the interview with the Herald, Bright's Chairman said:
"Both a2 and Bright Food want to Synlait to stabilise. Without Synlait, there would not be prosperity for a2 Milk".
I suspect A2M is voting no. In my mind there are three scenarios, ie, A2M:
- votes yes, but aren't announcing intentions to depress the share price prior to a capital raise
- votes yes, but don't announce intentions because they are wanting to maintain arms lengths distance from all Synlait matters (this one I am least sure about)
- votes no, to draw to an end Synlait's on-going demise (and remove distractions, ie, arbitration proceedings)
I think the third option is looking quite likely.
Quote from: SemiStrongForm on Jul 08, 2024, 03:41 PMI suspect A2M is voting no. In my mind there are three scenarios, ie, A2M:
- votes yes, but aren't announcing intentions to depress the share price prior to a capital raise
- votes yes, but don't announce intentions because they are wanting to maintain arms lengths distance from all Synlait matters (this one I am least sure about)
- votes no, to draw to an end Synlait's on-going demise (and remove distractions, ie, arbitration proceedings)
I think the third option is looking quite likely.
The cynic in me might agree. Just wondering, though what A2M is planning to sell after they voted no and pushed Synlait into liquidation?
You might want to check what percentage of their earnings comes from A2 Platinum ... and who other than Synlait (in the current ownership structure) is allowed to import that into China. After you find the answers, it might be a good time to reconsider option 3;
Quote from: BlackPeter on Jul 08, 2024, 04:40 PMThe cynic in me might agree. Just wondering, though what A2M is planning to sell after they voted no and pushed Synlait into liquidation?
My understanding is that a liquidator will seek to maximise the value of the business. In theory, this would mean Synlait or its component parts would be put up for sale, including to the likes of A2M and Bright, potentially as part of a joint venture.
Quote from: SemiStrongForm on Jul 08, 2024, 08:44 PMMy understanding is that a liquidator will seek to maximise the value of the business. In theory, this would mean Synlait or its component parts would be put up for sale, including to the likes of A2M and Bright, potentially as part of a joint venture.
Yes but you perhaps are underestimating the value that other bidders would put on Dunsandal. It is the key asset.
If a joint venture for Bright and A2 was the go - why would they muck around with receivership when they could take Synlait private?
Crikey.....The silence from A2M is deafening.
Another viewpoint to consider....... from Werdplayer on HC
Whichever way A2M votes, there really is no need for them to disclose this to Synlait beforehand. It would be a courtesy that Synlait has not earned. Synlait should have dropped the exclusivity matter long ago, it has only done them a lot of damage and continues to do so.
As I've said for some time, I really don't think Bright would ever allow Synlait go under. Full stop. Their comments recently seem to confirm this. It is also unlikely they would relinquish control of Synlait and its Dunsandel facility.
If you accept this, then it also follows that A2M's supply remains secure in the likeliest scenarios where they do not approve this loan.
Not approving the loan will then set in motion the negotiations between A2M and Bright about takeover scenarios for Synalit. Either a bidding war or a JV.
Even if Bright were to acquire effective ownership of Synlait they would still need A2M as a customer to make it financially viable. Their higher ups are not going to sign off on a takeover of Synlait without retaining the business that A2M brings.
And if A2M were to take a greater stake, they would presumably rather retain the mutual cooperation and investment of Bright as a partner, given how capital intensive manufacturing is (particularly in light of Synlait's problems).
Which is why I think a JV ultimately makes the most sense here, but a No vote by A2M on the loan is required in order to get there.
Quote from: SemiStrongForm on Jul 08, 2024, 08:44 PMMy understanding is that a liquidator will seek to maximise the value of the business. In theory, this would mean Synlait or its component parts would be put up for sale, including to the likes of A2M and Bright, potentially as part of a joint venture.
Sure.
I assume you realize though that Synlait's export licence for China is subject to the factory not changing ownership, which it would as soon as the company goes into administration. So - unless you tell us that A2M has made already a secret deal with the Chinese licence authority to make sure they change the licence "on the fly", they will have problems to export any IF to China until this is sorted. Dangerous game to risk the cash cow.
Hint - the current export licence (which Synlait is holding) took many months to obtain.
Of course is it possible that A2M and the Chinese Licence Authorities made a secret backroom deal, though not notifying it appears to be at least a violation of A2M's continuous reporting requirements.
More likely might be that A2M got a wink wink nudge nudge from somebody they assume knows what the Chinese licence authorities might do ... but it appears to be a bit risky to risk the farm on that.
Whatever it is - it all feels more than a bit fishy. If ATM would sell fish which passed its use by date, we could at least explain the stink.
Quote from: Left Field on Jul 09, 2024, 10:12 AMWhich is why I think a JV ultimately makes the most sense here, but a No vote by A2M on the loan is required in order to get there.
Which may leave the bondholders hung out to dry in the bitter cold.
Quote from: Left Field on Jul 09, 2024, 10:12 AMCrikey.....The silence from A2M is deafening.
Another viewpoint to consider....... from Werdplayer on HC
Whichever way A2M votes, there really is no need for them to disclose this to Synlait beforehand. It would be a courtesy that Synlait has not earned. Synlait should have dropped the exclusivity matter long ago, it has only done them a lot of damage and continues to do so.
As I've said for some time, I really don't think Bright would ever allow Synlait go under. Full stop. Their comments recently seem to confirm this. It is also unlikely they would relinquish control of Synlait and its Dunsandel facility.
If you accept this, then it also follows that A2M's supply remains secure in the likeliest scenarios where they do not approve this loan.
Not approving the loan will then set in motion the negotiations between A2M and Bright about takeover scenarios for Synalit. Either a bidding war or a JV.
Even if Bright were to acquire effective ownership of Synlait they would still need A2M as a customer to make it financially viable. Their higher ups are not going to sign off on a takeover of Synlait without retaining the business that A2M brings.
And if A2M were to take a greater stake, they would presumably rather retain the mutual cooperation and investment of Bright as a partner, given how capital intensive manufacturing is (particularly in light of Synlait's problems).
Which is why I think a JV ultimately makes the most sense here, but a No vote by A2M on the loan is required in order to get there.
Collusion by Bright & A2M (2 shareholders controlling 60%) to control and takeover Synlait at the expense of minorities?
Wow!
That will go down really well with ASIC!
Forfeiture of their Synlait shares as well as multi-million fines if history is any guide.
Bright could not have been and cannot be more transparent than with their rescue package and plans for Synlait.
All the postings about conspiracies etc etc - that's not how the Chinese state & government owned entities operate.
Those who believe A2M will vote NO should be shorting the hell out of A2M and SML - because A2M will be history in China.
From Professor Jeffery Sachs of Columbia University :
"When I speak with Chinese senior officials, which I do often, they are the best prepared professionals I know in the world. When I deal with them, they know their brief."
And from the very top official in Bright :
https://www.nzherald.co.nz/business/synlait-can-recover-chinas-bright-dairy/CD4OAZYKZVGVDISAFWATJIWKN4/
In the interview with the Herald, Bright's Chairman said:
"Both a2 and Bright Food want to Synlait to stabilise. Without Synlait, there would not be prosperity for a2 Milk".
606k shares traded today - some keen position taking ahead of Thursday vote.
Heck, some even paid up this morning to get stock!
A 10 bagger sometime in the future?
Would have been $7m+ turnover once but now, just $154k.
"Who dares wins!"
Worth a punt I reckon, even a 2 bagger would be fine.
Quote from: Breezy on Jul 09, 2024, 05:50 PMWorth a punt I reckon, even a 2 bagger would be fine.
Better to wait for the CR to come.
Quote from: Teitei on Jul 09, 2024, 05:01 PM606k shares traded today - some keen position taking ahead of Thursday vote.
And over 900k ATM traded.....
Someone just paid up again this morning to get some stock.
Do they know something or just punting?
https://www.nzherald.co.nz/business/...AILFOQPJELD4E/
paywalled
Adams is encouraging all shareholders to vote. Even if a2 votes against the proposal, other minority shareholders could see it through. A2 Milk, and the balance of minority shareholders, represent 61% of the shares that can be voted at the meeting.
"They [a2 Milk] are under no obligation to tell us what they are going to do," Adams told the Herald.
"It would be great to know, but ultimately they are not obliged to owe us a duty that says: you must tell the company which way you are going to vote."
"It means that if a2 Milk did vote against it, you would need 60% of the balance of shareholders to turn up and vote," Adams said.
"What I have been saying to our other shareholders is that ultimately, you don't want to die wondering on this one," he said.
Adams said a failed vote would put directors in a difficult position.
"We know that we have a loan falling due on July 15 which we would be unable to pay, and that pushes you into effectively having to decide with the banks whether or not they are willing to give you any relief from that repayment, which is not beyond the realms of possibility, all the way to voluntary administration.
"But if you are trying to get money into the business and the shareholders say no, then that pretty much is your answer."
Adams said the proxies that have come through so far were "overwhelmingly in favour" of the deal.
Bonds trading at 77%, (75 cents in the dollar). Punting that there's better than 3 chances in 4 that the bonds will be repaid in full. Wow, that's either very brave or very foolish, only time will tell which.
Quote from: Basil on Jul 10, 2024, 11:21 AMBonds trading at 77%, (75 cents in the dollar). Punting that there's better than 3 chances in 4 that the bonds will be repaid in full. Wow, that's either very brave or very foolish, only time will tell which.
Is that how the equation & odds work with fixed interest securities?
So what was it saying when the bonds were trading at 200% a few weeks ago?
Quote from: Teitei on Jul 10, 2024, 12:10 PMIs that how the equation & odds work with fixed interest securities?
So what was it saying when the bonds were trading at 200% a few weeks ago?
Its a moving target as the yield to maturity is wrapped up in the duration to maturity and being a very short bond that has changed a lot over the last few months. A few weeks ago when the bonds were trading at 170% the market pricing was just under 50 cents on the dollar, i.e. 50/50 outcome.
It seems like there's been a serious shift in the risk appetite either through ignorance or deliberate choice because (and using TAB odds to illustrate my point better), a gamble paying $2 (50/50 odds), has now shifted down to $1.33 ($4 back for every $3 risked).
As any punter knows, that's a pretty seismic shift in the odds not forgetting that for the bonds to be repaid, first we need the $130m loan to be approved as well as a very sizeable capital raise to be executed successfully, (two sequential events), as well as banks being keep happy in the meantime and Bright Dairy overlords being happy to underwrite the capital raise, (presuming they're the only ones prepared to do this).
Given ATM have not even confirmed they will vote in the affirmative for the $130m loan arrangement, I think $1.33 is very poor odds for the risks that clearly present, not forgetting that the bonds are deeply subordinated and completely unsecured. I hope it works out for you mate; I really do but I don't like those odds at all.
Quote from: Basil on Jul 09, 2024, 10:40 AMWhich may leave the bondholders hung out to dry in the bitter cold.
Putting aside all the business posturing, on the face of it ATM have to agree to Brights loan or it would be business suicide I would have thought.
I am somewhat surprised how well ATM shares have held up given how detrimental SML going broke could be for ATM product production and feed into China.
The way I see it all posturing aside ATM have 2 options and only one really works.
1. Agree to the Bright loan and then decide whether to participate in a cap raise or not.
2. Don't agree to the loan, SML goes belly up, ATM lose any say in the matter, have to fight for the scraps of the business along with other market participants, in the meantime could lose access to China market and production of their products.
Lets not forget ATM need to look after their own shareholders, would be interesting to explain to their own SHers why they thought it would be best to let SML go broke
Forgone conclusion ATM will agree to the loan
We'll know tomorrow! I bought an extra-large amount of popcorn just for the occasion lol
The risk on the bonds is also non-binary to the extent that partial recovery of face value is possible during a liquidation proceeding. In my mind, so long as the shares are trading above zero, there it equity value that is above zero and the bonds should be paid out. At least that it what the market is saying.
Quote from: Basil on Jul 10, 2024, 04:54 PMWe'll know tomorrow! I bought an extra-large amount of popcorn just for the occasion lol
You seriously believe that A2M will commit corporate hara kiri by voting against Bright's loan and put SML into receivership?
Trading Halt placed around tomorrows meeting....
Grab your popcorn.
https://www.nzx.com/announcements/434282
Quote from: Teitei on Jul 10, 2024, 05:43 PMYou seriously believe that A2M will commit corporate hara kiri by voting against Bright's loan and put SML into receivership?
They will vote yes and participate in any CR as well.
There's always two possible outcomes when it comes to a vote Balance me old mate. I have no stake in either the bonds or the shares these days, but I did sell my shares at an average price of just on $11 many years ago so quite obviously I have no clue what I'm doing ;)
Quote from: Basil on Jul 10, 2024, 05:55 PMThere's always two possible outcomes when it comes to a vote Balance me old mate. I have no stake in either the bonds or the shares these days, but I did sell my shares at an average price of just on $11 many years ago so quite obviously I have no clue what I'm doing ;)
Of course there are always two possible outcomes - maybe even three.
So you believe A2M will vote No and put SML into receivership.
Always have time for your opinion Beagle which is why I asked.
Quote from: Crackity on Jul 10, 2024, 07:54 PMWhat's the third option as most of us are old and stupid?
A draw.
Quote from: Teitei on Jul 09, 2024, 05:01 PM606k shares traded today - some keen position taking ahead of Thursday vote.
Heck, some even paid up this morning to get stock!
A 10 bagger sometime in the future?
Would have been $7m+ turnover once but now, just $154k.
"Who dares wins!"
Sp up ahead of vote tomorrow and on decent 500k+ turnover again.
Again, would have been $6m+ turnover once but now, just a paltry $132k.
Quote from: Teitei on Jul 10, 2024, 07:02 PMOf course there are always two possible outcomes - maybe even three.
So you believe A2M will vote No and put SML into receivership.
Always have time for your opinion Beagle which is why I asked.
I don't believe anything is certain here mate. It's not over until the fat lady sings but clearly, it's a commercial risk until the vote is done and dusted but I foresee that there are possible different ways ATM can "milk" this situation to their advantage. A JV with Bright on Dunsandel bought from the receivers might work?
Let me put it perhaps best, this way. I'm struggling to recall the last time a major shareholder, in a position to really heavily affect, as well as influence, the vote outcome, didn't enunciate their voting intention well before the vote date, if for no other reason than to exert their substantial influence. Why would they withhold this considerable influence given to exert it almost guarantees the outcome? This makes no commercial sense to me?
No other similar situation comes to mind, where such major influence has been withheld, but I am an old and forgetful Beagle these days so who knows, something similar has probably happened many times before.
You're a good guy so I hope it works out well for you mate. Bond pricing certainly suggests most people think everything will work out okay.
From my perspective as a bean counter looking at their operating losses. Its just that the whole thing is such a huge mess, with both the balance sheet and profit in loss in a severely distressed state, and the quantum of their indebtedness' is so, so severe. Please forgive my morbid fascination with slow motion train wrecks but I can't help myself wondering if parties don't work to exclude $180m (the unsecured bondholders), of the debt and mitigate the size of the problem? Just as well we can rely on the Chinese overlords who control Bright Dairy to ensure they always act with upmost integrity and honour to all stakeholders, and everything will work out okay...and we can also rely on ATM cowtoeing to Bright's behest...or can we? We'll know a lot more this time tomorrow.
Quote from: snapiti on Jul 10, 2024, 04:42 PMPutting aside all the business posturing, on the face of it ATM have to agree to Brights loan or it would be business suicide I would have thought.
I am somewhat surprised how well ATM shares have held up given how detrimental SML going broke could be for ATM product production and feed into China.
The way I see it all posturing aside ATM have 2 options and only one really works.
1. Agree to the Bright loan and then decide whether to participate in a cap raise or not.
2. Don't agree to the loan, SML goes belly up, ATM lose any say in the matter, have to fight for the scraps of the business along with other market participants, in the meantime could lose access to China market and production of their products.
Lets not forget ATM need to look after their own shareholders, would be interesting to explain to their own SHers why they thought it would be best to let SML go broke
Forgone conclusion ATM will agree to the loan
Good summation of where things are at.
Guess that in the background, A2M has been trying to use its position to milk (pun intended) some concessions from SML.
Quote from: Teitei on Jul 11, 2024, 07:59 AMGood summation of where things are at.
Guess that in the background, A2M has been trying to use its position to milk (pun intended) some concessions from SML.
As you predicted, Snapiti, A2M to vote in favour of loan proposal.
https://www.nzx.com/announcements/434298
Quote from: Left Field on Jul 10, 2024, 05:47 PMTrading Halt placed around tomorrows meeting....
Grab your popcorn.
https://www.nzx.com/announcements/434282
I zeriously theenk zomething memorable vill happen today. I am not absolutely zure. But I just have thees 'pinkling'....
RB
Quote from: Teitei on Jul 11, 2024, 08:36 AMAs you predicted, Snapiti, A2M to vote in favour of loan proposal.
https://www.nzx.com/announcements/434298
ATM's announce is somewhat more hawkish. It ain't over by any stretch of the imagination, even after the $130m bank loan is paid.
https://www.nzx.com/announcements/434292
Quote from: Buzz on Jul 11, 2024, 09:12 AMATM's announce is somewhat more hawkish. It ain't over by any stretch of the imagination, even after the $130m bank loan is paid.
https://www.nzx.com/announcements/434292
As I have written before, A2M is an eunuch.
What can A2M do? Put SML into receivership and commit corporate hara-kiri?
"As advised by Synlait in the notice of meeting, a2MC and Synlait have been in discussions. Those discussions relate to Synlait's broader recapitalisation plan, which includes the shareholder loan as well as Synlait's proposed equity raising and concurrent refinancing of its bank facilities, and various other matters.
a2MC continues to have concerns and will engage in discussions with Synlait in the coming weeks. In the meantime, the Company confirms that it has advised Synlait that it will vote in favour of today's resolution."
Quote from: Breezy on Jul 10, 2024, 05:55 PMThey will vote yes and participate in any CR as well.
This.
In my view, based on almost no evidence, A2M are acting as though they don't need Synlait to be a going concern. This is consistent with their (lack of) messaging around supporting Synlait, their late disclosure of intention to vote, and the concerns raised in A2M's announcement today (read between the lines in that one!).
I understand that it is Synlait holds the A2 Platinum licence. But IMO you have to know the specifics of the arrangements to draw any conclusions on A2M's need for Synlait. They may be comfortable with Synlait entering liquidation, especially given Synalit haven't been the best partner to date.
Would have been a fantastic trade at 25c now near 40c, kudos to those that took the chance.
Quote from: Teitei on Jul 11, 2024, 08:36 AMAs you predicted, Snapiti, A2M to vote in favour of loan proposal.
https://www.nzx.com/announcements/434298
same will go for the bonds, don't own any shares but took a punt on the bonds when they were offering monster 130% returns, this based on ATM's position that needs to make sure SML is a going concern.
Confident bonds will be repaid in full
Quote from: SemiStrongForm on Jul 11, 2024, 11:37 AMIn my view, based on almost no evidence, A2M are acting as though they don't need Synlait to be a going concern. This is consistent with their (lack of) messaging around supporting Synlait, their late disclosure of intention to vote, and the concerns raised in A2M's announcement today (read between the lines in that one!).
I understand that it is Synlait holds the A2 Platinum licence. But IMO you have to know the specifics of the arrangements to draw any conclusions on A2M's need for Synlait. They may be comfortable with Synlait entering liquidation, especially given Synalit haven't been the best partner to date.
https://www.nzherald.co.nz/business/synlait-can-recover-chinas-bright-dairy/CD4OAZYKZVGVDISAFWATJIWKN4/
In the interview with the Herald, Bright's Chairman said:
"Both a2 and Bright Food want to Synlait to stabilise. Without Synlait, there would not be prosperity for a2 Milk".
Loan proposal approved - clear from meeting.
Proxy votes - 59m or 27% in favour so A2M with its 20% would have been defeated anyway if it voted against the loan.
A2M would have egg all over its face if it voted NO.
A2M = Eunuch.
Quote from: SemiStrongForm on Jul 08, 2024, 03:41 PMI suspect A2M is voting no. In my mind there are three scenarios, ie, A2M:
- votes yes, but aren't announcing intentions to depress the share price prior to a capital raise
- votes yes, but don't announce intentions because they are wanting to maintain arms lengths distance from all Synlait matters (this one I am least sure about)
- votes no, to draw to an end Synlait's on-going demise (and remove distractions, ie, arbitration proceedings)
I think the third option is looking quite likely.
Did not matter which way A2M voted.
A2M = Eunuch.
Quote from: Teitei on Jul 10, 2024, 08:13 PMSp up ahead of vote tomorrow and on decent 500k+ turnover again.
Again, would have been $6m+ turnover once but now, just a paltry $132k.
Sp up 40% +.
Smart buying in the last 3 days.
Quote from: Minimoke on Jun 27, 2024, 10:06 AMQuite right. Market opened at $0.23 but already is at $0.225. Now worth less than $50m
Oops. Down to $0.22
Ops down to $0.215
Last post from Doomsday Minimoke regarding share price.
Interesting how very quiet he has been after being so vocal and being negative about anything Synlait.
Perhaps he will surface soon now that he can get really negative about the loan proposal going through?
Quote from: Teitei on Jul 11, 2024, 03:18 PMSp up 40% +.
Smart buying in the last 3 days.
Indeed..... well done those brave ones.
Anyway's as an ATM holder I'm happy too..... and still watching with interest to see how the cap raise plays out.
Quote from: Teitei on Jul 11, 2024, 02:30 PM"Both a2 and Bright Food want to Synlait to stabilise. Without Synlait, there would not be prosperity for a2 Milk".
This is posturing from Bright and should not be read literally IMO. There are all sorts of games that could be going on, some of which are being discussed on HC.
Quote from: Teitei on Jul 11, 2024, 03:04 PMDid not matter which way A2M voted.
A2M = Eunuch.
Yes it is easy to say that after a their intentions have been signalled.
No surprise that the majority voted in favour of the resolution. Would it have passed without A2's support? Looks like the vote would be over 50% but not sure what the rule is.
Quote from: SemiStrongForm on Jul 11, 2024, 03:46 PMNo surprise that the majority voted in favour of the resolution. Would it have passed without A2's support? Looks like the vote would be over 50% but not sure what the rule is.
Simple majority of those who vote.
Quote from: SemiStrongForm on Jul 11, 2024, 03:35 PMThis is posturing from Bright and should not be read literally IMO. There are all sorts of games that could be going on, some of which are being discussed on HC.
Yes it is easy to say that after a their intentions have been signalled.
I have stated several times before that A2M is a eunuch. Today more than confirms that. In fact, the other shareholders show that they can rally in numbers to outvote A2M.
As for HC - I never read that site as it's full of a lot of nonsense.
Quote from: SemiStrongForm on Jul 11, 2024, 03:35 PMThis is posturing from Bright and should not be read literally IMO. There are all sorts of games that could be going on, some of which are being discussed on HC.
Yes it is easy to say that after a their intentions have been signalled.
great investor lessons to be learned from following SML story, you don't even have to have a vested interest in the goings on to be learning a lot, that includes, among many things, the business posturing.
Would it be best now the loan agreement is agreed to for both Bright and ATM to have the SP fall from here to enable a cheaper cap raise price......makes sense to me
Quote from: Teitei on Jul 11, 2024, 04:05 PMAs for HC - I never read that site as it's full of a lot of nonsense.
I find that HC analysis is highly dependent on company. Although the recent threads on Cettire made me reconsider that position since it seemed to be full of technical analysis lunatics that were claiming the stock was cheap despite the revelation of serious allegations that could fundamentally break the entire business model. It is now one of the most shorted stocks on the ASX.
Quote from: Teitei on Jul 11, 2024, 04:05 PMI have stated several times before that A2M is a eunuch. Today more than confirms that. In fact, the other shareholders show that they can rally in numbers to outvote A2M.
As for HC - I never read that site as it's full of a lot of nonsense.
The A2M threads on HC are overall far better than any of the NZ forums due to a much larger audience and holder base.
Quote from: Teitei on Jul 11, 2024, 04:05 PMI have stated several times before that A2M is a eunuch. Today more than confirms that. In fact, the other shareholders show that they can rally in numbers to outvote A2M.
As for HC - I never read that site as it's full of a lot of nonsense.
Vote NO and "A2M can wave goodbye to its China IF business..."
Vote YES and "A2M = Eunuch"
Hmmm, not much choice here. But great analysis. No-one on HC can beat that. That's for sure.
Quote from: CG on Jul 11, 2024, 06:33 PMVote NO and "A2M can wave goodbye to its China IF business..."
Vote YES and "A2M = Eunuch"
Hmmm, not much choice here. But great analysis. No-one on HC can beat that. That's for sure.
Shanghai happens to be THE economic powerhouse of China, the second biggest economy in the world.
The Shanghai Municipal Council is the commercial arm of the local government of the Shanghai region.
Bright Foods is the commercial & industrial food operating arm of the Council.
Connect the dots.
Enough assurances were made by Bright's executives & finally, the Chairman himself no less - that they stand steadfast behind Synlait.
Seems to me that some posters cannot but see everything Synlait as negative & beyond salvation but cannot see the above.
Quote from: Teitei on Jul 11, 2024, 07:48 PMShanghai happens to be THE economic powerhouse of China, the second biggest economy in the world.
The Shanghai Municipal Council is the commercial arm of the local government of the Shanghai region.
Bright Foods is the commercial & industrial food operating arm of the Council.
Connect the dots.
Bright are much better connected, and influential than even those incredible credentials.
I agree, even though the SML SP has popped today, basically very little has changed with the $130m loan from Bright, except that the creditor is not the bank anymore. They still have to pay it off.
Better imo to see how the cap raise goes and whether that is the time to get some. Without a successful and
massive cap raise, SML is still in deep doo doo. It's not a given yet that Bright or ATM would pile hundreds of millions into maintaining their anchor shareholder stakes, or even that SML continues as a listed company.
Underlying that is SML doesn't make any money, last reporting was close to -$100m net loss, -$17.4m after adjustments. Debt up to $559m.
Still a sick puppy, very sick.
Quote from: Teitei on Jul 11, 2024, 07:48 PMShanghai happens to be THE economic powerhouse of China, the second biggest economy in the world.
The Shanghai Municipal Council is the commercial arm of the local government of the Shanghai region.
Bright Foods is the commercial & industrial food operating arm of the Council.
Connect the dots.
Enough assurances were made by Bright's executives & finally, the Chairman himself no less - that they stand steadfast behind Synlait.
Seems to me that some posters cannot but see everything Synlait as negative & beyond salvation but cannot see the above.
Did I say anything about Synlait? ::)
Quote from: Buzz on Jul 11, 2024, 08:17 PMBright are much better connected, and influential than even those incredible credentials.
I agree, even though the SML SP has popped today, basically very little has changed with the $130m loan from Bright, except that the creditor is not the bank anymore. They still have to pay it off.
Better imo to see how the cap raise goes and whether that is the time to get some. Without a successful and massive cap raise, SML is still in deep doo doo. It's not a given yet that Bright or ATM would pile hundreds of millions into maintaining their anchor shareholder stakes, or even that SML continues as a listed company.
Underlying that is SML doesn't make any money, last reporting was close to -$100m net loss, -$17.4m after adjustments. Debt up to $559m.
Still a sick puppy, very sick.
Sums the situation up very well. Happy for Balance but there's a very long and winding road ahead for this company.
Quote from: Teitei on Jul 11, 2024, 07:48 PMShanghai happens to be THE economic powerhouse of China, the second biggest economy in the world.
The Shanghai Municipal Council is the commercial arm of the local government of the Shanghai region.
Bright Foods is the commercial & industrial food operating arm of the Council.
Connect the dots.
Enough assurances were made by Bright's executives & finally, the Chairman himself no less - that they stand steadfast behind Synlait.
Seems to me that some posters cannot but see everything Synlait as negative & beyond salvation but cannot see the above.
Alright, lets talk about Synlait. Pokeno has been online for 4 years now and all these years it was hugely underutilized and burning cash as there is no tomorrow. Question is why this mighty shareholder and food operator have done nothing all these years and only now started showing its "power" and support? All they had to do was load it with its mighty orders and Pokeno would be hugely profitable.
Just to be clear - I'm and was 100% positive that Synlait will survive in one form or another and all thanks to Bright, not sure about smaller shareholders though.
Quote from: CG on Jul 11, 2024, 08:56 PMAlright, lets talk about Synlait. Pokeno has been online for 4 years now and all these years it was hugely underutilized and burning cash as there is no tomorrow. Question is why this mighty shareholder and food operator have done nothing all these years and only now started showing its "power" and support? All they had to do was load it with its mighty orders and Pokeno would be hugely profitable.
Just to be clear - I'm and was 100% positive that Synlait will survive in one form or another and all thanks to Bright, not sure about smaller shareholders though.
Answer - 2.5 years of Covid impact. Pokeno could not have been commissioned at a worse possible time - May 2020!
Same Covid impact which saw A2M's fortunes and sp just about collapsed, remember? A2M is still a long way from recovering the past glory it enjoyed effortlessly until Covid. And A2M was held up as THE Covid Success story initially, remember?
As for Bright, the Chairman himself said China is only in recent times recovering from the downturn.
We are in agreement about having a look during the CR - I have never ever said otherwise except that unlike others here, I never believed Synlait would fall over.
Where has Minimoke the doomsday merchant disappeared to?
Quote from: Teitei on Jul 11, 2024, 09:25 PM[...]
Same Covid impact which saw A2M's fortunes and sp just about collapsed, remember? A2M is still a long way from recovering the past glory it enjoyed effortlessly until Covid. And A2M was held up as THE Covid Success story initially, remember?
It may been held up as the Covid success story, but ATM was screwed by the demise of the Daigou channel. Since then, it has reorganised China distribution and the market has rewarded this with a 90% upside in SP.
This is not about ATM, this is about whether SML will survive and prosper. Either of which are not obvious at the moment. This is about SML's survival.
Quote from: Buzz on Jul 11, 2024, 09:39 PMIt may been held up as the Covid success story, but ATM was screwed by the demise of the Daigou channel. Since then, it has reorganised China distribution and the market has rewarded this with a 90% upside in SP.
This is not about ATM, this is about whether SML will survive and prosper. Either of which are not obvious at the moment. This is about SML's survival.
I mentioned ATM because it puts Synlait's problems in perspective. They are similar except that ATM was an established player with a superb track record whileas Pokeno was a start up during the Covid period.
I believe SML will not only survive but prosper with Bright's involvement - my concern is whether the prosperity Will he shared with minorities.
Quote from: Teitei on Jul 11, 2024, 09:25 PMAnswer - 2.5 years of Covid impact. Pokeno could not have been commissioned at a worse possible time - May 2020!
Same Covid impact which saw A2M's fortunes and sp just about collapsed, remember? A2M is still a long way from recovering the past glory it enjoyed effortlessly until Covid. And A2M was held up as THE Covid Success story initially, remember?
As for Bright, the Chairman himself said China is only in recent times recovering from the downturn.
We are in agreement about having a look during the CR - I have never ever said otherwise except that unlike others here, I never believed Synlait would fall over.
Where has Minimoke the doomsday merchant disappeared to?
Covid, eh? Is this thing still around? Looks like Bright is a bit slow to recover compare to others. Maybe not that almighty after all? Nah, she'll be alright
Quote from: CG on Jul 11, 2024, 08:56 PMAlright, lets talk about Synlait. Pokeno has been online for 4 years now and all these years it was hugely underutilized and burning cash as there is no tomorrow. Question is why this mighty shareholder and food operator have done nothing all these years and only now started showing its "power" and support? All they had to do was load it with its mighty orders and Pokeno would be hugely profitable.
Just to be clear - I'm and was 100% positive that Synlait will survive in one form or another and all thanks to Bright, not sure about smaller shareholders though.
Pokeno has never attracted enough milk supply volume so plant is very underutilized
Quote from: snapiti on Jul 11, 2024, 11:38 PMPokeno has never attracted enough milk supply volume so plant is very underutilized
Pokeno needs to attract more milk suppliers and the only way it can do that is by paying a higher payout rate than its competitors. It can only do that if the plant produces higher value nutritional dairy products.
Also, Synlait needs to show that it is financially robust so the farmers are confident of the long term future of the company.
A lot to do for Synlait in the next 3 years!
Quote from: Teitei on Jul 11, 2024, 07:48 PMShanghai happens to be THE economic powerhouse of China, the second biggest economy in the world.
The Shanghai Municipal Council is the commercial arm of the local government of the Shanghai region.
Bright Foods is the commercial & industrial food operating arm of the Council.
Connect the dots.
Enough assurances were made by Bright's executives & finally, the Chairman himself no less - that they stand steadfast behind Synlait.
Seems to me that some posters cannot but see everything Synlait as negative & beyond salvation but cannot see the above.
I think just a normal cross purpose discussion.
The discussion whether Synlaits retail shareholders (and bondholders) might be shafted is absolutely uncorrelated to the discussion whether Synlait (or at least its production facilities) will survive. Different things, and Chinese money is clearly only interested in the second part.
The other thing is - while hearing your admiration for one of Chinas economic hubs ... The role played by Synlait's board was pathetic. Given that China always controlled the board am I wondering what this says about their investment abilities.
Lets face it, the Chinese appointed one of our clapped out NZ politicians (Richardson) to hold their flag at the board table, because they didn't even understand that politicians are useless at board tables anyway (wrong skill sets) and that they have in NZ not even mana left after they left politics. Bunch of idiots.
To make things worse, they filled the rest of their allotment to control the board with young Chinese faces whose major qualification was to play with their cell phones during AGM's and board meetings. Many of the Chinese reps would have found it hard to follow any board discussion held in English anyway, so good that they could do at least some unrelated work during this time.
Bright and the Chinese contributed to the board nothing useful and they allowed Synlait to go down the drain. Sure - some of it was their own money they destroyed, so - fair enough, but all the shareholders who relied on them as strong partner - tough luck.
While I agree with you, that Dunsandel is highly likely to survive and to move firmly into Chinese hands - this does not mean that any of this is good for current Synlait retail share or bond holders. Different things. And no, it does not show either any particular Chinese investment or company management skills - its just money speaking.
Great example for how to build a small company by running down a big one.
Quote from: BlackPeter on Jul 12, 2024, 11:10 AMI think just a normal cross purpose discussion.
The discussion whether Synlaits retail shareholders (and bondholders) might be shafted is absolutely uncorrelated to the discussion whether Synlait (or at least its production facilities) will survive. Different things, and Chinese money is clearly only interested in the second part.
The other thing is - while hearing your admiration for one of Chinas economic hubs ... The role played by Synlait's board was pathetic. Given that China always controlled the board am I wondering what this says about their investment abilities.
Lets face it, the Chinese appointed one of our clapped out NZ politicians (Richardson) to hold their flag at the board table, because they didn't even understand that politicians are useless at board tables anyway (wrong skill sets) and that they have in NZ not even mana left after they left politics. Bunch of idiots.
To make things worse, they filled the rest of their allotment to control the board with young Chinese faces whose major qualification was to play with their cell phones during AGM's and board meetings. Many of the Chinese reps would have found it hard to follow any board discussion held in English anyway, so good that they could do at least some unrelated work during this time.
Bright and the Chinese contributed to the board nothing useful and they allowed Synlait to go down the drain. Sure - some of it was their own money they destroyed, so - fair enough, but all the shareholders who relied on them as strong partner - tough luck.
While I agree with you, that Dunsandel is highly likely to survive and to move firmly into Chinese hands - this does not mean that any of this is good for current Synlait retail share or bond holders. Different things. And no, it does not show either any particular Chinese investment or company management skills - its just money speaking.
Great example for how to build a small company by running down a big one.
100% agree, and now small shareholders have handed Bright the key to further benefit themselves at the expense of small shareholders.
Most sensible thing to have done yesterday was vote against the proposal and force Bright's hand when they were in a vulnerable position. Now, just watch them make off with the prize...
Quote from: Poet on Jul 12, 2024, 11:21 AM100% agree, and now small shareholders have handed Bright the key to further benefit themselves at the expense of small shareholders.
Most sensible thing to have done yesterday was vote against the proposal and force Bright's hand when they were in a vulnerable position. Now, just watch them make off with the prize...
Bright was never in a vulnerable position - A2M the eunuch was and still is.
Get used to that fact and then, start thinking about whether Synlait is worth considering any further as an investment during the rights trading.
Quote from: Teitei on Jul 12, 2024, 12:15 PMBright was never in a vulnerable position - A2M the eunuch was and still is.
Get used to that fact and then, start thinking about whether Synlait is worth considering any further as an investment during the rights trading.
Do you think that if Bright gets control of Synlait then it could become the biggest customer of Synlait and get the output near cost.
If so Would this transfer price be legal?
Does A2M already get its product cheap.
Does A2m really need Synlait in the medium term in your opinion.
I know little about Synlait.
Quote from: Clearasmud on Jul 12, 2024, 12:44 PMDo you think that if Bright gets control of Synlait then it could become the biggest customer of Synlait and get the output near cost.
If so Would this transfer price be legal?
Does A2M already get its product cheap.
Does A2m really need Synlait in the medium term in your opinion.
I know little about Synlait.
If Bright becomes Synlait's biggest customer, I would expect Bright to get very good pricing on its products from Synlait - it's just the nature of things.
Transfer pricing - just have a look at Apple, Google and any of the multi-nationals operating in NZ - thedy pay bugger all tax on their NZ revenues as most of their profits are transferred overseas and in the case of Apple, to Ireland! I worked for a multi-national and unerringly, the management fees charged by HQ New York were always at a level to leave NZ at just above breakeven. The IRD can certainly take a case against unfair transfer pricing but have you seen any?
Dunsandel plant where A2M sources its products is profitable but not as profitable as before Covid - I assume its fortunes are tied with A2M's profitability & willingness to pay for products.
A2M is trying to diversify away from Synlait - hence the attempt to break the exclusivity agreement. In the medium term, A2M clearly prefers to be not reliant on Synlait. The arbitration result will determine that to a great extent.
As I have written before, A2M needs to be very careful it does not get offside with China Inc. China is a command economy and they can exact a horrendous cost on anyone, country or any company deemed to be a threat to China's well being (read China state owned companies). I am sure you have followed what China did to Australia's wine & lobster exports, and to Norway's salmon exports.
As was put to me by an investment banker recently - A2M cannot do without sales to China but China can do without products from A2M.
Put it another way - I believe most exporters would prefer to sell to other countries if they could but they can't.
A2M's share price doesn't seem particularly correlated with Synlait. This leads me to believe that Synlait does not need to continue as a going concern, at least from the market's perspective.
Put another way, I disagree that:
- A2M is an eunuch, or that
- A2M's hands are tied
If you read the announcement yesterday from A2M it appeared to me that A2M are
concerned about Synlait going down the current road in its current management or capital structure. To me, it read as if they want to bring this saga to a close by rejecting the loan, but such a decision would have massive consequences and could open up A2M to the wrath of their shareholders. It was ultimately less risky to approve the loan.
Open to contrary views, as always.
Quote from: SemiStrongForm on Jul 12, 2024, 02:16 PMA2M's share price doesn't seem particularly correlated with Synlait. This leads me to believe that Synlait does not need to continue as a going concern, at least from the market's perspective.
Put another way, I disagree that:
- A2M is an eunuch, or that
- A2M's hands are tied
If you read the announcement yesterday from A2M it appeared to me that A2M are concerned about Synlait going down the current road in its current management or capital structure. To me, it read as if they want to bring this saga to a close by rejecting the loan, but such a decision would have massive consequences and could open up A2M to the wrath of their shareholders. It was ultimately less risky to approve the loan.
Open to contrary views, as always.
The most telling indication of how little leverage A2M has - keeping coy about voting intention and then, voting Yes in the morning while issuing a grudging statement.
Shows A2M was not able to obtain any concessions or mlieage.
A2M's strategy is so transparent - keep coy until they know how the proxy votes were going. If Synlait did not have enough proxy votes, SML would have had to call A2M to ask A2M to vote Yes and A2M would then, name its prize.
Unfortunately, the other shareholders overwhelmingly voted Yes with their proxies.
A2M did not received the call from Synlait and with no card left to play, had to vote Yes. A2M could have been the big hero by indicating it would vote yes much much earlier.
Shareholders really should be turning their attention to influencing the CR terms and conditions so that it's a fair CR to all shareholders.
Forgone conclusion that the CR will be dilutary but it does not have to be unfair to other shareholders.
Remember that a shareholders' vote is required to approve the CR so there's one more hurdle Synlait has to clear before the CR goes ahead and Synlait is recapitalised.
Quote from: Teitei on Jul 12, 2024, 03:19 PMShareholders really should be turning their attention to influencing the CR terms and conditions so that it's a fair CR to all shareholders.
Forgone conclusion that the CR will be dilutary but it does not have to be unfair to other shareholders.
Remember that a shareholders' vote is required to approve the CR so there's one more hurdle Synlait has to clear before the CR goes ahead and Synlait is recapitalised.
How could the CR be structured unfairly?
Bright is the natural underwriter.
Their loan to Synlait could easily have been structured to convert to equity at a favourable price,do you think they would have liked to do this?
Quote from: Clearasmud on Jul 12, 2024, 06:50 PMHow could the CR be structured unfairly?
Bright is the natural underwriter.
Their loan to Synlait could easily have been structured to convert to equity at a favourable price,do you think they would have liked to do this?
A pro-rata issue to all shareholders would be fair.
A placement of shares followed by a retail issue would not be.
I certainly thought Bright was going to provide funding via a convertible note issue. Surprised me they didn't. Have to admit I am impressed!
Quote from: Teitei on Jul 12, 2024, 01:12 PMAs I have written before, A2M needs to be very careful it does not get offside with China Inc. China is a command economy and they can exact a horrendous cost on anyone, country or any company deemed to be a threat to China's well being (read China state owned companies). I am sure you have followed what China did to Australia's wine & lobster exports, and to Norway's salmon exports.
As was put to me by an investment banker recently - A2M cannot do without sales to China but China can do without products from A2M.
Put it another way - I believe most exporters would prefer to sell to other countries if they could but they can't.
It seems like you are either forgetting or unaware who is the A2M's key Chinese partner.
"China State Farm Agribusiness has been a2 Milk's strategic distribution partner in China since 2013 and is the exclusive import agent for its China label products, including a2's China label infant milk formula.
CSFA is a wholly owned unit of China National Agriculture Development Group Co (CNADC), which is also the parent company of China Animal Husbandry Group (CAHG), which holds a 25 per cent stake in Mataura Valley Milk.
A2 Milk owns the rest of Mataura Valley."
"The extension of arrangements with China State Farm confirms the strength of our relationship with key partners in China and our shared confidence in the future," a2 Milk chief executive David Bortolussi said.
"Bortolussi said China State Farm's support would be critical for joint success in China."Here are some insight about CNADC
China National Agricultural Development Group Co., Ltd. (hereinafter referred to as "CNADC") was founded in October 2004 upon the restructuring and merging of China National Fisheries (Group) Corporation with the China Animal Husbandry (Group) Corporation and changed its governance structure and name in January 2011 according to the Company Law. It is the only central comprehensive agricultural enterprise under the direct governance of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council. It is a leading enterprise in national animal epidemic diseases and is irreplaceable in meeting China's agricultural needs. CNADC holds 17 wholly owned or share-controlled subsidiaries, and 3 publicly listed companies. CNADC's business can be found in all provinces, autonomous regions and municipalities in China. It has established branches or bases in more than 40 countries and regions around the world and maintains economic and trade ties with over 80 countries and regions.
As a wholly state-owned company, CNADC devotes itself to international cooperation and the exploitation of agricultural and fishery resources. Domestically CNADC keeps in mind its aim to serve "agriculture, rural areas and farmers" and actively promotes the development of agricultural industrialization. After years of development, CNADC has gradually built up three core businesses: development of strategic resources, with focus on pelagic fishing and agricultural resource exploitation; research and development, manufacturing and distribution of biological vaccines, vet-medicines and feed additives; and modern seed, agricultural insurance and agricultural international trade. Meanwhile, it develops supplementary services for core businesses, such as diesel manufacturing and port construction.
CNADC adheres to the plans made by the Central Committee of the CPC and the State Council to deepen reforms in state-owned enterprises and follows the SASAC's guiding principles "to grow stronger and larger" in a bid to implement the "Twelfth Five-year Plan". CNADC will continue its efforts regarding enterprise reform, further adjust and optimize its business structure and make a more reasonable allotment of resources so as to enhance the enterprise's core competition. CNADC will cater to the domestic and international markets and strive towards more ambitious goals.I'd say it not too bad for an eunuch to have such partner.
Quote from: CG on Jul 12, 2024, 08:32 PMIt seems like you are either forgetting or unaware who is the A2M's key Chinese partner.
"China State Farm Agribusiness has been a2 Milk's strategic distribution partner in China since 2013 and is the exclusive import agent for its China label products, including a2's China label infant milk formula.
CSFA is a wholly owned unit of China National Agriculture Development Group Co (CNADC), which is also the parent company of China Animal Husbandry Group (CAHG), which holds a 25 per cent stake in Mataura Valley Milk.
A2 Milk owns the rest of Mataura Valley."
"The extension of arrangements with China State Farm confirms the strength of our relationship with key partners in China and our shared confidence in the future," a2 Milk chief executive David Bortolussi said.
"Bortolussi said China State Farm's support would be critical for joint success in China."
Here are some insight about CNADC
China National Agricultural Development Group Co., Ltd. (hereinafter referred to as "CNADC") was founded in October 2004 upon the restructuring and merging of China National Fisheries (Group) Corporation with the China Animal Husbandry (Group) Corporation and changed its governance structure and name in January 2011 according to the Company Law. It is the only central comprehensive agricultural enterprise under the direct governance of the State-owned Assets Supervision and Administration Commission (SASAC) of the State Council. It is a leading enterprise in national animal epidemic diseases and is irreplaceable in meeting China's agricultural needs. CNADC holds 17 wholly owned or share-controlled subsidiaries, and 3 publicly listed companies. CNADC's business can be found in all provinces, autonomous regions and municipalities in China. It has established branches or bases in more than 40 countries and regions around the world and maintains economic and trade ties with over 80 countries and regions.
As a wholly state-owned company, CNADC devotes itself to international cooperation and the exploitation of agricultural and fishery resources. Domestically CNADC keeps in mind its aim to serve "agriculture, rural areas and farmers" and actively promotes the development of agricultural industrialization. After years of development, CNADC has gradually built up three core businesses: development of strategic resources, with focus on pelagic fishing and agricultural resource exploitation; research and development, manufacturing and distribution of biological vaccines, vet-medicines and feed additives; and modern seed, agricultural insurance and agricultural international trade. Meanwhile, it develops supplementary services for core businesses, such as diesel manufacturing and port construction.
CNADC adheres to the plans made by the Central Committee of the CPC and the State Council to deepen reforms in state-owned enterprises and follows the SASAC's guiding principles "to grow stronger and larger" in a bid to implement the "Twelfth Five-year Plan". CNADC will continue its efforts regarding enterprise reform, further adjust and optimize its business structure and make a more reasonable allotment of resources so as to enhance the enterprise's core competition. CNADC will cater to the domestic and international markets and strive towards more ambitious goals.
I'd say it not too bad for an eunuch to have such partner.
I'll get in before Teitei does.
I think you're missing his point (albeit rather crudely and obliquely put), which is, exactly what you have illuminated. ATM are beholden to Bright's connections in the CCCP which so far are working very well for them both,
and they are exposed to about 50% of their revenue attached to the SMAR which Synlait hold, and they're a smaller less influential shareholder.
Best maybe for ATM to not get too uppity and frustrate their most important partner to the China market,
or compromise their supply to that market, from Synlait, which accounts for 50% of revenue.
A delicate balance, but so far I think they're doing OK.
Quote from: Teitei on Jul 12, 2024, 02:28 PMThe most telling indication of how little leverage A2M has - keeping coy about voting intention and then, voting Yes in the morning while issuing a grudging statement.
Shows A2M was not able to obtain any concessions or mlieage.
A2M's strategy is so transparent - keep coy until they know how the proxy votes were going. If Synlait did not have enough proxy votes, SML would have had to call A2M to ask A2M to vote Yes and A2M would then, name its prize.
Unfortunately, the other shareholders overwhelmingly voted Yes with their proxies.
A2M did not received the call from Synlait and with no card left to play, had to vote Yes. A2M could have been the big hero by indicating it would vote yes much much earlier.
There was no point for A2M to vote NO as it was quite obvious that majority will vote YES. This vote had nothing to do with obtaining concessions or to show who holds power or not, where as support for upcoming recapitalisation plan will be somewhat a different story.
Quote from: Buzz on Jul 12, 2024, 08:42 PMI'll get in before Teitei does.
I think you're missing his point (albeit rather crudely and obliquely put), which is, exactly what you have illuminated. ATM are beholden to Bright's connections in the CCCP which so far are working very well for them both, and they are exposed to about 50% of their revenue attached to the SMAR which Synlait hold, and they're a smaller less influential shareholder.
Best maybe for ATM to not get too uppity and frustrate their most important partner to the China market, or compromise their supply to that market, from Synlait, which accounts for 50% of revenue.
A delicate balance, but so far I think they're doing OK.
No, I don't think I'm missing Teitei's point. Why do you think "ATM are beholden to Bright's connections in the CCP" and not to CNADC's connections in CCP. CNADC tied directly to the Central Committee of the CPC and the State Council. You won't get more powerful connection than that. Also, why do you think that to get SAMR you need some special connections to CCP? There are hundreds if not thousands businesses around the world who received SAMRs and I doubt all of them got it through some sort of connections to CCP. And once again Bright is not A2M most important partner to the China market, CNADC is and exclusive one. Bright is a partner of Synlait. A2M is Synlait's customer and shareholder. But all these aside, it seems there are too much emotions and conspiracy theories around current situation. I don't think anyone wants to ruin or do harm to anybody. It's in everybody's interest to get Synlait going. All A2M wants is to remove exclusivity clause that they can expand its business and they will get what they want one way or another.
Quote from: CG on Jul 12, 2024, 09:21 PMNo, I don't think I'm missing Teitei's point. Why do you think "ATM are beholden to Bright's connections in the CCP" and not to CNADC's connections in CCP. CNADC tied directly to the Central Committee of the CPC and the State Council. You won't get more powerful connection than that. Also, why do you think that to get SAMR you need some special connections to CCP? There are hundreds if not thousands businesses around the world who received SAMRs and I doubt all of them got it through some sort of connections to CCP. And once again Bright is not A2M most important partner to the China market, CNADC is and exclusive one. Bright is a partner of Synlait. A2M is Synlait's customer and shareholder. But all these aside, it seems there are too much emotions and conspiracy theories around current situation. I don't think anyone wants to ruin or do harm to anybody. It's in everybody's interest to get Synlait going. All A2M wants is to remove exclusivity clause that they can expand its business and they will get what they want one way or another.
Understand that China is a command economy which means that the national interest comes first when the strategy is put in place. In this case, the national interest is securing China's food supply chain in China as well as overseas. All SOEs adhere to that strategy from central command - one for all and all for one.
A2M is taking on the central command if it takes on Bright - it's that simple. CNADC and Bright dance to the same tune.
Which is why A2M needs to tread very very carefully. And my observation is that it did not play the game well with its voting on the loan proposal. Bright has extended a friendly 'let's work together' to A2M in Synlait's and both our interests - let's hope that happens.
Quote from: Teitei on Jul 13, 2024, 09:34 AMUnderstand that China is a command economy which means that the national interest comes first when the strategy is put in place. In this case, the national interest is securing China's food supply chain in China as well as overseas. All SOEs adhere to that strategy from central command - one for all and all for one.
A2M is taking on the central command if it takes on Bright - it's that simple. CNADC and Bright dance to the same tune.
Which is why A2M needs to tread very very carefully. And my observation is that it did not play the game well with its voting on the loan proposal. Bright has extended a friendly 'let's work together' to A2M in Synlait's and both our interests - let's hope that happens.
I guess we all get it. A2M is controlled by the Chinese and so is Synlait. They both are just puppets to please the long term desire of the CCP.
What I don't get is how in such a scenario Synlait and ATM can perform such an ugly mudwrestling match in front of everybody's eyes as they did. This is very un-Chinese and lots of people will loose their face over this episode .... and hey, even if its just a show fight, I am not seeing who gains from this spectacle? There are clearly cleaner and more efficient ways for them to get control of Synlait's facilities (actually, they used to have full control prior to SML's IPO).
While I generally agree with your conclusion - am I wondering, whether this episode might be an indication that the Chinese dragon might as well loose either its teeth or its marbles.
Pathetic board control of Synlait. Pathetic management and control of the infighting of its minions A2M and SML.
I am wondering whether its maybe not just the US slowly falling apart ...
Quote from: Teitei on Jul 13, 2024, 09:34 AMUnderstand that China is a command economy which means that the national interest comes first when the strategy is put in place. In this case, the national interest is securing China's food supply chain in China as well as overseas. All SOEs adhere to that strategy from central command - one for all and all for one.
A2M is taking on the central command if it takes on Bright - it's that simple. CNADC and Bright dance to the same tune.
Which is why A2M needs to tread very very carefully. And my observation is that it did not play the game well with its voting on the loan proposal. Bright has extended a friendly 'let's work together' to A2M in Synlait's and both our interests - let's hope that happens.
Dear Teitei, in my previous life I had a privilege to spend quite a few years in one of those "command economy". During that time, for a couple of years, I had a chance to run my own small business while my better half at the same time was working at one of not many private banks as a top assistant to CEO. That bank later was nationalized in the name of "national interests" and top management either left country (the lucky ones) or went to prison. Now, tell me again what I need to understand about "command economy" and what is your personal experience in that field?
As for A2M, in that case they did everything right. Loan voting wasn't that important as the outcome was quite obvious. They held off to the last minute because they wanted to show that they are not happy and ready to "fight" and that was confirmed in their statement.
Regardless of anything my view is there won't be any serious confrontation and I see three possible scenarios to unfold 1) recapitalizations will be successful, Synlait will keep exclusivity rights but in this case in short to medium terms A2M will intensify it's effort to distance itself from Synlait finally cancel the contract in its current form and in the long term Synlait will probably lose A2M as customer, as a major customer anyway. 2) recapitalization will be successful, Synlait lose exclusivity rights, A2M will gradually move production to other sites to spread the risks but might keep Synlait as on of the major suppliers. 3) recapitalization won't be successful and Synlait will be taken private by Bright or some sort of JV between Bright and A2M. I think first two scenarios are more likely and have equal chances. I do not expect scenario where Synlait forced into liquidation or A2M is taking over the whole or part of it.
Quote from: BlackPeter on Jul 13, 2024, 10:50 AMI guess we all get it. A2M is controlled by the Chinese and so is Synlait. They both are just puppets to please the long term desire of the CCP.
What I don't get is how in such a scenario Synlait and ATM can perform such an ugly mudwrestling match in front of everybody's eyes as they did. This is very un-Chinese and lots of people will loose their face over this episode .... and hey, even if its just a show fight, I am not seeing who gains from this spectacle? There are clearly cleaner and more efficient ways for them to get control of Synlait's facilities (actually, they used to have full control prior to SML's IPO).
While I generally agree with your conclusion - am I wondering, whether this episode might be an indication that the Chinese dragon might as well loose either its teeth or its marbles.
Pathetic board control of Synlait. Pathetic management and control of the infighting of its minions A2M and SML.
I am wondering whether its maybe not just the US slowly falling apart ...
Pathetic attempt at sarcasm.
You might as well opine then that Fonterra, all Australian wine makers & Norwegian salmon farmers are controlled by the Chinese. Because they export at the whim and fancy of the Chinese - fact.
Which part of command economy do you not get?
Quote from: CG on Jul 13, 2024, 11:18 AMDear Teitei, in my previous life I had a privilege to spend quite a few years in one of those "command economy". During that time, for a couple of years, I had a chance to run my own small business while my better half at the same time was working at one of not many private banks as a top assistant to CEO. That bank later was nationalized in the name of "national interests" and top management either left country (the lucky ones) or went to prison. Now, tell me again what I need to understand about "command economy" and what is your personal experience in that field?
As for A2M, in that case they did everything right. Loan voting wasn't that important as the outcome was quite obvious. They held off to the last minute because they wanted to show that they are not happy and ready to "fight" and that was confirmed in their statement.
Regardless of anything my view is there won't be any serious confrontation and I see three possible scenarios to unfold 1) recapitalizations will be successful, Synlait will keep exclusivity rights but in this case in short to medium terms A2M will intensify it's effort to distance itself from Synlait finally cancel the contract in its current form and in the long term Synlait will probably lose A2M as customer, as a major customer anyway. 2) recapitalization will be successful, Synlait lose exclusivity rights, A2M will gradually move production to other sites to spread the risks but might keep Synlait as on of the major suppliers. 3) recapitalization won't be successful and Synlait will be taken private by Bright or some sort of JV between Bright and A2M. I think first two scenarios are more likely and have equal chances. I do not expect scenario where Synlait forced into liquidation or A2M is taking over the whole or part of it.
FYI, I have been involved in 2 companies with China partners exporting NZ produce to China. One of the companies had to close because the China government changed the regulations with no warning or explanation - our China partner which is the subsidiary of multi-billion company accepted the decision and moved on.
And I can tell you numerous stories of how the authorities there changed regulations without consultation & with bugger all notice, and the number of times we had to twist and turn to accommodate the change in regulations. All in the name of ensuring food safety and protecting their citizens.
Eg. Ever heard about "no wood' certification? Even our export agent never heard of it when one of our shipments was stopped until we obtained the certification from MBIE!
So perhaps, just perhaps I may just have some relevant experience?
Round and round in circles you go.
Oh well, it's a lovely sunny day so let's all go and enjoy the day.
Crikey guidence withdrawn......how low can SML go!
https://www.nzx.com/announcements/434597
Synlait Milk Limited (Synlait) is withdrawing its full year 2024 (FY24) guidance.
The previously announced guidance stated that Synlait's earnings before interest, taxes, depreciation, and amortisation (EBITDA) performance was to be at the lower end of the $45 million to $60 million range, excluding a non-cash adjustment for the product costing method change of approximately $17 million.
The company's immediate FY24 performance has been impacted by unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan due to the extended timeframes to execute. Because of this, Synlait advises that its final EBITDA result will be below the current FY24 guidance, but continuing uncertainty means that it is not able to provide an updated outlook.
GLH's
Quote from: Teitei on Jul 11, 2024, 03:25 PMLast post from Doomsday Minimoke regarding share price.
Interesting how very quiet he has been after being so vocal and being negative about anything Synlait.
Perhaps he will surface soon now that he can get really negative about the loan proposal going through?
It isnt very interesting at all.
I am back online. As I posted earlier I flagged I was going to be away. Dont be making something out of nothing!
Now that I'm back I'm catching up on things. So while I was away what has happened.
For a start Synlait have swapped one $130m debt at 7% for a $130m debt at 8%
They have swapped a debt due now to a debt due in a years' time. So essentially zero change to the balance sheet on this front.
A debt of $180m due in December remains due.
It appears there remains an acrimonious relationship between Synlait and its largest most valuable customer A2 - I'm referring to the A2 Bright loan announcement which said
"a2MC continues to have concerns and will engage in discussions with Synlait in the coming weeks."There is confirmation that Dairyworks is essentially no longer for sale. So don't expect any equity from there. (Probably just as well since it appears Dairyworks remains profitable - which is likely the only profitable leg Synliat has.
There appears to be no apparent interest from anyone in Pokeno. So This "asset" remains a significant drain on Synlait.
Given there is no change to balance sheet or cashflow I suspect farmer suppliers will remains particularly nervous about the future. So no change there. I doubt the new $130m will give them any confidence.
An equity raise is clearly now on the cards that Synlait have survived the 15 July liquidation threat. Lets assume a $200m raise at a discounted $0.30 cents. Current shareholders will own 25% of Synlait. Those taking up the new equity will own 75% of Synlait. As I have posited earlier, the Synlait we know today will not be the Synlait of the future.
What will the equity raise do for the eventual Shareprice. That I cant predict. But to retain current value of $0.30 it would need to rise to $1.30 post equity raise.
Post equity raise it appears Bondholders money will be safe. This does not get shareholders out of the poo.
I retain the view that Synlait remains totally uninvsestable. I dont congratulate people who bought at the low and now hold with 50% gains - these people are simply gamblers - not investors.
And what do we see today. A withdrawal of the 4 July guidance. For petes sake - that was only 10 days ago. It is patently obvious (if we didnt know already) Synlait management and board have absolutely zero idea what is happening within their business. I'll go as far as saying I think the 4 July announcement needs to be investigated as it was clearly misleading the market in the run up to a critical shareholder vote. And its for this reason I dont think bond holders should think they are out of the woods yet.
Fast forward a couple of years and this thing will emerge from the ashes looking a lot prettier.
Quote from: Breezy on Jul 17, 2024, 10:36 AMFast forward a couple of years and this thing will emerge from the ashes looking a lot prettier.
Possible. One important question though is: Who will benefit from the rebirth you are predicting? I would be concerned retail shareholders capital might go the way of the phoenix ... ending up as ashes.
Whatever is going to emerge out of the ashes will belong to the dragons
Quote from: BlackPeter on Jul 17, 2024, 11:15 AMPossible. One important question though is: Who will benefit from the rebirth you are predicting? I would be concerned retail shareholders capital might go the way of the phoenix ... ending up as ashes.
Whatever is going to emerge out of the ashes will belong to the dragons
I think most retail shareholders capital has already been burnt to ashes over the last few years, Bright just blew upon the embers with their loan.
Quote from: Breezy on Jul 17, 2024, 11:21 AMI think most retail shareholders capital has already been burnt to ashes over the last few years, Bright just blew upon the embers with their loan.
Wait for the next CR. Can't really see their current downgrade trend increasing the success rate and certainly not reducing the dilution :) ;
Quote from: Minimoke on Jul 17, 2024, 09:16 AMI am back online. As I posted earlier I flagged I was going to be away. Dont be making something out of nothing!
Reports of my death have been greatly exaggerated!
Good to have you back, Minimoke.
IMO - it's pretty unprecedented to withdraw guidance only ten days after its been issued. To me, this reads like an announcement that has been issued because it is in a far worse financial position than the note suggests at face value.
Synlait can't even meet EBITDA guidance of $45 million without removing one-off costs!
Good to see you, Minimoke, back - this thread is not the same without your incessant negativity about anything Synlait & its imminent demise (many times over).
All the issues you have raised (again) have been discussed since 1 July - nothing new.
The CR will happen and bond holders will get their money back.
Agree with you that traders currently are the ones making hay (up to 100% gain for those who bought at 20c). As I have posted before, I am not so brave and it's best to wait for details of the CR before deciding whether to play the turnaround story.
Interesting of course that you went off air after one comment on the day that Bright's Chairman came out in full support of SML (positive)and reversed the sp fall. And you now reappear on the same day that SML withdrew its earnings' guidance (negative). Just coincidence of course! And thank goodness for that!
Quote from: Teitei on Jul 17, 2024, 02:16 PMGood to see you, Minimoke, back - this thread is not the same without your incessant negativity about anything Synlait & its imminent demise (many times over).
All the issues you have raised (again) have been discussed since 1 July - nothing new.
The CR will happen and bond holders will get their money back.
Agree with you that traders currently are the ones making hay (up to 100% gain for those who bought at 20c). As I have posted before, I am not so brave and it's best to wait for details of the CR before deciding whether to play the turnaround story.
Interesting of course that you went off air after one comment on the day that Bright's Chairman came out in full support of SML (positive)and reversed the sp fall. And you now reappear on the same day that SML withdrew its earnings' guidance (negative). Just coincidence of course! And thank goodness for that!
This ones all coming out in the wash now that I'm holding some. Lol
Quote from: Teitei on Jul 17, 2024, 02:16 PMGood to see you, Minimoke, back - this thread is not the same without your incessant negativity about anything Synlait
Still not seeing anything positive to report.
Quote from: Teitei on Jul 17, 2024, 02:16 PM& its imminent demise (many times over).
Its plain as day to see the Synlait as we knew it now no more. Totally reliant on the Chinese to buy it out / take it over. It appears A2 may not have an appetite to participate in the equity raise - leaving Bright the new owners
Quote from: Teitei on Jul 17, 2024, 02:16 PMAll the issues you have raised (again) have been discussed since 1 July - nothing new.
The CR will happen and bond holders will get their money back.
Agree with you that traders currently are the ones making hay (up to 100% gain for those who bought at 20c). As I have posted before, I am not so brave and it's best to wait for details of the CR before deciding whether to play the turnaround story.
Interesting of course that you went off air after one comment on the day that Bright's Chairman came out in full support of SML (positive)and reversed the sp fall. And you now reappear on the same day that SML withdrew its earnings' guidance (negative). Just coincidence of course! And thank goodness for that!
What total drivel! A couple of days before that I quite clearly said I was going to be out of the country. You and I of course already knew by then Bright were supporting the loan - this is what Synlait had already been saying. Brights Chair added nothing new to the story.
Edit. I've now had a chance to catch up on SP's. You are factually wrong. SP closed 27 June at $0.225. Closed 1 July (after Brights announcement) at $0.225 So there was no reversal in SP. 2 July closed still at $0.225 - still no reversal. 3 July closed at $0.23. (wow - up $0.005!!!!) From then a gradual daily increase until 10 July, day before Vote and A2 announcement at $0.26. Really not a stellar rebound. Closed to a new high on 12 July at $0.335. And its been back downhill since.
Quote from: Breezy on Jul 17, 2024, 02:28 PMThis ones all coming out in the wash now that I'm holding some. Lol
Turnaround stories are hard and tough to play.
Rewards however when done right are worth the effort.
One just have to look at ATM in its early days, Diligent & Serko to name 3 I have participated in to realise that it's not a matter of aiming to double one's monies investing in them but to aim for 10 baggers+.
Can SML be one? Too early to assess until CR details come out.
Quote from: Teitei on Jul 17, 2024, 02:58 PMTurnaround stories are hard and tough to play.
Rewards however when done right are worth the effort.
One just have to look at ATM in its early days, Diligent & Serko to name 3 I have participated in to realise that it's not a matter of aiming to double one's monies investing in them but to aim for 10 baggers+.
Can SML be one? Too early to assess until CR details come out.
No!
Why?
Because they have a totally inept Board and management team who today admit they are clueless running their company when they say "
unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan"
"Unforeseen". Just beggars belief they are totally incapable of seeing 1 month out. Totally ill-equipped to be running a company even as far out as December when bonds are due.
They quite clearly have zero idea of what is running through their plant at the moment and have lost total sight of shipping bookings. They have given their advisors an open cheque book and loose timeframes - and that never ends well.
Must be due a positive ESG announcement any day now.
Quote from: Minimoke on Jul 01, 2024, 11:11 AMCathy Gamlen, head of People is off after lasting less than a year.
In the meantime this is interesting "Huang said Bright and a2 Milk — which derives all its infant milk formula from Synlait — "exchange views on critical matters, from time to time, and in a friendly and co-operative way".
Deafening silence about Bright Chairman's comments from Minimoke but he has time to put in the above post on the same day.
Quote from: Teitei on Jul 17, 2024, 03:16 PMDeafening silence about Bright Chairman's comments from Minimoke but he has time to put in the above post on the same day.
Poor form having a go at a poster rather than the posts. I have already explained where I was. I'm not posting my travel in intimate detail just to satisfy some vague conspiracy you have rattling around in your head.
Quote from: Minimoke on Jul 17, 2024, 03:16 PMNo!
Why?
Because they have a totally inept Board and management team who today admit they are clueless running their company when they say "unforeseen year-end timing differences between July and August for manufacturing and shipping, along with additional costs incurred in relation to the strategic review and deleveraging plan"
"Unforeseen". Just beggars belief they are totally incapable of seeing 1 month out. Totally ill-equipped to be running a company even as far out as December when bonds are due.
They quite clearly have zero idea of what is running through their plant at the moment and have lost total sight of shipping bookings. They have given their advisors an open cheque book and loose timeframes - and that never ends well.
Must be due a positive ESG announcement any day now.
Chill, Minimoke.
You sound almost panicky at the prospect of SML doing a turnaround and delivering a ten bagger. Why so?
Wait for the CR details.
Quote from: Teitei on Jul 17, 2024, 03:24 PMChill, Minimoke.
You sound almost panicky at the prospect of SML doing a turnaround and delivering a ten bagger. Why so?
Wait for the CR details.
I'm chill as.
Given, in fact, Synlait cannot even manage one month out there is zero possibility of a turnaround delivering a ten bagger. Zero!
Edit to add ... under the current ownership / management.
And I was thinking we would have to wait for the CR details. But no. SML never fail to disappoint. They couldn't even wait for then before releasing another down grade. Gee. Stil a lot of water to go under the bridge before the CR details come out.
Quote from: Teitei on Jul 17, 2024, 03:24 PMChill, Minimoke.
Nothing like telling somebody to chill after being the aggressor!
Quote from: Minimoke on Jul 17, 2024, 03:21 PMPoor form having a go at a poster rather than the posts. I have already explained where I was. I'm not posting my travel in intimate detail just to satisfy some vague conspiracy you have rattling around in your head.
Eh?
Pointing out your inconsistencies is attacking you?
Giving you an opportunity to clarify is attacking you?
Ok then.
Quote from: Minimoke on Jul 17, 2024, 03:28 PMI'm chill as.
Given, in fact, Synlait cannot even manage one month out there is zero possibility of a turnaround delivering a ten bagger. Zero!
Edit to add ... under the current ownership / management.
And I was thinking we would have to wait for the CR details. But no. SML never fail to disappoint. They couldn't even wait for then before releasing another down grade. Gee. Stil a lot of water to go under the bridge before the CR details come out.
Can sense you frothing around your mouth!
Why so?
Quote from: Teitei on Jul 17, 2024, 03:35 PMEh?
Pointing out your inconsistencies is attacking you?
Giving you an opportunity to clarify is attacking you?
Ok then.
For all my faults being inconsistent about Synlait, I wouldn't have thought is one of them.
And here was me thinking I had done a pretty good job explaining my position in each of my posts. I didnt figure I needed any other opportunity.
Sorry - I feel zero obligation to clarify my personal movements to you just to satisfy some imaginary thing you seem now somewhat obsessed with
Quote from: Teitei on Jul 17, 2024, 03:39 PMCan sense you frothing around your mouth!
Why so?
Why the focus on a poster and not the content of the posts. Gee - I've arrived back to a very weird place.
Quote from: Minimoke on Jul 17, 2024, 03:40 PMWhy the focus on a poster and not the content of the posts. Gee - I've arrived back to a very weird place.
You never left, figuratively speaking.
Keeping quiet is not leaving.
Market not too worried about the latest update, bit of panic first thing and now the depth chart has well, deepened up on the bid side again.
Quote from: Breezy on Jul 17, 2024, 04:24 PMMarket not too worried about the latest update, bit of panic first thing and now the depth chart has well deepened up on the bid side again.
Market realises it is all about the recapitalisation for now.
As you posted before, profitability will become the focus once SML's financial position is stabilised and real majority ownership is established.
Quote from: Minimoke on Jul 17, 2024, 02:43 PMEdit. I've now had a chance to catch up on SP's. You are factually wrong. SP closed 27 June at $0.225. Closed 1 July (after Brights announcement) at $0.225 So there was no reversal in SP. 2 July closed still at $0.225 - still no reversal. 3 July closed at $0.23. (wow - up $0.005!!!!) From then a gradual daily increase until 10 July, day before Vote and A2 announcement at $0.26. Really not a stellar rebound. Closed to a new high on 12 July at $0.335. And its been back downhill since.
Quite likely the bounce was short sellers closing out their positions post vote. Taking their profits and running.
Quote from: KW on Jul 17, 2024, 07:13 PMQuite likely the bounce was short sellers closing out their positions post vote. Taking their profits and running.
Why would you think that? Short selling in NZ is behind the scenes, IF you can find someone to lend you shares. SM1 on the ASX has been 0% short since Jan 2023 and the highest it got to in past three years was 0.8%.
Quote from: KW on Jul 17, 2024, 07:13 PMQuite likely the bounce was short sellers closing out their positions post vote. Taking their profits and running.
Highly unlikely with this stock, it was most likely a relief rally based on the fact that the company wasn't going to the wall. Price seems to be stabilizing higher than before the vote even with today's bad update so not a sign of shorts doing their thing.
Great having Minimoke back arguing with Balance. Not the same here without you two going at it hammer and tongs...great entertainment value that's for sure!
For mine, withdrawal of guidance today, so soon after issuing it is indeed, unprecedented on the NZX to the best of my knowledge and is an absolute bloody disgrace. It's clear the directors and management are running around the ship like headless chooks, desperately rearranging the deck chairs as best they can and praying on a stack of bibles that the very small rudders on the good ship Synlait AKA Titanic, are effective enough to avoid hitting any nearby icebergs. Even if by some miracle, they manage to avoid hitting any of the icebergs, is there a captain that knows how to steer the ship going forward, that's the $64,000 question.
Quote from: Buzz on Jul 17, 2024, 07:33 PMWhy would you think that? Short selling in NZ is behind the scenes, IF you can find someone to lend you shares. SM1 on the ASX has been 0% short since Jan 2023 and the highest it got to in past three years was 0.8%.
The lending fee for Synlait is currently 8.01%. Pretty easy money if you are sitting on a block of shares.
I don't understand but am interested to know what you mean. You said:
"Quite likely the bounce was short sellers closing out their positions post vote. Taking their profits and running."
And then in reply to my question, you answered:
Quote from: KW on Jul 18, 2024, 12:31 AMThe lending fee for Synlait is currently 8.01%. Pretty easy money if you are sitting on a block of shares.
How are these related - like what does "lending fee" have to do with short selling (borrow shares, sell them, buy them back lower), how would this work to short-sell SML, and make a profit post-the loan being approved?
thanks
I'd like this whole saga to be over so I can stop following it.
Disc. not holding.
Quote from: Teitei on Jul 17, 2024, 03:43 PMYou never left, figuratively speaking.
Keeping quiet is not leaving.
I've nothing to say. Just checking in to help assure you I am here.
Quote from: SemiStrongForm on Jul 18, 2024, 01:58 PMI'd like this whole saga to be over so I can stop following it.
Disc. not holding.
It will be a long wait till it turns and flourishes again but it will happen.
Quote from: Minimoke on Jul 18, 2024, 02:22 PMI've nothing to say. Just checking in to help assure you I am here.
I do really think it was some long winded way of saying he missed you!
Quote from: Breezy on Jul 18, 2024, 02:41 PMIt will be a long wait till it turns and flourishes again but it will happen.
I have no doubt it will happen. But its what it will look like that will be interesting.
I reckon the only thing of value worth keeping is Dunsandel Infant Formula. Now who ends up owning that is the $60,000 question. (They have SAMR and BCorp accreditation that wil assure value here!)
They obviously want to see the back of Dairyworks. (Talbot has already gone).
Packing liquid milk for house brands "Pams" cant be profitable - so i reckon that will go.
Pokeno is obviously about to be put on the blocks.
30 MT of Lactoferrin - that one will go.
UHT cream - really. Who can be bothered.
Recycled milk container - opps thats gone already.
So whats the answer to the $60,000 question. It certainly isnt mom and pop investors having a stake in Synlait as we know it today.
Change my mind!
Quote from: Minimoke on Jul 18, 2024, 02:57 PMI have no doubt it will happen. But its what it will look like that will be interesting.
I reckon the only thing of value worth keeping is Dunsandel Infant Formula. Now who ends up owning that is the $60,000 question. (They have SAMR and BCorp accreditation that wil assure value here!)
They obviously want to see the back of Dairyworks. (Talbot has already gone).
Packing liquid milk for house brands "Pams" cant be profitable - so i reckon that will go.
Pokeno is obviously about to be put on the blocks.
30 MT of Lactoferrin - that one will go.
UHT cream - really. Who can be bothered.
Recycled milk container - opps thats gone already.
So whats the answer to the $60,000 question. It certainly isnt mom and pop investors having a stake in Synlait as we know it today.
Change my mind!
No it won't be the same SML but at the current sp everything but Armageddon is already built in so a lot of potential upside, it hit a low of 20c when it was a coin toss whether it would survive or not. Convince me its not good buying at current levels.
Quote from: Breezy on Jul 18, 2024, 03:01 PMNo it won't be the same SML but at the current sp everything but Armageddon is already built in so a lot of potential upside, it hit a low of 20c when it was a coin toss whether it would survive or not. Convince me its not good buying at current levels.
I'm not sure everything is yet built in.
For a start, Synlait remains uninvestable, so its really appears to be just few parties currently propping up the SP on low volume trades.
Next is we have the swinging brick Arbitration results. I dont think these will be material to A2. But given Synlaits sick and precarious position any additional costs will quite likely be material. But who knows - no one does. So the SP cant reflect this.
And then we have year end. Who would be an Auditor when the company clearly has zero idea on what their accounts look like literally from one fortnight to the next. My money is on the Auditors currently burning the midnight oil at extreme ongoing cost to Synlait. And how they twiddle and fiddle their "adjustments" is not going to be a quick sign off for the Auditor.
Which leaves the capital raise. How can a person enter a capital raise exercise with arbitration and year end books being a great unknown.
Still a few chapters of this text book left to be written.
Quote from: Minimoke on Jul 18, 2024, 04:20 PMI'm not sure everything is yet built in.
For a start, Synlait remains uninvestable, so its really appears to be just few parties currently propping up the SP on low volume trades.
Next is we have the swinging brick Arbitration results. I dont think these will be material to A2. But given Synlaits sick and precarious position any additional costs will quite likely be material. But who knows - no one does. So the SP cant reflect this.
And then we have year end. Who would be an Auditor when the company clearly has zero idea on what their accounts look like literally from one fortnight to the next. My money is on the Auditors currently burning the midnight oil at extreme ongoing cost to Synlait. And how they twiddle and fiddle their "adjustments" is not going to be a quick sign off for the Auditor.
Which leaves the capital raise. How can a person enter a capital raise exercise with arbitration and year end books being a great unknown.
Still a few chapters of this text book left to be written.
When yes your not sure and no one is at this point. SP is relatively stable after yesterday's update, your not seeing the depth wiped out back down to 25c as it easily could with keen sellers so yeah.
Quote from: Buzz on Jul 18, 2024, 10:37 AMI don't understand but am interested to know what you mean. You said:
"Quite likely the bounce was short sellers closing out their positions post vote. Taking their profits and running."
And then in reply to my question, you answered:
How are these related - like what does "lending fee" have to do with short selling (borrow shares, sell them, buy them back lower), how would this work to short-sell SML, and make a profit post-the loan being approved?
thanks
You said "
Short selling in NZ is behind the scenes, IF you can find someone to lend you shares"If you ask a broker to go find you some shares, the lending fee is what they will be offering the owner of those shares. So if a broker approaches a client and says "I can get 8% pa for loaning your shares out, are you keen?" then that's how brokers find shares. If I tell IB that I want to short SM1 they will source those shares for me. The higher the lending fee, the easier it is to get someone to agree to lend out their shares.
yep very hard to find someone in NZ to facilitate shorting, from my experience when you do the volume available and conditions attached are not ideal
Quote from: snapiti on Jul 20, 2024, 02:06 PMyep very hard to find someone in NZ to facilitate shorting, from my experience when you do the volume available and conditions attached are not ideal
Whether you can short depends on whether stock is available. One entity which provides shorting is LE (owned by Forbar). LE lends stock which it holds as security for their margin lending clients.
I have used LE for shorting before - most profitably with Air NZ - but the conditions are such that it is easy to get caught out by the holder calling the stock back.
With SML, be very surprising if any investor is holding in LE via margin lending!!!!
https://www.forsythbarr.co.nz/assets/Leveraged-Equities/Leveraged-Equities-Short-Selling-Brochure.pdf
I see Fonterra are making some tough calls. Finance team being outsourced to india.
Now there's an idea for Synlait - especially given they cant get their Guidance right one fortnight to the next
https://www.waikatotimes.co.nz/nz-news/350352215/brutal-job-cuts-hit-fonterra-hamilton
Quote from: Minimoke on Jul 23, 2024, 03:35 PMI see Fonterra are making some tough calls. Finance team being outsourced to india.
Now there's an idea for Synlait - especially given they cant get their Guidance right one fortnight to the next
https://www.waikatotimes.co.nz/nz-news/350352215/brutal-job-cuts-hit-fonterra-hamilton
Brutal Indeed ,I hope other companies do not follow this trend
Quote from: Minimoke on Jul 23, 2024, 03:35 PMI see Fonterra are making some tough calls. Finance team being outsourced to india.
Now there's an idea for Synlait - especially given they cant get their Guidance right one fortnight to the next
https://www.waikatotimes.co.nz/nz-news/350352215/brutal-job-cuts-hit-fonterra-hamilton
Pretty sure there's a couple of monkey's at Auckland zoo with some time on their hands. Would do a better job that Synlaits team for a few bananas a day ;)
Quote from: Basil on Jul 23, 2024, 08:26 PMPretty sure there's a couple of monkey's at Auckland zoo with some time on their hands. Would do a better job that Synlaits team for a few bananas a day ;)
Now now, Beagle - don't insult the monkeys! They are known to be able to write books by simply randomly bashing on key boards!
Spat between A2M and SYN sorted, A2M to support cap raise and pay SYN 24.5 million in "Backpay" - a third of SYN market cap, hummmm
Here's the full details for those interested..... a win-win IMO
https://www.nzx.com/announcements/436290
Financial bonus for SML as well.......
"The parties have agreed to resolve the various pricing and other disputes between them with a2MC to make a one-off payment to Synlait of NZ$24.75 million. This payment largely comprises amounts that had been withheld in accordance with the terms of the NPMSA from payment pending resolution of matters in dispute."
"a2MC's decision to support Synlait's recapitalisation plan reflects the strategic importance to a2MC of the continued stability of production at Synlait's Dunsandel manufacturing site."
For the purposes of transparency i have bought back into SML
Legal disputes over and ATM supporting the capital raise.
Lot of acrimony now over...maybe this is a game changer for SML ? Certainly the $24.75m will help SML a LOT as will retaining ATM's business going forward. Really good to see these two parties have resolved their differences. Turning point for SML ?
Disc: I also bought back in today in a small way and stand ready to write a cheque for what is hopefully a pro-rata capital raise.
Hopefully onward and upward from here.
Quote from: Breezy on Jul 18, 2024, 03:01 PMNo it won't be the same SML but at the current sp everything but Armageddon is already built in so a lot of potential upside, it hit a low of 20c when it was a coin toss whether it would survive or not. Convince me its not good buying at current levels.
I think it is now its been considerably derisked. It seems clear to me Bright and ATM will support and probably also underwrite the capital raise.
Quote from: Minimoke on Aug 16, 2024, 11:53 AMFor the purposes of transparency i have bought back into SML
So you are not alone I have joined you..!!...lol
First time back in since the IPO.
count me in, though - all these gurus agreeing can't be good, can it?
Quote from: Basil on Aug 16, 2024, 12:30 PMI think it is now its been considerably derisked. It seems clear to me Bright and ATM will support and probably also underwrite the capital raise.
Agree. Lot of risk no gone. Bond holders will be very happy. Looks like Balance sheet will be fixed. Stil got profit making assets like dairy works that can be flogged off. Just need to deal to the dead weight that is Pokeno.
Quote from: Minimoke on Aug 16, 2024, 12:50 PMAgree. Lot of risk no gone. Bond holders will be very happy. Looks like Balance sheet will be fixed. Stil got profit making assets like dairy works that can be flogged off. Just need to deal to the dead weight that is Pokeno.
I'm happy for Balance.
LOL BP, we don't know the future eh but what could possibly go wrong now ;D
Whatever happened to the "International New Client" (Nestle) for Pokeno did they ever get that of the ground or is it still lingeriing in the background.
Asset value SML 600 million - Market cap 65.57 million at 0.35c - seems like it might have room to run.
Quote from: Basil on Aug 16, 2024, 12:57 PMI'm happy for Balance.
LOL BP, we don't know the future eh but what could possibly go wrong now ;D
We cant predict the future. But we can make a best guess on all currently available information.
We now have a lot more information at hand so decisions can be better informed.
Still a lot to go wrong. Pokeno for one. They really need to get that cranking.
But famers will be happier knowing there is a much better chance they will get paid.
Wow never seen so much agreement, better follow with a tiny gamble.
I sold 1400 shares of Synlait in March of 2019 for around $14k, today I bought them back for $500...
Quote from: allfromacell on Aug 16, 2024, 01:41 PMWow never seen so much agreement, better follow with a tiny gamble.
I sold 1400 shares of Synlait in March of 2019 for around $14k, today I bought them back for $500...
Much less of a gamble today than it was over the prior few month.
Quote from: Minimoke on Aug 16, 2024, 01:42 PMMuch less of a gamble today than it was over the prior few month.
That's true! SML, you can't have too many ;D
Quote from: Basil on Aug 16, 2024, 12:57 PMI'm happy for Balance.
LOL BP, we don't know the future eh but what could possibly go wrong now ;D
Minds all coming together, must be as good as Mothers Milk.
Quote from: Minimoke on Aug 16, 2024, 01:42 PMMuch less of a gamble today than it was over the prior few month.
What do you reckon on the capital raise mate. Place your bets. X for 1 @ Y cents.
What's your best guess for the values of X and Y ?
Off Jarden website they reckon 466.77m shares.
I reckon to have all bases covered they need to raise about $350m. If Y is 30 cents that's 1166m shares so maybe its 2.5:1 @ 30 cents.
What do you reckon ?
Quote from: Breezy on Aug 16, 2024, 02:03 PMMinds all coming together, must be as good as Mothers Milk.
As they say, "Great minds think alike"...... good to see Stocktalkers benefitting from sharing info.
Onwards and upwards..... however there is just the small Cap raise to get sorted..... so it may take a while but prospects look good.
Quote from: Basil on Aug 16, 2024, 03:57 PMWhat do you reckon on the capital raise mate. Place your bets. X for 1 @ Y cents.
What's your best guess for the values of X and Y ?
Off Jarden website they reckon 466.77m shares.
I reckon to have all bases covered they need to raise about $350m. If Y is 30 cents that's 1166m shares so maybe its 2.5:1 @ 30 cents.
What do you reckon ?
Hmm. Im going to have relook at there accounts now they have another 27m flowing in. Need at least enough to pay back $180m in bonds and Bright.
Quote from: Cod on Aug 16, 2024, 01:01 PMWhatever happened to the "International New Client" (Nestle) for Pokeno did they ever get that of the ground or is it still lingeriing in the background.
Asset value SML 600 million - Market cap 65.57 million at 0.35c - seems like it might have room to run.
Yes, room to run .. but don't forget the capital raise. While I am rather sure it will work, it might reduce the runway :) ;
Quote from: Minimoke on Aug 16, 2024, 04:35 PMHmm. Im going to have relook at there accounts now they have another 27m flowing in. Need at least enough to pay back $180m in bonds and Bright.
Yeah, I just did a real quick "back of the envelope" to come to $350m.
$180m for the bonds, $130m for Bright and $40m for working capital.
Maybe they need more, I haven't really looked that hard.
Developments all as expected so am reading with amusement.
What's new?
Lets look at some numbers
Current liabilities exceed current assets by $205m. $180m is owed to bond holders.
They have an awful lot of inventory in these assets - $316m (contrast this with A2 Milks $180m in inventories.)
Accounts payable exceed accounts receivable by $177m (a2's $27m cash hold back will be in here)
Total assets exceed total liabilities by $700m. But this is likely grossly over valued eg no one wants to buy dairy works for $120m. There is no sign of Pokeno selling (and A2 have indicated they need waikato farm supply)
Cash on hand is $30.5m
So how much do they need?
I reckon, since they have both Bright and A2 on board for an equity raise, they should do it once and do it right.
I don't think Bright will be looking for their $130m back at this stage – lets cover that debt off with inventory. Also Dairyworks might sell – but lets not bank on that. At least it is adding to profitability in the meantime.
I think if they get a capital raise over the line banks will remain happy – so no need to worry about paying them back.
$180m to pay back bond holders.
$177m to pay off short term creditors – need to give confidence back to farmers and suppliers.
That gets me to $357m. Lets keep this simple and call it $350,000,000 capital raise.
Now they have 218.581m shares allocated at the moment. This means they need $1.60 from each shareholder
Lets say the one week VWAP is $0.35
This now gives me 4.475 share rights issue at $0.35 for each single share held
Change my mind!
Now, by chance, a rights issue as mentioned below would mean there would be 1,000,000,000 shares issued.
Bringing the registry to 1,218,581,661 shares.
Now, if shares maintained a value of $0.35 this would give a market cap of $426.5m. Compared with todays $65.57m
On todays dollars that would have a Share price of $1.95. This may not be too outrageous - it was only back in the beginning of June 2023 the SP was $1.88
From May 2021 - March 2023 SP was over $3.00
Quote from: Minimoke on Aug 19, 2024, 10:36 AMLets look at some numbers
Current liabilities exceed current assets by $205m. $180m is owed to bond holders.
They have an awful lot of inventory in these assets - $316m (contrast this with A2 Milks $180m in inventories.)
Accounts payable exceed accounts receivable by $177m (a2's $27m cash hold back will be in here)
Total assets exceed total liabilities by $700m. But this is likely grossly over valued eg no one wants to buy dairy works for $120m. There is no sign of Pokeno selling (and A2 have indicated they need waikato farm supply)
Cash on hand is $30.5m
So how much do they need?
I reckon, since they have both Bright and A2 on board for an equity raise, they should do it once and do it right.
I don't think Bright will be looking for their $130m back at this stage – lets cover that debt off with inventory. Also Dairyworks might sell – but lets not bank on that. At least it is adding to profitability in the meantime.
I think if they get a capital raise over the line banks will remain happy – so no need to worry about paying them back.
$180m to pay back bond holders.
$177m to pay off short term creditors – need to give confidence back to farmers and suppliers.
That gets me to $357m. Lets keep this simple and call it $350,000,000 capital raise.
Now they have 218.581m shares allocated at the moment. This means they need $1.60 from each shareholder
Lets say the one week VWAP is $0.35
This now gives me 4.475 share rights issue at $0.35 for each single share held
Change my mind!
Same amount I came to in post #1245 above. $350m. I made a mistake with the number of shares on issue in my quick back of the envelope calculations above and concur with your figures. So, we're looking at about 4.5:1 @ 35 cents or they might make it 5:1 just to keep the math's a bit simpler for people and to raise some additional working capital. At this stage, given we know there's a massive capital raise coming I haven't bought many, just bought the ones I sold at $11 several years ago, back for 35 cents. Might be quite a while before they get back to $11 again lol
I sold my small holding this morning.
Quote from: lorraina on Aug 20, 2024, 10:57 AMI sold my small holding this morning.
I sold half of my holding yesterday (and made a nice profit :); - Just being careful to not overcommit for the coming CR.
Quote from: BlackPeter on Aug 20, 2024, 11:10 AMI sold half of my holding yesterday (and made a nice profit :); - Just being careful to not overcommit for the coming CR.
Have around $1 cash for each share you own for the CR and you Will be right!
Quote from: Teitei on Aug 17, 2024, 12:19 PMDevelopments all as expected so am reading with amusement.
What's new?
Kudos to you Balance..... you have read the SML saga very well and I'm sure your bond investment will be richly rewarded. Well done.
Quote from: Teitei on Aug 20, 2024, 12:33 PMHave around $1 cash for each share you own for the CR and you Will be right!
Roughly $220m shares after their last CR (I think) - so, you think $220m will be enough for them this time?
To be honest, I budgeted a bit more, but hey, I can live with that as well.
Wonder if the rights issue will be renounceable or not?
Quote from: Breezy on Aug 20, 2024, 04:37 PMWonder if the rights issue will be renounceable or not?
I suspect that whatever they do it will be good for the big boys. Do they want renounceable rights issues (which would be fair, wouldn't it)? Hardly. Probably a big fat institutional placing and some crumbs afterwards (underwritten by Bright or similar) for the plebs.
Looks like we will find out in the next 10 minutes
Quote from: Minimoke on Aug 20, 2024, 06:08 PMLooks like we will find out in the next 10 minutes
Here are the details of the Cap raise
https://www.nzx.com/announcements/436510
To reduce Synlait's debt, shareholders are being asked to approve by way of ordinary resolutions the issuance of approximately $217.8 million of new equity capital by way of:
- a $185 million issue of shares to Bright Dairy Holding Limited (Bright Dairy) at an issue price of $0.60 (a 100% premium to the closing price of Synlait's shares on the NZX Main Board on 15 August 2024 (which was the last undisturbed share price prior to announcement of the settlement with The a2 Milk Company and its support of Synlait's equity raise, and a 40% premium to the issue price of $0.43 for the a2MC placement)), which will increase its shareholding in Synlait from 39.01% to 65.25% (Bright Dairy placement); and
- a $32.8 million issue of shares to The a2 Milk Company (a2MC) at an issue price of $0.43 (a 43% premium to the closing price of Synlait's shares on the NZX Main Board on 15 August 2024 (which was the last undisturbed share price prior to announcement of the settlement with a2MC and its support of Synlait's equity raise), which will result in its holding of 19.83% being retained (a2MC placement).
Wow, wasn't expecting that.
Bright wins
Looks like massive dilution and retail holders screwed.
Retail Shareholders have just been screwed. How does this not pass at the shareholder meeting?
Was looking at buying in during the run up, but glad I watched. I am a little shocked for the small shareholders.
Quote from: Greekwatchdog on Aug 20, 2024, 06:39 PMRetail Shareholders have just been screwed. How does this not pass at the shareholder meeting?
Was looking at buying in during the run up, but glad I watched. I am a little shocked for the small shareholders.
Yep
Other shareholders other than Bright/A2 own 40% of Synlait
After the raise they'll own 15%
Take it or Synlait 'cease trading'
That's how the cookie crumbles
Quote from: winner (n) on Aug 20, 2024, 06:58 PMYep
Other shareholders other than Bright/A2 own 40% of Synlait
After the raise they'll own 15%
Take it or Synlait 'cease trading'
That's how the cookie crumbles
Why not offer xxx amount to other shareholders? Surely if they had a choice and they had the funds they would have bought in.
A very weak board to not give retail shareholders the chance to buy in.
That said I see it differently to others.
It's clear to me Pokeno has no value and no prospect of making money anytime soon. It has been a complete and utter cluster f@#k from beginning to end.
Strip that off NTA, stated on the Jarden Website as $3.23 and you'd be lucky if the real NTA before further adjustments for Dairy foods which they can't sell, is even $1.00.
The reality is the company is at the point of liquidation without this recapitalization and the net realizable value of assets is probably a LOT less than $1.
Bright are paying 60 cents and ATM 43 cents. I paid 35 cents for a small stake. I think I got a better deal than either of them. The reality is this was never going to revert to being a $2-3 stock any year soon and those thinking that they could invest 35 cents and make 8 times their money in a few years were just dreaming. I can understand why anyone silly enough to hold all the way down from $10+ would be really annoyed at this deal but they've had years of opportunities to come to terms with the new reality Synlait faces and if they didn't, they had nobody to blame but themselves. There's an absolute hoard of posts on both channels warning what a complete fiasco this company has become.
I'm going against the crowd here and saying I think this is not a completely terrible deal. Not sure how they will fund all the early bond redemptions?
Have they raised enough?
Yes you would have to think buying in around current sp is pretty good buying in the grand scheme of things.
Quote from: Basil on Aug 20, 2024, 07:43 PMI'm going against the crowd here and saying I think this is not a completely terrible deal. Not sure how they will fund all the early bond redemptions?
Have they raised enough?
Effectively a takeover of Synlait by Bright, supported by ATM.
And no, I don't think they have raised enough.
Quote from: Breezy on Aug 20, 2024, 08:01 PMYes you would have to think buying in around current sp is pretty good buying in the grand scheme of things.
Yes...if the market has a tantrum tomorrow and goes down to somewhere around 30 cents again....its going to be hard to resist the urge to raise the stakes in terms of betting on this nag.
Quote from: Basil on Aug 20, 2024, 08:14 PMYes...if the market has a tantrum tomorrow and goes down to somewhere around 30 cents again....its going to be hard to resist the urge to raise the stakes in terms of betting on this nag.
Watching with anticipation, it could very well move upwards of course now the numbers are out there.
Market closed today at $0.395. Lets see what happens tomorrow.
Also. I dont think the $217.8m is nearly enough. $180m of that goes straight to bond holders. Leaving just $37.8 to otherwise help cashflow. And why .8m. Why not round it up to raising $220m? The raise is quite the specific number.
Quote from: Minimoke on Aug 20, 2024, 09:00 PMAlso. I dont think the $217.8m is nearly enough. $180m of that goes straight to bond holders. Leaving just $37.8 to otherwise help cashflow.
I agree $218m is not enough. Gross debts to non-bond holders at the half year report were $411m. Would they be happy getting $38m after bondholders get $180m? Accordingly I don't think we have heard the last of how this will play out given the quantum of debts was the issue. I also expect to see some hefty write offs in the full year report.
Quote from: Minimoke on Aug 20, 2024, 09:00 PMMarket closed today at $0.395. Lets see what happens tomorrow.
The ASX was still open when the announcement hit. It went to almost NZ$0.49 before closing around NZ$0.46.
ASX spread is showing after-hours as NZ$0.395-$0.49.
Let's see what the NZX makes of it. My guess is it'll open strong above NZ$0.50 but soften when the ASX opens - anyway, that's what happened with KMD's positive announcement today, could be a pattern.
(Disc: rubbernecking)
Ok. Now lets look on the bright side.
In December 2023 we had the last set of wheels fall ff. Just before they did the market, with 218,581,661 shares on issue valued Synlai at $284m ($1.30 a share)
There will be now 603,194,064 shares on issue. The arbitration with A2 is over. The bank has been paid back its $130m. Bond holders will get their $180m back. So the company is in at the very least the xame position as it was in December. So if the market is going to reset at that value SP will be $0.47
If we go back a further year to Dec 2022 market value SML at $743m. ($3.40 a share) Very roughly the value of its fixed assets. If the market rerates to this level SP will end up being about $1.23.
Quote from: Ferg on Aug 20, 2024, 11:20 PMI agree $218m is not enough. Gross debts to non-bond holders at the half year report were $411m. Would they be happy getting $38m after bondholders get $180m? Accordingly I don't think we have heard the last of how this will play out given the quantum of debts was the issue. I also expect to see some hefty write offs in the full year report.
They are not trying to repay all debts. They are trying to reduce it to the level where they will be able to refinance it. Also do not forget $24m settlement payment from A2M and $130m loan from Bright. If all goes to plan their debt to banks will be half of what it was and much easier to refinance.
I think they were quite clear in their statement:
"The equity raise will only complete if it does so concurrently with the refinancing of Synlait's bank facilities. The equity raise, the settlement with a2MC, and the bank refinancing are inter-conditional and therefore must all be approved and occur contemporaneously (or substantially contemporaneously) with each other, or not at all. Completion of all three components is expected on 1 October 2024."
Quote from: Minimoke on Aug 20, 2024, 09:00 PMMarket closed today at $0.395. Lets see what happens tomorrow.
Also. I dont think the $217.8m is nearly enough. $180m of that goes straight to bond holders. Leaving just $37.8 to otherwise help cashflow. And why .8m. Why not round it up to raising $220m? The raise is quite the specific number.
Our friend Balance who called this right will be happy. ATM just kowtowing to their Chinese overlord as he correctly predicted.
Quote from: BlackPeter on Aug 20, 2024, 04:55 PMI suspect that whatever they do it will be good for the big boys. Do they want renounceable rights issues (which would be fair, wouldn't it)? Hardly. Probably a big fat institutional placing and some crumbs afterwards (underwritten by Bright or similar) for the plebs.
Looks like I was too optimistic for the retail shareholders. They even kept the crumbs for the big boys.
I guess I still made some money buying back into them, and can use the funds reserved for the CR certainly in other ways as well. However - looking at Synlait as a longterm investment, this is now clearly a a no-no.
The board never looked after the interests of retail investors, and the recent CR and subsequent board changes will only further harden this stance. Synlait is now to 2/3rd (which means fully) controlled by the CCP, and they clearly won't worry about aligning their agenda with the agenda of NZ retail investors.
Just wondering - given that Bright Dairy is further increasing their share (and they are sitting well above the 20% threshold anyway) - would they not have to make a full takeover offer?
Quote from: CG on Aug 21, 2024, 08:43 AMThey are not trying to repay all debts. They are trying to reduce it to the level where they will be able to refinance it. Also do not forget $24m settlement payment from A2M and $130m loan from Bright. If all goes to plan their debt to banks will be half of what it was and much easier to refinance.
I think they were quite clear in their statement:
"The equity raise will only complete if it does so concurrently with the refinancing of Synlait's bank facilities. The equity raise, the settlement with a2MC, and the bank refinancing are inter-conditional and therefore must all be approved and occur contemporaneously (or substantially contemporaneously) with each other, or not at all. Completion of all three components is expected on 1 October 2024."
I didt read teh $24m as being a settlement payment. SML said
"The a2 Milk Company will make a one-off payment to Synlait in the order of $24.75 million. That payment includes amounts that had largely been withheld in accordance with the terms of the NPMSA from payment pending resolution of matters in dispute." So i see this as an item that was sitting in the Accounts Payable line. It was money owed, but disputed. Dispute is now over so it is payable. It will help cash flow. But that's all.
I think teh market has already factored in teh $130m loan from Bright. This loan did nothing to the balance sheet as it just swapped one loan for another. All it achieved was making the banks happy. Given Brights willingness to recapitalize SML I don't think they are in any hurry at all to see this money back. They will just take the interest payments for quite some time yet.
I dont see the banks having any issue with refinancing. Bonds are paid off. Total debt to realisable value of assets is stil comfortable
Total debt was
$180m Bonds
$309 Banks
$589.7 total
Total debt in December will be
$130 Bright
$179 Banks
$309m total.
Thats a $280m improvement. And $130m of that Bright isn't worried about.,
Quote from: BlackPeter on Aug 21, 2024, 09:53 AMLooks like I was too optimistic for the retail shareholders. They even kept the crumbs for the big boys.
I guess I still made some money buying back into them, and can use the funds reserved for the CR certainly in other ways as well. However - looking at Synlait as a longterm investment, this is now clearly a a no-no.
The board never looked after the interests of retail investors, and the recent CR and subsequent board changes will only further harden this stance. Synlait is now to 2/3rd (which means fully) controlled by the CCP, and they clearly won't worry about aligning their agenda with the agenda of NZ retail investors.
Just wondering - given that Bright Dairy is further increasing their share (and they are sitting well above the 20% threshold anyway) - would they not have to make a full takeover offer?
I bought back in at $0.33 and market opened today at $0.45.
I still think SML is uninvestbale. There is no chance of a dividend. It is still going to need more capital. Its still has anchors like Pokeno dragging it down.
It is clear Bright have zero interest in retail investors. And A2 have a track record of having little concern for their shareholders.
But since I'm in I'll ride this a bit longer. Getting rid of Dairyowrks may still be on the cards. Doing something positive with pokeno may still have some upside.
Quote from: Basil on Aug 20, 2024, 07:43 PMA very weak board to not give retail shareholders the chance to buy in.
Yes.
Quote from: Basil on Aug 20, 2024, 07:43 PM...
That said I see it differently to others.
...
I'm going against the crowd here and saying I think this is not a completely terrible deal. Not sure how they will fund all the early bond redemptions?
Have they raised enough?
I guess from a traders point of view you are absolutely right, and given I bought in together with you I am sure I can appreciate this view. Didn't expect my new Synlait liaison to be that short, though - but it certainly looks to be financially rewarding.
What I find disappointing is that the board happily surrendered another (once promising) NZ company and sold it out for a song, but hey - this is life.
As an investor - I didn't expected Synlait to move back anytime soon to its IPO price (around $3) or even higher, but I think they had a good chance to turn (after getting rid of Pokeno) Synlait into a profitable and sustainable NZ company, providing good jobs for the region and benefits to NZ. Sure - they still might turn it into a profitable company, providing food for China - but not quite sure how high on the minds of the Beijing CCP office the well being of NZ employees and NZ interests will rank.
This is why I see the development as very disappointing.
BP. Agree from a philosophical perspective but Beagles mainly care about their dog food and anything is fair game including chasing down old worthless nags like this. Penno should hang his head in shame. This has been an absolute disaster for retail shareholders in terms of its original listing price, which from memory was $3 and its never paid a dividend once in over ten years and then the CCP is allowed to walk all over retail shareholders, aided and abetted by ATM. Some old nags deserve to be sent to the glue factory...this is probably a good case in point.
How I look at it from an economic viewpoint is that at least it keeps going, people with their weird and wild LGTPQ ways stay employed rather than demonstrating along Queer St, opps sorry Queen Street, that their dole cheque isn't enough and there's some competition for "Fonterror". I suppose that's "a win", of sorts. The other win is that Universities around the country who run investment analysis courses will have an excellent case study for their students for the "wonderful" benefits of ESG extremism. Enough material in that case study to fill up the study books of students for a whole semester.
Quote from: Basil on Aug 21, 2024, 10:48 AMBP. Agree from a philosophical perspective but Beagles mainly care about their dog food and anything is fair game including chasing down old worthless nags like this. Penno should hang his head in shame. This has been an absolute disaster for retail shareholders in terms of its original listing price, which from memory was $3 and its never paid a dividend once in over ten years and then the CCP is allowed to walk all over retail shareholders, aided and abetted by ATM. Some old nags deserve to be sent to the glue factory...this is probably a good case in point.
How I look at it from an economic viewpoint is that at least it keeps going, people with their weird and wild LGTPQ ways stay employed rather than demonstrating along Queer St, opps sorry Queen Street, that their dole cheque isn't enough and there's some competition for "Fonterror". I suppose that's "a win", of sorts. The other win is that Universities around the country who run investment analysis courses will have an excellent case study for their students for the "wonderful" benefits of ESG extremism. Enough material in that case study to fill up the study books of students for a whole semester.
Someone will write an excellent text book on business management with Synlait being the case study. All we have seen yesterday is another very interesting chapter being written.
Just for full disclosure - I am out again.
I really bought back into this share last week with expectations of a long term hold and support of a local company, but given the changes not interested to be now part of a 15% minority whose interests count nothing for the board.
Pity - I will miss the AGM's. They all have been in interesting venues. A vineyard near West Melton, their Dunsandel factory and a couple of times in a nice and new Tait building in the Western parts of Christchurch. I might miss the team exercise of clapping for boards and managements amazing achievements. Things looked bright in 2017/2018. These were the times.
I probably won't miss the long Te Reo introductions at the AGM which nobody including the speaker understood, and I definitely won't miss the announcements headed in pink letters. Not really my choice of colour for business communication.
Discl: long term holder from 2014 to 2018 ... and short term holder for a couple of days this month.
Quote from: BlackPeter on Aug 21, 2024, 11:23 AMJust for full disclosure - I am out again.
I really bought back into this share last week with expectations of a long term hold and support of a local company, but given the changes not interested to be now part of a 15% minority whose interests count nothing for the board.
Pity - I will miss the AGM's. They all have been in interesting venues. A vineyard near West Melton, their Dunsandel factory and a couple of times in a nice and new Tait building in the Western parts of Christchurch. I might miss the team exercise of clapping for boards and managements amazing achievements. Things looked bright in 2017/2018. These were the times.
I probably won't miss the long Te Reo introductions at the AGM which nobody including the speaker understood, and I definitely won't miss the announcements headed in pink letters. Not really my choice of colour for business communication.
Discl: long term holder from 2014 to 2018 ... and short term holder for a couple of days this month.
I havent been to a meeting since that terrible one when Clements decide to go full te reo in front of the Chines board members with literally no maori in the crowd.
Anyway, I may just hold on if for no other reason to go to another meeting
Quote from: Left Field on Aug 20, 2024, 01:36 PMKudos to you Balance..... you have read the SML saga very well and I'm sure your bond investment will be richly rewarded. Well done.
Thanks, Left Field.
I had continued adding onto my bond holding and am pleased that my credit assessment skills and experience have served me well.
As I said to my fellow investor over coffee this morning, ours is a poorly analysed and assessed market so opportunities to make exceptional returns do present themselves from time to time. And when they do, one has to be prepared to go against the market and make it worthwhile.
Pity the CR via rights issue is not happening as I would have loved to be able to invest via buying during the rights trading period but such is life.
Onto the next opportunity.
Quote from: BlackPeter on Aug 21, 2024, 11:23 AMJust for full disclosure - I am out again.
I really bought back into this share last week with expectations of a long term hold and support of a local company, but given the changes not interested to be now part of a 15% minority whose interests count nothing for the board.
Pity - I will miss the AGM's. They all have been in interesting venues. A vineyard near West Melton, their Dunsandel factory and a couple of times in a nice and new Tait building in the Western parts of Christchurch. I might miss the team exercise of clapping for boards and managements amazing achievements. Things looked bright in 2017/2018. These were the times.
I probably won't miss the long Te Reo introductions at the AGM which nobody including the speaker understood, and I definitely won't miss the announcements headed in pink letters. Not really my choice of colour for business communication.
Discl: long term holder from 2014 to 2018 ... and short term holder for a couple of days this month.
It's certainly been a fascinating case study in all things ESG extremism, that's for sure as well as a fascinating train wreck to follow over recent years. Balance has also given us a free lesson in the power of the CCP in terms of its overlord position even while they're holding without a majority stake.
Like you, I have no interest in staying on board with a company controlled by a company that is controlled by CCP who have a long track record of treating minority shareholders with complete disdain and contempt and the "so called" independent directors here have acted with no thought or care for minority shareholder interests either and that's not going to change going forward. If anything, with Bright's 65% it's only going to get a lot worse, and the "independent" directors are merely puppets on a string. Its truly pathetic to watch. As for the so called independent Northington report, just as well it's in electronic form because nothing I have read from them in the past has been worth the paper it's printed on. They just report whatever the person paying the bill wants them to report. Happy to have got my tummy filled here with another reasonable feed and moved on to the next opportunity.
Reckon there will be good support around that 43c mark being the A2 discount price, should trade between this and 50c for a while, looks like more fun to be had for some time yet.
Quote from: CG on Aug 21, 2024, 08:43 AMThey are not trying to repay all debts. They are trying to reduce it to the level where they will be able to refinance it. Also do not forget $24m settlement payment from A2M and $130m loan from Bright.
My bad - I forgot about the $130m loan from Bright so thanks for that.
I read something today that says the new bank debt facilities will be $450m plus the $130m. If so, it will be interesting to see how much of the bank facilities have been drawn and the terms of the facilities.
Quote from: Ferg on Aug 21, 2024, 06:32 PMMy bad - I forgot about the $130m loan from Bright so thanks for that.
I read something today that says the new bank debt facilities will be $450m plus the $130m. If so, it will be interesting to see how much of the bank facilities have been drawn and the terms of the facilities.
$450m is proposed new bank facilities and terms are still under negotiation. Related information can be found in the Notice of shareholders meeting (page 22-23 to be precise) https://www.synlait.com/wp-content/uploads/2024/08/Notice-of-Meeting_Digital.pdf
Quote from: Minimoke on Aug 21, 2024, 09:57 AMTotal debt was
$180m Bonds
$309 Banks
$589.7 total
Total debt in December will be
$130 Bright
$179 Banks
$309m total.
Thats a $280m improvement. And $130m of that Bright isn't worried about.,
Well I'm confused. I thought this hullaboo was about resetting the balance sheet. But it appears debt is now going to look like
$130m Bright
$450m banks
$580m TOTALSo $9.7m better off
Quote from: Minimoke on Aug 22, 2024, 07:10 AMWell I'm confused. I thought this hullaboo was about resetting the balance sheet. But it appears debt is now going to look like
$130m Bright
$450m banks
$580m TOTAL
So $9.7m better off
Simple.
Drawn vs undrawn debt facilities.
Banks make available debt facilities which can be drawn down subject to the company continuously meeting agreed covenants, terms and conditions.
Bye bye Pokeno?
Looks like one option is to monthball Pokeno - $300m+ down the gurgle?
Be interesting to work the figures out with Pokeno written off.
https://www.nzx.com/announcements/436600
https://businessdesk.co.nz/article/primary-sector/open-country-expected-to-pick-up-synlaits-north-island-milk-supply
Quote from: Teitei on Aug 22, 2024, 08:47 AMBye bye Pokeno?
Looks like one option is to monthball Pokeno - $300m+ down the gurgle?
Be interesting to work the figures out with Pokeno written off.
https://www.nzx.com/announcements/436600
https://businessdesk.co.nz/article/primary-sector/open-country-expected-to-pick-up-synlaits-north-island-milk-supply
A2 noted that Synlait sourced theri milk from canterbury and Waikato farms. Rather than mothball, perhaps A2 and Bright can buy processing and canning for a song. A2 needs canning facilities.
Quote from: Minimoke on Aug 22, 2024, 09:06 AMA2 noted that Synlait sourced theri milk from canterbury and Waikato farms. Rather than mothball, perhaps A2 and Bright can buy processing and canning for a song. A2 needs canning facilities.
I've heard several rumours re ATM buying Pokeno..... at this stage just rumours..... but another reason why ATM is better to be 'well positioned' with its cash pile (and yes, I appreciate you favour an ATM dividend payout.)
If it is to happen... I suspect any announcement will wait till after SML's cap raise is approved...... the following from SML today....
22/08/2024, 08:30 NZST, GENERAL
Synlait Milk Limited (Synlait) notes the article published by BusinessDesk this morning regarding the possible sale of raw milk in the North Island to Open Country.
In April, Synlait announced it was undertaking a strategic review of its North Island assets, including its manufacturing facility in Pokeno and its blending and canning facility in Auckland. The strategic review was expected to take several months. It is now nearing the final stages. The strategic review does include consideration of the continued collection and processing of milk in the North Island. Synlait expects to make a further announcement about the outcome of the broader strategic review before it releases its full-year results at the end of September.
Quote from: Left Field on Aug 22, 2024, 09:17 AMI've heard several rumours re ATM buying Pokeno..... at this stage just rumours..... but another reason why ATM is better to be 'well positioned' with its cash pile (and yes, I appreciate you favour an ATM dividend payout.)
If it is to happen... I suspect any announcement will wait till after SML's cap raise is approved...... the following from SML today....
22/08/2024, 08:30 NZST, GENERAL
Synlait Milk Limited (Synlait) notes the article published by BusinessDesk this morning regarding the possible sale of raw milk in the North Island to Open Country.
In April, Synlait announced it was undertaking a strategic review of its North Island assets, including its manufacturing facility in Pokeno and its blending and canning facility in Auckland. The strategic review was expected to take several months. It is now nearing the final stages. The strategic review does include consideration of the continued collection and processing of milk in the North Island. Synlait expects to make a further announcement about the outcome of the broader strategic review before it releases its full-year results at the end of September.
SML responding so quickly to the BusinessDesk's article is telling imo.
The BusinessDesk article is rather specific about Open Country signing a deal to take over SML's milk supply. So I would certainly give it credence - especially when Pokeno has been out of operation for a while already.
Open Country Dairy is expanding its Waikato facilities at a time when Milk production in the region is static.
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/open-country-unveils-major-expansion-plan
Quote from: Teitei on Aug 22, 2024, 09:40 AMSML responding so quickly to the BusinessDesk's article is telling imo.
The BusinessDesk article is rather specific about Open Country signing a deal to take over SML's milk supply. So I would certainly give it credence - especially when Pokeno has been out of operation for a while already.
Open Country Dairy is expanding its Waikato facilities at a time when Milk production in the region is static.
https://www.ruralnewsgroup.co.nz/dairy-news/dairy-general-news/open-country-unveils-major-expansion-plan
I didn't realize Pokeno was out of operation. I thought it was just under utilized
Quote from: Minimoke on Aug 22, 2024, 07:10 AMWell I'm confused. I thought this hullaboo was about resetting the balance sheet. But it appears debt is now going to look like
$130m Bright
$450m banks
$580m TOTAL
So $9.7m better off
No matter how you slice and dice it, Synlait is still going to be a VERY heavily indebted company, struggling at an operational level to make a profit and controlled by the CCP. Gosh that's such an incredibly attractive investment opportunity, why did I sell lol
Quote from: Basil on Aug 22, 2024, 10:35 AMNo matter how you slice and dice it, Synlait is still going to be a VERY heavily indebted company, struggling at an operational level to make a profit and controlled by the CCP. Gosh that's such an incredibly attractive investment opportunity, why did I sell lol
I personally think Synlait will prosper (just like Westland) after Bright takes control.
But I do not believe minorities will get to enjoy the upside. Like any multinational entities, plenty of scope for transfer pricing to channel the profits to wherever the owners feel are most appropriate!
Look at RBD!
Quote from: Basil on Aug 22, 2024, 10:35 AMNo matter how you slice and dice it, Synlait is still going to be a VERY heavily indebted company, struggling at an operational level to make a profit and controlled by the CCP. Gosh that's such an incredibly attractive investment opportunity, why did I sell lol
Synlait last reported net assets of $699m
How do they write off $350m worth of mothballed Pokeno?
They are already going to have to write down Dairyworks. (I dont think that was done in half year results)
It look ugly. Especially if they have the potential of $580 bank / bright debt (which excludes creditors)
Quote from: Minimoke on Aug 22, 2024, 10:53 AMSynlait last reported net assets of $699m
How do they write off $350m worth of mothballed Pokeno?
They are already going to have to write down Dairyworks. (I dont think that was done in half year results)
It look ugly. Especially if they have the potential of $580 bank / bright debt (which excludes creditors)
Apparently 'mothballing Pokeno' is off the table now: https://www.synlait.com/wp-content/uploads/2024/08/SML-Independent-Advisers-Report-20-August-2024-FINAL.pdf
Quote from: Buzz on Aug 22, 2024, 11:53 AMApparently 'mothballing Pokeno' is off the table now: https://www.synlait.com/wp-content/uploads/2024/08/SML-Independent-Advisers-Report-20-August-2024-FINAL.pdf
Begs the question then as to what they are going to do with the plant if they sell the milk supply to Open Country Dairy.
Quote from: Buzz on Aug 22, 2024, 11:53 AMApparently 'mothballing Pokeno' is off the table now: https://www.synlait.com/wp-content/uploads/2024/08/SML-Independent-Advisers-Report-20-August-2024-FINAL.pdf
The reports supports my view A2M and Bright should l have driven this thing to insolvency and picked up the pieces.
"we have estimated a hypothetical insolvency value range of $0.15 - $0.50 per share (approximately 33% – 60% of our going concern value). This outcome relies on a liquidator or receiver being able to generate strong buyer interest for Synlait's assets and completing the process over a reasonable time period. If these conditions are not satisfied, we believe that our assessed range could significantly overstate the potential insolvency value of Synlait"That is a value range between $32,787,249 and $109,290,831
But I need to move on. Dunsandle is obviously being saved. For $217.8m.
But that leaves distressed Pokeno.
Lets assume its not going to be mothballed.
It seems teh very max it could be worth is $109m
Which is supported by
"However, the material improvement in debt levels, along with the bank refinancing which is a condition of the a2MC Placement and a2MC Settlement, will provide the company with the necessary headroom to
explore further avenues for debt reduction and earnings improvement"". Notwithstanding that view, we believe these divestments (Pokeno and dairyworks) are likely to remain viable options to further reduce debt following the Equity Raising"
Quote from: Teitei on Aug 22, 2024, 12:16 PMBegs the question then as to what they are going to do with the plant if they sell the milk supply to Open Country Dairy.
I think you have it backwards. "Open Country Dairy is
expected to sign a deal to purchase Synlait Milk's North Island milk supply" which in simple language means they may or may not. I have no doubt that as part of review Synlait approached Open County and offered them to take over the supply on condition
if the plant is sold or something but not otherwise
Report values Auckland at
$57m for land and buildings
$31 - $44m for plan and equipment salvage costs.
Total $88 - $101.
They are also valuing Dairyworks at $85 - $95m.
Quote from: CG on Aug 22, 2024, 12:51 PMI think you have it backwards. "Open Country Dairy is expected to sign a deal to purchase Synlait Milk's North Island milk supply" which in simple language means they may or may not. I have no doubt that as part of review Synlait approached Open County and offered them to take over the supply on condition if the plant is sold or something but not otherwise
Fair enough.
I read "is expected" as much stronger than "is negotiating".
Quote from: Teitei on Aug 22, 2024, 01:00 PMFair enough.
I read "is expected" as much stronger than "is negotiating".
I'd say it's rather "conditional".
The irony is that a2 sources their new formula "a2 Gold" from Yashili next door from Synlait Pokeno.
I don't think a2 will be interested in Pokeno as it has too much capacity to handle
Down over 5% but that 43c A2 discount price providing support.
Looks like a bigger punter exiting today the way the sell line has been layered.
The Northington report on SML makes interesting reading.......( if there are any retail SML shareholders left to be interested!??)
https://www.synlait.com/wp-content/uploads/2024/08/SML-Independent-Advisers-Report-20-August-2024-FINAL.pdf
Quote from: Left Field on Aug 22, 2024, 05:34 PMThe Northington report on SML makes interesting reading.......( if there are any retail SML shareholders left to be interested!??)
https://www.synlait.com/wp-content/uploads/2024/08/SML-Independent-Advisers-Report-20-August-2024-FINAL.pdf
Midpoint value of 64c, whats not to like, thats not a question.
Quote from: Left Field on Aug 22, 2024, 05:34 PMif there are any retail SML shareholders left to be interested!??)
YAWN https://www.youtube.com/watch?v=GJwW8GlqNFk
Quote from: Basil on Aug 22, 2024, 06:33 PMYAWN https://www.youtube.com/watch?v=GJwW8GlqNFk
Yup - game's over for SML.
There were fantastic gains to be made (especially when the bonds were trading at over 100% yield) but without a pro-rata CR, SML with 85% ownership by Bright & ATM is no go territory.
Quote from: Teitei on Aug 24, 2024, 10:19 AMYup - game's over for SML.
There were fantastic gains to be made (especially when the bonds were trading at over 100% yield) but without a pro-rata CR, SML with 85% ownership by Bright & ATM is no go territory.
Dont count on it, retail punters could very well get their shares taken off their hands at a much higher price than 40c or failing that the sp will rise as the Phoenix rises from the ashes. I'm in for a decent sized but calculated punt.
Quote from: Breezy on Aug 24, 2024, 11:05 AMDont count on it, retail punters could very well get their shares taken off their hands at a much higher price than 40c or failing that the sp will rise as the Phoenix rises from the ashes. I'm in for a decent sized but calculated punt.
Good luck hoping the CCP plays fair. How are the people in Tibet getting on...just a thought.
Quote from: Basil on Aug 24, 2024, 01:04 PMGood luck hoping the CCP plays fair. How are the people in Tibet getting on...just a thought.
If they want the retail shares they will have to pay an acceptable price for them unless the company goes under which is extremely unlikely now, apart from that they can't force a sale.
Its not about playing fair, they are currently bound by rules they can't break and it would not be in their favour to try if they want milk for their people.
My opinion is they will buy the retail shares at a premium to current sp in due course.
There's nothing about the current placement that's fair to minority shareholders and nothing to suggest their treatment in the future will be any better.
Quote from: Basil on Aug 24, 2024, 04:23 PMThere's nothing about the current placement that's fair to minority shareholders and nothing to suggest their treatment in the future will be any better.
If they want what will be 15% of retail shares after the recap then they will have to pay for them or wind up, even if they delisted they still wouldn't own them. I agree its not fair to minority shareholders who paid above current sp but life isn't fair, ask me how I know.
Quote from: Breezy on Aug 24, 2024, 05:50 PMIf they want what will be 15% of retail shares after the recap then they will have to pay for them or wind up, even if they delisted they still wouldn't own them. I agree its not fair to minority shareholders who paid above current sp but life isn't fair, ask me how I know.
I don't think Bright wants the other 15%.
It helps SML's profile to be a NZ listed company - dairy products from the land of quality milk and honey.
Quote from: Teitei on Aug 25, 2024, 11:00 AMI don't think Bright wants the other 15%.
It helps SML's profile to be a NZ listed company - dairy products from the land of quality milk and honey.
Probably not but I was just highlighting what they would have to do to obtain them if they desired and I see plenty of upside from the current sp as opposed to Basils normal very negative stance once he's sold his shares.
Quote from: Breezy on Aug 25, 2024, 01:39 PMProbably not but I was just highlighting what they would have to do to obtain them if they desired and I see plenty of upside from the current sp as opposed to Basils normal very negative stance once he's sold his shares.
By definition, why would anyone sell something unless they feel negative or buy something unless they feel positive?
I do however observe with some amusement how rabidly vocal some posters were about Synlait's survival prospects (despite unequivocal assurances from Bright), and how quickly they jumped onboard the 'recovery' story when the assurances materialised!
All cool - that's how the market works and how glaring opportunities like bonds yielding 100%+ becomes available!
I genuinely thought we were in for a 4 or 5:1 deeply discounted rights issue so the outcome was a genuine surprise and not a situation I am willing to tolerate. The fact that Bright and ATM were favored the way they were and that Bright as a CCP controlled company now completely dominates the company, makes it uninvestable for me at any price.
There are so many ways to skin a cat when it comes to a dominant shareholder manipulating things for their own outcome, minority shareholders are in a very invidious position with no effective representation on the board. I doubt shareholders will ever see a dividend.
Quote from: Basil on Aug 26, 2024, 10:55 AMI genuinely thought we were in for a 4 or 5:1 deeply discounted rights issue so the outcome was a genuine surprise and not a situation I am willing to tolerate. The fact that Bright and ATM were favored the way they were and that Bright as a CCP controlled company now completely dominates the company, makes it uninvestable for me at any price.
There are so many ways to skin a cat when it comes to a dominant shareholder manipulating things for their own outcome, minority shareholders are in a very invidious position with no effective representation on the board. I doubt shareholders will ever see a dividend.
am I reading this right, how can you possibly be surprised that the final outcome will have favor to major shareholders.
Take another look at the perilous position the company got itself into and the power this afforded the major SHers.
I thought the independent directors would protect minority shareholder interests and that they would do the capital raise at the same price for everyone, probably with Bright underwriting it. Silly me...but I got out with a reasonable profit so have dodged a bullet. Those hanging in there expecting the independent director(s) in the future will protect their interests given Bright are now in such a dominant position, are even more naïve than I was.
I got a reasonable feed so I really don't care anymore and won't ever be back so its game over as far as I am concerned.
Quote from: Basil on Aug 26, 2024, 11:22 AMI thought the independent directors would protect minority shareholder interests and that they would do the capital raise at the same price for everyone, probably with Bright underwriting it. Silly me...but I got out with a reasonable profit so have dodged a bullet. Those hanging in there expecting the independent director(s) in the future will protect their interests given Bright are now in such a dominant position, are even more naïve than I was.
I got a reasonable feed so I really don't care anymore and won't ever be back so its game over as far as I am concerned.
You didn't dodge any bullet, plenty of upside from here. You just transacted a swing trade, that's it.
Quote from: Teitei on Aug 26, 2024, 07:37 AMBy definition, why would anyone sell something unless they feel negative or buy something unless they feel positive?
I do however observe with some amusement how rabidly vocal some posters were about Synlait's survival prospects (despite unequivocal assurances from Bright), and how quickly they jumped onboard the 'recovery' story when the assurances materialised!
All cool - that's how the market works and how glaring opportunities like bonds yielding 100%+ becomes available!
As I mentioned in early posts. The Synlait we knew then is not the Synlait we will know going forward.
For retail shareholders, Synlait has, for all intents and purposes gone.
"assurances materialised" is also known as better understanding the risk based on known information.
https://www.chrislee.co.nz/taking-stock
https://www.nzshareholders.co.nz/scrip-article/retail-shareholders-swallowing-dead-rats-at-synlait/
Quote from: Minimoke on Aug 26, 2024, 12:53 PMAs I mentioned in early posts. The Synlait we knew then is not the Synlait we will know going forward.
For retail shareholders, Synlait has, for all intents and purposes gone.
"assurances materialised" is also known as better understanding the risk based on known information.
Happy to take a $1/share from Bright if they want my 40c shares.
Quote from: Minimoke on Aug 26, 2024, 12:53 PMAs I mentioned in early posts. The Synlait we knew then is not the Synlait we will know going forward.
For retail shareholders, Synlait has, for all intents and purposes gone.
"assurances materialised" is also known as better understanding the risk based on known information.
Yet you were very keen to jump back on board on the materialization of the assurances?
"For retail shareholders, Synlait has, for all intents and purposes gone." Interesting!
Still got the shares? :P
article in the Business Desk:
https://businessdesk.co.nz/article/primary-sector/how-bright-dairy-plans-to-turn-synlaits-losses-into-profit
(probably paywalled, and clearly not worth-while to buy a subscription to read this article)
Anyway - in a nutshell: Based on Bright Dairies announcement on the Shanghai Stock Exchange is their amazing plan to profitability for Synlait as follows:
"reduce unnecessary consulting service fees, improve inventory management and reasonably reduce inventory to improve cash flow."
Ah yes, and they quickly hired some consultants (to reduce the unnecessary consulting fees?):
"Bright has appointed corporate affairs consultants Shanahan Partners to help it with its NZ communications and Forsyth Barr is advising the Chinese firm on the placement."
Amazing! they didn't explain however that Bright always controlled the board. Not quite clear to me why this wisdom is only eventuating since they have a 2/3rd board majority (as compared to a simple majority so far).
It is getting clearer and clearer to me why Synlait is stuck so deep deep in the proverbial. Just look who always controlled the board. Quite funny that the people who did run them into it are now claiming they have an amazing plan to get them out.
But hey - probably just another smoke and mirrors event. I am sure the dragon has a diabolical plan it doesn't want to communicate to simple beings like us.
Quote from: Teitei on Aug 27, 2024, 07:41 AMYet you were very keen to jump back on board on the materialization of the assurances?
Why not. Act on known information taht derisks a situation rather than gamble of the unknown. Thats me!
Quote from: Teitei on Aug 27, 2024, 07:41 AM"For retail shareholders, Synlait has, for all intents and purposes gone." Interesting!
Isnt it. Just as I said it would turn out.
Quote from: Teitei on Aug 27, 2024, 07:41 AMStill got the shares? :P
In the interests of transparency you will see in my posts I declare when I buy and sell. If you took the trouble to read my posts you would see the answer to this question
Interesting complaint from John Penno
"The notice of complaint asserts that under the NZX Listing Rules and Takeovers Code, Bright and a2MC should not be able to vote on resolutions relating to the recapitalisation, leaving only shareholders other than Bright and a2MC being able to vote on the two resolutions."
Seesm to me it might have merit - based on the fact that Bright stood aside on the decision to loan Synlait $130m
if we remember:
"The meeting is to vote on the resolution to approve the proposed entry into a $130 million shareholder loan to be made available to Synlait by Bright Dairy
International Investment Limited, a related company of Bright Dairy Holding Limited, Synlait's 39.01% shareholder..........
Bright Dairy cannot vote in favour of the resolution; as such, the Directors appointed by Bright Dairy have abstained from making a recommendation."
Edit and in the interests of transparency I have sold out taking my 20% gain. Some unknown = risk again.
https://api.nzx.com/public/announcement/436976/attachment/425885/436976-425885.pdf
The situation is indeed noteworthy. It seems reasonable to concur that Bright and ATM ought not to be eligible to vote, considering the significant marginalization of minority shareholders in this recapitalization proposal. Penno's complaint appears to have substance, and in the interest of upholding the integrity of NZX's takeover regulations—which this effectively resembles a takeover—I hope the NZX concur. Clearly, Penno feels aggrieved; however, it is also noted that he served on the board until May 2024, implicating him in the remarkable debacle that Synlait has become.
Clearly, the risk of insolvency and non-repayment of the unsecured bonds just ratcheted up several notches.
Quote from: Basil on Aug 28, 2024, 10:58 AMhttps://api.nzx.com/public/announcement/436976/attachment/425885/436976-425885.pdf
The situation is indeed noteworthy. It seems reasonable to concur that Bright and ATM ought not to be eligible to vote, considering the significant marginalization of minority shareholders in this recapitalization proposal. Penno's complaint appears to have substance, and in the interest of upholding the integrity of NZX's takeover regulations—which this effectively resembles a takeover—I hope the NZX concur. Clearly, Penno feels aggrieved; however, it is also noted that he served on the board until May 2024, implicating him in the remarkable debacle that Synlait has become.
Clearly, the risk of insolvency and non-repayment of the unsecured bonds just ratcheted up several notches.
Yes, it amazed me that they had apparently received approval from the regulators to vote for each other's share issue. But then I put that down to the wild west nature of NZs regulatory regime.
It will be interesting to watch developments from here especially since Penno will have the inside oil on the actual relationship between A2M and SML as opposed to the one they have been publicly displaying. I wonder what he will be able to tell the regulators in support of his complaint (or a court afterwards if this scheme does proceed)
Quote from: Poet on Aug 28, 2024, 11:08 AMYes, it amazed me that they had apparently received approval from the regulators to vote for each other's share issue. But then I put that down to the wild west nature of NZs regulatory regime.
It will be interesting to watch developments from here especially since Penno will have the inside oil on the actual relationship between A2M and SML as opposed to the one they have been publicly displaying. I wonder what he will be able to tell the regulators in support of his complaint (or a court afterwards if this scheme does proceed)
Wild west indeed. Clearly, he feels very strongly about this so even if the NZX dismiss his complaint you cannot rule out the possibility of him seeking a High Court injunction. Notable that ATM shares slid quite a lot yesterday and SML share depth on the buy side is very shallow today. Coincidence?
Quote from: Basil on Aug 28, 2024, 11:13 AMWild west indeed. Clearly, he feels very strongly about this so even if the NZX dismiss his complaint you cannot rule out the possibility of him seeking a High Court injunction. Notable that ATM shares slid quite a lot yesterday and SML share depth on the buy side is very shallow today. Coincidence?
Complaint will go no where at the end of the day, just temporal noise like the A2 class action
How its being reported in the media
https://www.nzherald.co.nz/business/synlait-co-founder-john-penno-lodges-complaint-over-recapitalisation-plan/Z7SU5DKPIVGN5OXI57JBQZDWFI/
Associated people cant vote.
Associated person = " person (A) is associated with, or an Associated Person of, another person (B) if:..... A and B are acting jointly or in concert"
Thanks for posting. 6.3.2 is interesting. Clearly shareholders are being treated very differently, both in terms of not only the issue price to Bright, but also to ATM and the exclusion of all other shareholders from the capital raise.
I am sure Penno has hired good legal representation and has a strong vested interest in seeing an equitable outcome here for all shareholders. Interesting times for shareholders and unsecured bondholders.
Quote from: Minimoke on Aug 28, 2024, 11:38 AMAssociated people cant vote.
Associated person = " person (A) is associated with, or an Associated Person of, another person (B) if:..... A and B are acting jointly or in concert"
That is correct. For the complaint to be upheld by regulators, John Penno would need to prove that Bright and a2 are "associates" and have some sort of business or ownership relationships. I don't think they have any business relationship. As for ownership I doubt that having shares in the same company makes them associates, otherwise any shareholder could be classified as such.
Not sure what JP is trying to achieve with this? Revenge?
Quote from: CG on Aug 28, 2024, 11:58 AMThat is correct. For the complaint to be upheld by regulators, John Penno would need to prove that Bright and a2 are "associates" and have some sort of business or ownership relationships. I don't think they have any business relationship. As for ownership I doubt that having shares in the same company makes them associates, otherwise any shareholder could be classified as such.
Not sure what JP is trying to achieve with this? Revenge?
So if company A and company B got together and had a discussion along the lines of
We will buy x shares at 43c and you buy y shares at 60c and we will not make any shares available for the other shareholders and we will vote for your placement provided you vote for our placement.
In my view these two companies would be acting in concert.
Quote from: Poet on Aug 28, 2024, 12:08 PMSo if company A and company B got together and had a discussion along the lines of
We will buy x shares at 43c and you buy y shares at 60c and we will not make any shares available for the other shareholders and we will vote for your placement provided you vote for our placement.
In my view these two companies would be acting in concert.
Can you prove that company A and company B got together and decided who gets what in company C?
How about another view. Company C acted on independent advise and made an offer to two biggest shareholders who happens to be companies A and B?
Quote from: CG on Aug 28, 2024, 12:14 PMCan you prove that company A and company B got together and decided who gets what in company C?
How about another view. Company C acted on independent advise and made an offer to two biggest shareholders who happens to be companies A and B?
Sure company C could have been involved but then all three would be acting in concert.
At the very least A and B have agreed to support each other's share issue. That shows a quid pro quo which must have been agreed between them at some point even if an intermediary was involved in the process.
Oh, and we shouldn't overlook that company C is effectively company A anyway since A has control of the board of C
Quote from: CG on Aug 28, 2024, 11:58 AMThat is correct. For the complaint to be upheld by regulators, John Penno would need to prove that Bright and a2 are "associates" and have some sort of business or ownership relationships. I don't think they have any business relationship. As for ownership I doubt that having shares in the same company makes them associates, otherwise any shareholder could be classified as such.
Not sure what JP is trying to achieve with this? Revenge?
A2 have publicly said
"Synlait's recapitalisation proposal includes a proposed equity raising of approximately NZ$217.8 million by way of a....:" A2 and Bright chucking some money in the pot. If this isnt Acting "in concert" then I dont know what is.
Synlait have also publicly said that without the $217m they are basically kaput. So they need both A2 and Bright to come together and provide the funds. In the absence of retail shareholders there is no plan to get $217m, without both A2 and Bright working together to save Synlait.
A2 have also publicly said "The settlement is conditional on Synlait completing its equity raise and the refinancing of Synlait's existing banking facilities. a2MC has agreed to support and subscribe for shares under Synlait's equity raise, subject to finalisation of terms which will be set out in Synlait's forthcoming notice of meeting expected to be released this month. If the conditions to the settlement are satisfied, the arbitration to resolve the disputes will be
discontinued. In the meantime, the arbitration hearing has been adjourned."
For the settlement to go through A2 and Bright need to work together to each support the others new equity..
Synlait also needs the 2 parties to work together so the can get the $24.75m in much needed immediate cash as well as the overall equity.
Seems to me all 3 parties are inextricably linked
More fees for lawyers - waste of everybody else's time and money.
Quote from: Minimoke on Aug 28, 2024, 12:25 PMA2 have publicly said
"Synlait's recapitalisation proposal includes a proposed equity raising of approximately NZ$217.8 million by way of a....:" A2 and Bright chucking some money in the pot. If this isnt Acting "in concert" then I dont know what is.
Synlait have also publicly said that without the $217m they are basically kaput. So they need both A2 and Bright to come together and provide the funds. In the absence of retail shareholders there is no plan to get $217m, without both A2 and Bright working together to save Synlait.
There is a huge difference between a) companies A and B got together and decided how to take over company C (effectively that would mean hostile takeover) and b) company C make an offer to company A and to company B to participate in capital injection and as usual in such cases companies A and B might have some conditions.
So, can you prove that this is case a)?
Somehow nobody raised this question when a2 was allowed to vote on Bright's loan. How is that different from that a2 is allowed to vote on Bright's equity raising participation or Bright is allowed to vote on a2's participation?
If it was only Bright who injecting new capital would be a2 allowed to vote?
Quote from: Minimoke on Aug 28, 2024, 12:53 PMA2 have also publicly said "The settlement is conditional on Synlait completing its equity raise and the refinancing of Synlait's existing banking facilities. a2MC has agreed to support and subscribe for shares under Synlait's equity raise, subject to finalisation of terms which will be set out in Synlait's forthcoming notice of meeting expected to be released this month. If the conditions to the settlement are satisfied, the arbitration to resolve the disputes will be
discontinued. In the meantime, the arbitration hearing has been adjourned."
For the settlement to go through A2 and Bright need to work together to each support the others new equity..
Synlait also needs the 2 parties to work together so the can get the $24.75m in much needed immediate cash as well as the overall equity.
Seems to me all 3 parties are inextricably linked
There is nothing wrong with having some conditions when negotiating a deal.
Quote from: CG on Aug 28, 2024, 01:14 PMThere is nothing wrong with having some conditions when negotiating a deal.
Having conditions is a very sensible thing to do.
But Synlait have said
"the equity raise will only complete if it does so concurrently with the refinancing of its bank facilities. The equity raise, the recent dispute settlement with a2MC, and the bank refinancing are inter-conditional and therefore must all be approved and occur around the same time or not at all."Seems to me that Bright and A2 (as well as synlait and their banks) are all, by their own admission acting "jointly or in concert"
Quote from: Minimoke on Aug 28, 2024, 01:55 PMHaving conditions is a very sensible thing to do.
But Synlait have said "the equity raise will only complete if it does so concurrently with the refinancing of its bank facilities. The equity raise, the recent dispute settlement with a2MC, and the bank refinancing are inter-conditional and therefore must all be approved and occur around the same time or not at all."
Seems to me that Bright and A2 (as well as synlait and their banks) are all, by their own admission acting "jointly or in concert"
It's not an admission, it's your interpretation. As I said there is nothing wrong with having conditions.
Quote from: CG on Aug 28, 2024, 02:04 PMIt's not an admission, it's your interpretation. As I said there is nothing wrong with having conditions.
When you have conditions, in good faith, you need conditions that you think are going to be achievable. And the best way for them to be achievable is if you work in some way or another with other parties to help ensure those conditions can be met. Even if it just means the other party can accept and/or and work with those conditions.
Quote from: Teitei on Aug 28, 2024, 12:54 PMMore fees for lawyers - waste of everybody else's time and money.
This.
And might I add that the current recap is the best outcome for retail shareholders, seems Penno is blowing his own aggrieved trumpet which is very rich when you consider the way the company went downhill big time under his leadership.
Quote from: Breezy on Aug 28, 2024, 04:26 PMThis.
And might I add that the current recap is the best outcome for retail shareholders, seems Penno is blowing his own aggrieved trumpet which is very rich when you consider the way the company went downhill big time under his leadership.
https://www.farmersweekly.co.nz/news/penno-sees-better-options-for-synlait/
Quote from: Teitei on Aug 29, 2024, 01:53 PMhttps://www.farmersweekly.co.nz/news/penno-sees-better-options-for-synlait/
"Penno said minority shareholders would be better off if Synlait was put into the hands of an administrator to sell the assets to the highest value owners."
He might be right. Assuming administrators can extract maximum value to repay all debts and leave something aside for the shareholders.
"Synlait's need to address fundamental issues facing it dates back to 2020. I applaud the board settling its differences with a2Milk. However, questions should be asked about how the relationship could have got in this state to begin with. " didn't he have a bit of a set to with A2 over another company?
""Bright has controlled the Synlait board since 2010, so how can moving from 39% to 65% help when it has not worked to date?" Good point!
I do disagree with Chair George Adams who says ""Our proposal recapitalises the company, pays our bondholders, provides a refinance option for our banks and ensures a viable future for Synlait group's more than 1400 employees and the nearly 260 farmer suppliers whose businesses rely on us. "
AS far as I can see all this proposal does is change the financing. it does nothing to solve the business management practices that have seen Synlait end up in the position it finds it self in. Again. So unless there are more fundamental changes than just fiddling with the balance sheet / share structure, SML will one day in the not too far distant future will be faced, once again with the prospect of trying to raise more capital. I've lost count the number of times they have had to do this
As Penno says "It should be noted that minority shareholders cumulatively own 41% of Synlait's shares" they are the biggest stakeholder. Youde think they should at least be given the option to participate in a capital raise.
Do things in haste, repent at your leisure.
Quote from: Minimoke on Aug 29, 2024, 04:24 PM"
AS far as I can see all this proposal does is change the financing. it does nothing to solve the business management practices that have seen Synlait end up in the position it finds it self in. Again. So unless there are more fundamental changes than just fiddling with the balance sheet / share structure, SML will one day in the not too far distant future will be faced, once again with the prospect of trying to raise more capital. I've lost count the number of times they have had to do this
Interesting comment from you.
And yet you were very quick to change from your rabid negative view of SML to jump on board (when nothing has changed except the balance sheet, according to you)!
Quote from: Teitei on Aug 29, 2024, 09:26 PMInteresting comment from you.
And yet you were very quick to change from your rabid negative view of SML to jump on board (when nothing has changed except the balance sheet, according to you)!
One persons "rabid" is another persons "Thoughtful and considered"
I stand by all my comments - backed up by the share price chart since I started posting after my first encounter with leon.
If you had comprehended my posts you would have seen I thought Synlait was uninvestable for all sorts of reasons. Not so long ago it became totally uninvestible due to the huge risk around the uncertainty of paying back the bank loan and other balance sheet requirements. The risk was the unknown. I dont like that kind of risk - so I dont put my money there.
Since then more has become known and the risk was, in my view substantially reduced. Which is why I took a punt. I wasnt "very quick to change my view". I just saw more information, analysed it, formed a view and placed an order. I saw an opportunity. But as I flagged not as a long term investment.
And then Penno has popped up. Raising more uncertainty. Which creates a risk profile I don't like.
So I sold. Taking my 20% gain in 12 days with me.
you might like your 7% interest with no gain over 5 years for a high risk bond. But I reckon at times there are better opportunities.
I see Penno more like a bug that just crawled up my arm ready to be squashed than a risk.
Quote from: Breezy on Aug 30, 2024, 08:15 AMI see Penno more like a bug that just crawled up my arm ready to be squashed than a risk.
Put him aside, what do you think of his argument. I think he makes some fair points on behalf of minority shareholders.
Quote from: Minimoke on Aug 30, 2024, 08:27 AMPut him aside, what do you think of his argument. I think he makes some fair points on behalf of minority shareholders.
He has some valid points although they are probably driven almost entirely by his personal holding size. I don't see his argument as a better option for minority shareholders in terms of how much they will get for their shares or even if a majority would vote for this option.
Quote from: Breezy on Aug 30, 2024, 08:51 AMHe has some valid points although they are probably driven almost entirely by his personal holding size. I don't see his argument as a better option for minority shareholders in terms of how much they will get for their shares or even if a majority would vote for this option.
I suspect he is motivated by partly his holding size, and I think also the way his company has gone over the past decade or so - noting of course he was on the Board (but likely neutered)
He may also have nothing to loose. His shareholding is worth so little now relative to what it was worth.
I suspect he has also had difficulty transitioning from a "mom and Pop" business to a mega corporate. So would quite like to see the day when Dunsandel returns back to a Mom and Pop business. Smaller scale, and local.
I'd be interested in knowing his role in getting B Corp status - i dont think Bright would have been pushing that.
Needless to say I ma happy to observe 9and comment) from the sidelines again.
Quote from: Breezy on Aug 30, 2024, 08:51 AMHe has some valid points although they are probably driven almost entirely by his personal holding size. I don't see his argument as a better option for minority shareholders in terms of how much they will get for their shares or even if a majority would vote for this option.
Minorities following Penno would be like turkeys voting for Christmas.
Realistically, only ATM and Bright would ever bid for Dunsandel so where's the competitive tension?
And as I have posted before (and now confirmed), ATM is but a eunuch in the saga. Bright is China and China determines who gets the SAMR.
Can't blame John Penno for trying though as he has seen his 'perceived/potential' wealth of 5.1m SML shares decrease from over $60m at its peak to being worth less than $2m today! Remember that John was in charge of SML when the go ahead for Pokeno was made and he was also a director until this year. Then, there's his own court case with ATM.
Quote from: Teitei on Aug 30, 2024, 09:13 AMCan't blame John Penno for trying though as he has seen his 'perceived/potential' wealth of 5.1m SML shares decrease from over $60m at its peak to being worth less than $2m today!
WOW, that's what I call a serious haircut !
Quote from: Basil on Aug 30, 2024, 11:34 AMWOW, that's what I call a serious haircut !
Rather sad really.
But he now wants the shares to go to zero?
Quote from: Basil on Aug 30, 2024, 11:34 AMWOW, that's what I call a serious haircut !
I'm surprised he didnt sell down more.
Quote from: Teitei on Aug 30, 2024, 12:02 PMRather sad really.
But he now wants the shares to go to zero?
I wouldn't want to be a psychologist reading his head after a loss like that but maybe he's so annoyed at being sidelined he wants to adopt a scorched earth approach?
I'd rather lose my $500 gamble than let the CCP controlled Bright take over in this fashion.
I'll be voting NO (as if it matters), lets liquidate this mother.
Quote from: allfromacell on Aug 30, 2024, 03:23 PMI'd rather lose my $500 gamble than let the CCP controlled Bright take over in this fashion.
I'll be voting NO (as if it matters), lets liquidate this mother.
Just had a call from Computershare AU (If it was them) making me aware of the special meeting and making sure I put my vote in on time and to arrange forms if needed, they also asked whether i would be voting for the resolutions. Sounds dicey and have never had this happen before ever.
Quote from: Breezy on Aug 30, 2024, 03:46 PMJust had a call from Computershare AU (If it was them) making me aware of the special meeting and making sure I put my vote in on time and to arrange forms if needed, they also asked whether i would be voting for the resolutions. Sounds dicey and have never had this happen before ever.
That sounds odd. Someone got hold of the share register?
Quote from: Breezy on Aug 30, 2024, 03:46 PMJust had a call from Computershare AU (If it was them) making me aware of the special meeting and making sure I put my vote in on time and to arrange forms if needed, they also asked whether i would be voting for the resolutions. Sounds dicey and have never had this happen before ever.
Happened to me before (with other companies) with SH-votes when the outcome was open and some stakeholder very interested, so - quite probably legit.
Quote from: Minimoke on Aug 30, 2024, 04:20 PMThat sounds odd. Someone got hold of the share register?
As indicated above - not odd, but quite usual if there are existential votes with unclear outcome.
However - getting hold of the shareholder register is not difficult. You just need to give them a legit reason (e.g. contact them regarding the outcome of an important vote, or to introduce yourself as potential board candidate or similar) and they have to give you the register. Absolutely legit.
Have received calls from Computershare Australia - last one being a reminder to put in my vote to delist EVO from NZX and list only on ASX.
Quote from: Teitei on Sep 02, 2024, 10:26 AM"you might like your 7% interest with no gain over 5 years for a high risk bond. But I reckon at times there are better opportunities."
Nothing abusive about calling out a Class A moron who would not know how to assess risk even if it fell on his face. I do not suffer fools.
Admin may choose to disagree again and is amenable to suffer fools like you, in which case, I am happy to leave this forum in the interests of better things.
Suffer fools in life and you become the fool.
We should be able to agree the bonds were unsecured and subordinated - so in 2019 "High risk" SP was around $13 at the time
May 2023 Farmers Weekly were saying "Synlait 11.25% bond yield a flashing red light"
On another forum, in 2023 posters were saying "Market's treating Synlait bonds like junk bonds, a nice 15.25% yield!"
Quote from: Minimoke on Sep 02, 2024, 11:39 AMWe should be able to agree the bonds were unsecured and subordinated - so in 2019 "High risk" SP was around $13 at the time
May 2023 Farmers Weekly were saying "Synlait 11.25% bond yield a flashing red light"
On another forum, in 2023 posters were saying "Market's treating Synlait bonds like junk bonds, a nice 15.25% yield!"
Good on you for being able to rise above personal insults and converse about the topic at hand.
Quote from: Breezy on Aug 30, 2024, 03:46 PMJust had a call from Computershare AU (If it was them) making me aware of the special meeting and making sure I put my vote in on time and to arrange forms if needed, they also asked whether i would be voting for the resolutions. Sounds dicey and have never had this happen before ever.
I've just had a call from them too - from melbourne.
This must be costing some one a bit. I was only on the register for a few days and obviously they don't have the most up to date version.
They are keen to get hold of shareholders - they called me twice.
Penno's legal challenge fails.....
https://api.nzx.com/public/announcement/437562/attachment/426607/437562-426607.pdf
Quote from: Left Field on Sep 06, 2024, 08:34 AMPenno's legal challenge fails.....
https://api.nzx.com/public/announcement/437562/attachment/426607/437562-426607.pdf
Onewards and upwards as the new version of Synlait evolves.
I reckon there's a good chance Penno will seek a high court injunction. This isn't over yet because Penno is right, this is an "in principle takeover" and minority shareholders, who actually make up the largest shareholding class with 41% current holding, have been treated with complete disdain and contempt.
Quote from: Basil on Sep 06, 2024, 09:43 AMI reckon there's a good chance Penno will seek a high court injunction. This isn't over yet because Penno is right, this is an "in principle takeover" and minority shareholders, who actually make up the largest shareholding class with 41% current holding, have been treated with complete disdain and contempt.
Quite so. It's tempting to let schadenfreude or whatever cloud the discussion, but every one of Penno's SML shares should be treated as equal to one belonging to A2, or yours or mine (supposing we had any). Same rights, obligations and opportunities.
Companies are IMHO being given far too much freedom in how they're structuring CRs and equity issues. 'Mate's rates' deals should be off the table, and definitely not under it. Imagine if dividends were issued the same way, just to the big boys. Think of the children.
Takeover Panle has said
"The Panel considered that each of a2MC and Bright were acting in pursuit of their respective commercial interests, rather than as part of a coordinated strategy relating to control over voting rights. "
And I am sure A2 and Bright are acting in pursuit of their respective commercial interests.
Trouble is, as I see it, those commercial interests are reliant on each party supporting the other. I didnt see this as a battle over control of voting rights.
And I'm not sure the commercial interest could be met in a liquidation event. After all the Independent report said "We note that Synlait would retain its SAMR registration in an insolvency event but there may be a risk that the relevant Chinese authorities could revoke the registration if insolvency had a serious impact on product quality or standards of the registration. "
QuoteTakeover Panle has said
"The Panel considered that each of a2MC and Bright were acting in pursuit of their respective commercial interests, rather than as part of a coordinated strategy relating to control over voting rights. "
That's actionable and appealable. Their commercial interests are quite obviously inextricably intermingled, and they have acted in concert. High court judges would have a field day with the ineptitude shown by the NZX here. I hope the "so called" independent director's professional indemnity insurance is fully paid up because the conduct there is an absolute bloody disgrace.
NZX found the parties are not associated...oh please...give me a break, that's beyond pathetic ::) ::)
Quote from: Basil on Sep 06, 2024, 11:12 AMThat's actionable and appealable. Their commercial interests are quite obviously inextricably intermingled, and they have acted in concert. High court judges would have a field day with the ineptitude shown by the NZX here. I hope the "so called" independent director's professional indemnity insurance is fully paid up because the conduct there is an absolute bloody disgrace.
NZX found the parties are not associated...oh please...give me a break, that's beyond pathetic ::) ::)
Bright dairy has even publicly said "our decision to invest at this critical juncture
reflects our long-term commitment to Synlait, its shareholders, "
Since when does one shareholder have obligations to other shareholders? Why would Bright be committed to A2 if there was no commercial benefit between the two. You cant tell me the Chinese are doing this out of the kindness of their hearts.
Build it and the milk will come
Seems not to be the case for Pokeno
What a disaster
https://api.nzx.com/public/announcement/437637/attachment/426704/437637-426704.pdf
Quote from: winner (n) on Sep 09, 2024, 08:48 AMBuild it and the milk will come
Seems not to be the case for Pokeno
What a disaster
https://api.nzx.com/public/announcement/437637/attachment/426704/437637-426704.pdf
Yashili, who are across the road, seem to be able to make it work.
So, the "new international customer" was the savour knight in shining armour after all.
We all should know by now that text books will be written about Synlait. I reckon there could be one book all on its own on Pokeno. Gosh, don't we remember
"Currently an undeveloped site in New Zealand's North Island, Synlait expects to invest around $260 million in the coming years as we establish our infant base powder manufacturing capability at the site."So, how much of a write down in asset value can we expect of the raw milk processing facilities. Essentially I guess it has to go to $0.00
And how much advanced nutrition products that do not require raw milk do they do?
Can someone tell me what " plant-based proteins" are?
We could also ask, with three Bright Directors on the Board in 2018, is further Bright control a great idea?
Quote from: Minimoke on Sep 09, 2024, 09:19 AMYashili, who are across the road, seem to be able to make it work.
So, the "new international customer" was the savour knight in shining armour after all.
We all should know by now that text books will be written about Synlait. I reckon there could be one book all on its own on Pokeno. Gosh, don't we remember "Currently an undeveloped site in New Zealand's North Island, Synlait expects to invest around $260 million in the coming years as we establish our infant base powder manufacturing capability at the site."
So, how much of a write down in asset value can we expect of the raw milk processing facilities. Essentially I guess it has to go to $0.00
And how much advanced nutrition products that do not require raw milk do they do?
Can someone tell me what " plant-based proteins" are?
We could also ask, with three Bright Directors on the Board in 2018, is further Bright control a great idea?
Can someone tell me what " plant-based proteins" are?
Actually - many proteins are plant based, but I would assume they might refer to proteins from peanuts, almonds, soybeans, various grains (like oats) and whatever else people use to produce plant based "milk".
It actually is a growing industry ... but whether they have a business case for Pokeno to produce this sort of stuff I would not know (and I suspect they don't know either).
Quote from: BlackPeter on Sep 09, 2024, 11:53 AMCan someone tell me what " plant-based proteins" are?
Actually - many proteins are plant based, but I would assume they might refer to proteins from peanuts, almonds, soybeans, various grains (like oats) and whatever else people use to produce plant based "milk".
It actually is a growing industry ... but whether they have a business case for Pokeno to produce this sort of stuff I would not know (and I suspect they don't know either).
Thansk . I thought it might be something like that. But I ended up confused because I dont recall seeing a definition in any of Synlaits reports. And I though pokeno was set up sole to process fresh milk. And then primally turn it into milk powder. both blended and into tins.
Given the Waikato is mainly into agriculture I wonder where they are going to source these plant based proteins from.
Synlait are really good at shooting themsleves in teh foot.
On none hand they say 'In addition, it found that transportation and a number of manufacturing costs mean it is not financially viable for Synlait to keep processing milk at Pokeno"
And on the other they say "The Board will not actively seek a buyer for Pokeno, however in the event a compelling offer was made for the asset, the company may consider it."
You wouldn't put in a compelling offer for a milk processing plant. Which only leaves scrap stainless value.
Quote from: Minimoke on Sep 09, 2024, 11:58 AMThansk . I thought it might be something like that. But I ended up confused because I dont recall seeing a definition in any of Synlaits reports. And I though pokeno was set up sole to process fresh milk. And then primally turn it into milk powder. both blended and into tins.
Given the Waikato is mainly into agriculture I wonder where they are going to source these plant based proteins from.
I agree that it is a terrible waste to first build a plant to process fresh milk and then mothball the bit which turns fresh milk into milk powder.
I suspect however they can re-use the later parts of the system used for blending milk powder and tinning the lot.
Nobody claims that building Pokeno was a great business decision, I assume they just try to cut their losses ...
Quote from: BlackPeter on Sep 09, 2024, 12:09 PMI agree that it is a terrible waste to first build a plant to process fresh milk and then mothball the bit which turns fresh milk into milk powder.
I suspect however they can re-use the later parts of the system used for blending milk powder and tinning the lot.
Nobody claims that building Pokeno was a great business decision, I assume they just try to cut their losses ...
I thought blending and canning was part of Aucklands Richard Pearce Drive. Which they have already sold and now lease back.
And look how far they have moved from "Doing milk differently for a healthier world"
Is it now "Doing plants differently for a healthier world"
Quote from: Minimoke on Sep 09, 2024, 12:34 PMI thought blending and canning was part of Aucklands Richard Pearce Drive. Which they have already sold and now lease back.
And look how far they have moved from "Doing milk differently for a healthier world"
Is it now "Doing plants differently for a healthier world"
But we have to give them that they still use this funny pink font for their publications.
Clearly - they are consistent, we have to give them that ;) !
A cynic might suggest the whole Pokeno fiasco was a cunning plan to get the company deep into doggy doo so the Chinese could take the company over really cheaply.
Quote from: Basil on Sep 09, 2024, 06:00 PMA cynic might suggest the whole Pokeno fiasco was a cunning plan to get the company deep into doggy doo so the Chinese could take the company over really cheaply.
Need to check out this theory with John Penno when I meet him next time :) ;
But yes - I see where you are coming from.
Quote from: Basil on Sep 09, 2024, 06:00 PMA cynic might suggest the whole Pokeno fiasco was a cunning plan to get the company deep into doggy doo so the Chinese could take the company over really cheaply.
It was very odd right from the beginning. From the very short time the land came to market, their purchase and then getting consents to build. And that's not even taking into account the covenant fiasco (with links to china) and the builder going into liquidation
They signed a deal with Abbott Laboratories to make a plant based Baby Formula.
https://www.synlait.com/news/synlait-signs-new-multinational-customer-agreement/
https://www.abbottnutrition.com/our-products/similac-soy-isomil-20#:~:text=SIMILAC%20SOY%20ISOMIL%20is%20a,for%20infants%20of%20vegetarian%20families.
It is made using the same dryer as for Milk based products.
When switching from Milk based to Plant based , The entire system has to be cleaned so there is no trace of Dairy or the plant based product will be rejected.
I just got 113 pages of documents from SML even though I voted online a couple of weeks ago, not too friendly on the trees I would have thought but never mind because we have a lovely bright pink B Corp Certified thing on the last page so all good.
Quote from: Breezy on Sep 11, 2024, 11:18 AMI just got 113 pages of documents from SML even though I voted online a couple of weeks ago, not too friendly on the trees I would have thought but never mind because we have a lovely bright pink B Corp Certified thing on the last page so all good.
Pretty sure that the communication option you chose with your registry hasn't anything to do with whether you voted already or not.
They are legally required to send you the info (i.e. blame the government), and if you tell them that you want snail mail (which happens to be the legal default) or don't ask them to use an environmentally friendlier alternative, than they have to send you snail mail. Only you to blame about destroying our forests.
But anyway - I chose to sell the shares before they had to cut down all these trees to print all the materials. Way to go!
Quote from: BlackPeter on Sep 11, 2024, 03:53 PMPretty sure that the communication option you chose with your registry hasn't anything to do with whether you voted already or not.
They are legally required to send you the info (i.e. blame the government), and if you tell them that you want snail mail (which happens to be the legal default) or don't ask them to use an environmentally friendlier alternative, than they have to send you snail mail. Only you to blame about destroying our forests.
But anyway - I chose to sell the shares before they had to cut down all these trees to print all the materials. Way to go!
I don't get snail mail for anything these days(Electronic option ticked universally) they must have just decided I needed to read a pink and white book.
Slightly off topic. Synlait employees get a day off work a year to plant trees.
Newly planted trees absorb a heck of a lot of CO2 and pump out O2 - critical for human survival
Aged trees keep people in the central north island employed.
Snail mail is a win win for every one.
On the other hand, email communications just suck the life out of our electrical generation and supply system.
Gosh, they still have a VAST debt burden, ($450m this facility plus $130m from Bright = $580m), even after this capital raise and its notable the new banking syndicate have them on a VERY short leash with the new facility only being for 12 months. A company still very much on its knees is how I see it despite this capital injection which is on top of the previous $200m capital raise a few years ago. https://www.nzx.com/announcements/438029
Price is spiking on anticipation of rescue package going through tomorrow, might get to 50c odd after confirmation.
Quote from: Basil on Sep 17, 2024, 10:05 AMGosh, they still have a VAST debt burden, ($450m this facility plus $130m from Bright = $580m), even after this capital raise and its notable the new banking syndicate have them on a VERY short leash with the new facility only being for 12 months. A company still very much on its knees is how I see it despite this capital injection which is on top of the previous $200m capital raise a few years ago. https://www.nzx.com/announcements/438029
In January half year they had $514m worth of debt including bonds. And look at the pickle they ended up in.
So now they can carry $580m of debt. Excellent!
Thunderbirds are go. ;D
So. To recap,
Shareholding goes from 218.5m shores to 603.3m shares
Bright now holds 65.25% of those shares. A2 retain 19.82% of their holding. Thats 85.07% accounted for. Leaving 14.93% to other minor holders.
After the capital raise available debt goes from $514m to $580m.
Still no one interested in buying Dairyworks
$300m+ worth of Pokeno build essentially being mothballed.
Synlait now no longer the company it was a few months ago. And still a long way from being out of the woods.
Quote from: Minimoke on Sep 18, 2024, 10:44 AMSo. To recap,
Shareholding goes from 218.5m shores to 603.3m shares
Bright now holds 65.25% of those shares. A2 retain 19.82% of their holding. Thats 85.07% accounted for. Leaving 14.93% to other minor holders.
After the capital raise available debt goes from $514m to $580m.
Still no one interested in buying Dairyworks
$300m+ worth of Pokeno build essentially being mothballed.
Synlait now no longer the company it was a few months ago. And still a long way from being out of the woods.
In for a good time not a long time, price spike will fizzle out pretty quickly once sugar burst wears off.
Quote from: Breezy on Sep 18, 2024, 11:04 AMIn for a good time not a long time, price spike will fizzle out pretty quickly once sugar burst wears off.
I've been in and out. Happily took my gains. But see no compelling argument to re-enter.
Quote from: Minimoke on Sep 18, 2024, 11:17 AMI've been in and out. Happily took my gains. But see no compelling argument to re-enter.
You took the words right out of my mouth. I couldn't agree more. Now the communists are completely in control, the so-called independent director protecting minority shareholders' interests is not only toothless, but he's also literally a puppet on a string.
The NZX not recognizing this as an effective takeover by another means, is a bloody disgrace and makes a complete mockery of the so-called investor protections built into their so-called takeover code. A truly damming inditement of the lack of efficacy of their regulatory system.
Quote from: Minimoke on Sep 18, 2024, 11:17 AMI've been in and out. Happily took my gains. But see no compelling argument to re-enter.
But that goes for most NZX companies and others on the unlisted market, look at our beloved PAZ as an example, no one wants to buy it yet we believe it has heaps of potential.
Quote from: Breezy on Sep 18, 2024, 02:07 PMBut that goes for most NZX companies and others on the unlisted market, look at our beloved PAZ as an example, no one wants to buy it yet we believe it has heaps of potential.
To True Breezy & synlait the Chinese version will be a much different Animal certainly not as pink
Its a train wreck.
Revenue up to $1.63b from $1.60
Gross profit actually a loss: $4.1m. Down from an actual gross profit of $90.7 last year.
NPAT loss of $182M. compared with a NPAT loss of $4.3m last year.
Total assets down to $1.494b from $1.685b
Short term debt up to $369m from $243m
Long term debt up to $191m from $178m
Net assets down to $604m from $790m
How is it possible that good will has gone up to $58m from $6m?
"In a scenario where all current (Farmer milk supply) ceases materialise, it is likely that the Group would be required to record a significant impairment against its South Island assets. The viability of the Group's South Island operations would also be threatened". June 2026 a date to put in your diary.
"Poor trading performance or a lack of progress in obtaining removals of farmer supplier cessation notices may preclude a successful future refinance of the Group's banking facilities on acceptable terms. An inability to refinance may result in the Group having to consider securing further debt or equity financing through alternative means or initiating a formal insolvency process. Until such time the Group demonstrates a marked improvement in trading and security over future milk supply, material uncertainty will continue to exist over the Group's ability to remain a going concern"
And lets not loose sight of their closing statement: "If improvements in financial performance and future milk supply are not achieved, the Group may be unable to realise its assets and discharge its liabilities in the normal course of business."
I guess page 27 of the presentations says it all: All financial indicators turning towards the lower right corner of the page with one notable exception - the debt ratio is rising!
https://api.nzx.com/public/announcement/439061/attachment/428363/439061-428363.pdf
No further info required to make an informed investment decision ...
On the other hand - good to see that the second language (xie-xie) they are now using in the report is much more relevant for the company! Much better to pet the dragon instead of alienating him by requiring him to learn not just English, but as well Te Reo.
Nice as well that the chair thanked Bright Dairy for taking over the company by skill fully avoiding any takeover regulations as well as thanking the retail shareholders for committing Hara-kiri (I know, this is not a Chinese word).
Sounds like everybody is happy now and the company can start to deliver ... though they go to lengths not telling us what they plan to deliver.
What an happy end!
This page tells a tale - in colour! The only thing meaningfully up is net debt. Interesting the way they make the up/down indicators so small you can hardly see them.
sml.png
Quote from: Minimoke on Sep 30, 2024, 10:40 AMInteresting the way they make the up/down indicators so small you can hardly see them.
I do believe they call that deliberate obfuscation, something that apart from their extreme all things ESG, Synlait are very good at.
Long road ahead for this company to ever be successful but no worries, it's something a couple more $200m capital raises will probably fix lol
Right oh. its official. Synlait now has 603,198,098 shares on issue. Shares are currently trading at $0.41 which gives a market cap of $247,311,220.
Or the market might want to readjust. Its current market cap is showing as $85,250,000 (obviously before the release of new shares.) So if this is what the market think Synlait is actually worth, shares will be trading at $0.1413
Quote from: Minimoke on Oct 01, 2024, 04:36 PMRight oh. its official. Synlait now has 603,198,098 shares on issue. Shares are currently trading at $0.41 which gives a market cap of $247,311,220.
Or the market might want to readjust. Its current market cap is showing as $85,250,000 (obviously before the release of new shares.) So if this is what the market think Synlait is actually worth, shares will be trading at $0.1413
You might need to add the CR amount to the old market cap and only then divide by the number of total shares after CR.
Too lazy to do the numbers myself, but I am sure it will be more than the 14 cents per share you came up with.
Quote from: BlackPeter on Oct 01, 2024, 04:43 PMYou might need to add the CR amount to the old market cap and only then divide by the number of total shares after CR.
Too lazy to do the numbers myself, but I am sure it will be more than the 14 cents per share you came up with.
Share price is essentially the value the market places on a company. Just because a company adds $X amount of cash to its business does not mean its Share price will move accordingly.
A good chunk of the recent capital raise was to pay off unsecured creditors. So is simply a balance sheet adjustment. The money isn't earning accretive.
Then we need to adjust for yesterday's woeful year end announcement and then factor in SML having lots of announcements but zero plans for digging themselves out of the bog.
I have no idea how you actually value all that and come up with an adjusted figure. But knowing all that (and recognising the market tends to be forward looking) it is today saying SML is worth $85m
Quote from: Minimoke on Oct 01, 2024, 05:00 PMShare pricer is essentially the value the market places on a compnay. Just becasue a compnay adds $X amount of cash to its business does not mean its Shareprice will move accordingly.
A good chunk of the recent capital raise was to pay off unsecured creditors. So is simply a balance sheet adjustment. The money isn't earning accretive.
Then we need to adjust for yesterdays woeful year end announcement and then factor in SML having lots of announcements but zero plans for digging themselves out of the bog.
I have no idea how you actually value all that and come up with an adjusted figure. But knowing all that (and recognising the market tends to be forward looking) it is today saying SML is worth $85m
Well, it sounds we both are not interested in investing in the current situation into SML, which makes this discussion pretty academical.
However - if we assume for a moment that the market does some data crunching when deciding about the market cap (I know, the market is only rational until it isn't), then it should make a difference for the market cap if they reduced their debts. Always remember that share holders are the last people at liquidation time who get the leftovers after all debts are paid - i.e. debts do matter for the market cap.
Quote from: BlackPeter on Oct 01, 2024, 05:09 PMWell, it sounds we both are not interested in investing in the current situation into SML, which makes this discussion pretty academical.
However - if we assume for a moment that the market does some data crunching when deciding about the market cap (I know, the market is only rational until it isn't), then it should make a difference for the market cap if they reduced their debts. Always remember that share holders are the last people at liquidation time who get the leftovers after all debts are paid - i.e. debts do matter for the market cap.
I agree - a purely academic exercice.
But if we look at money coming in and money going out what do we have. $218m of new cash coming in. And considering this triggers a bond event that could quickly be $180m plus interest going out. Which only leaves less than $38m in extra cash. Which is offset by the increase in bank financing. With no prospect on the table for selling Dairworks or Pokeno.
All I see happening is the immediate risk of liquidation has gone. But only temporarily. Nothing really has happened to improve the capital value of the company.
So I look forward to what a rational and now fully informed market does. Needless to say i shan't be part of it.
Quote from: Minimoke on Oct 01, 2024, 04:36 PMRight oh. its official. Synlait now has 603,198,098 shares on issue. Shares are currently trading at $0.41 which gives a market cap of $247,311,220.
Or the market might want to readjust. Its current market cap is showing as $85,250,000 (obviously before the release of new shares.) So if this is what the market think Synlait is actually worth, shares will be trading at $0.1413
Market opens today with share numbers adjusted. Market cap now showing as $202.86m (SP = $0.385)
Bond holders breathing a big sigh of relief. And showing their lack of faith in the future. even just a couple of months out
$169 million of the $180 million bonds elected to have their bonds redeemed early. Get out while the going is good. Very sensible
Quote from: Minimoke on Oct 16, 2024, 09:10 AMBond holders breathing a big sigh of relief. And showing their lack of faith in the future. even just a couple of months out
$169 million of the $180 million bonds elected to have their bonds redeemed early. Get out while the going is good. Very sensible
I have no doubt that the future of SML will be Bright over the longer term.
I can only assume clearing out the dead wood ""Grant will take a well-deserved break before deciding his next career move."
Grants Watson CEO since jan 2022. Only 2 1/2 years in the job and resigning already.
Dairyworks (the part of Synlait they are keen to sell) CEO taking over in the interim. Effective today. Which I also assume means Grant isnt turning up to work today. So he's gone with no notice required to be worked out. Must be a decent payout!
Grant might head back to MacDonalds
Quote from: Minimoke on Oct 21, 2024, 08:52 AMI can only assume clearing out the dead wood ""Grant will take a well-deserved break before deciding his next career move."
Grants Watson CEO since jan 2022. Only 2 1/2 years in the job and resigning already.
Dairyworks (the part of Synlait they are keen to sell) CEO taking over in the interim. Effective today. Which I also assume means Grant isnt turning up to work today. So he's gone with no notice required to be worked out. Must be a decent payout!
Contrary 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?
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?
I'm always suspicious about the circumstances surrounding the departure of a person on no notice and no job to go to.
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......
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
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
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.
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
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.
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
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?
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.
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
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 ...
Tidy result.... well done those who 'picked the bottom'!??
https://www.nzx.com/announcements/448855
Key financial metrics
• EBITDA was $63.1 million, up 217%.
• NPAT was $4.8 million, up 105%.
• Net debt was $391.9 million, down 29%.
• Revenue was $916.8 million, up 16%.
• Gross profit was $87.0 million, up 99%.
Not a share for me tho'
Quote from: Left Field on Mar 24, 2025, 08:56 AMTidy result.... well done those who 'picked the bottom'!
https://www.nzx.com/announcements/448855
Key financial metrics
• EBITDA was $63.1 million, up 217%.
• NPAT was $4.8 million, up 105%.
• Net debt was $391.9 million, down 29%.
• Revenue was $916.8 million, up 16%.
• Gross profit was $87.0 million, up 99%.
WOW -
Looking at EPS:
company lost last year 83 cent per share, and recovered in the first HY25 1 cent per share. So- 41,5 years to recover from the 2024 loss?
But no - they said the 2nd half won't be as good as the first :o OK - I realise its now ways more shares, but still - not good.
Looking at cashflow:
shareholders put $212m new cash into the business to make a total NPAT of 4.4m.
Do I dare to calculate the return - even assuming the old capital was totally written off?
Tiny steps forward and huge steps back ...
But anyway - Retail shareholders don't matter anymore (well, they never did for this company, but now its still worse). Riding this SP is at best like playing in the casino with somebody else controlling the outcome. At the end its always the house which wins, and this even without loaded dice.
Looks like Mr. Market mislaid his pink glasses.
SP already down by 11% in the first trading hour from Friday close ($1.01)
Well done to those who sold their shares before the announcment (i.e. last week)!
Buy the rumor and sell it before everybody sees the facts!
Quote from: BlackPeter on Mar 24, 2025, 10:21 AMAt the end its always the house which wins, and this even without loaded dice.
Unfortunately, it's almost always the case with CCP controlled companies the dice is heavily loaded which means that even if the financials were not a train wreck, you'd be a VERY "brave" investor to be expecting to get fair and equitable treatment going forward.
Quote from: Basil on Mar 24, 2025, 11:43 AMUnfortunately, it's almost always the case with CCP controlled companies the dice is heavily loaded which means that even if the financials were not a train wreck, you'd be a VERY "brave" investor to be expecting to get fair and equitable treatment going forward.
The major shareholder(s) has shown they have absolutely zero interest in minor retail shareholders.
I dont see a prospect of a dividend from this company within my lifetime.
So its really just going to be a good share for the traders.
Whats up with Synlait. SP back down to $0.56
Quote from: Minimoke on Jul 09, 2025, 11:27 AMWhats up with Synlait. SP back down to $0.56
Dairy auction prices are down, and the outlook for them is not flash either. A2 Milk was down 4% yesterday on good volumes. NZ Herald yesterday, "China-based infant-formula maker Feihe Milk issued a profit warning earlier in the week, which he said had "spilled over" into a2 Milk."
SML update..... slowly reducing its losses......but not without risks going forward.
https://www.nzx.com/announcements/455851
Quote from: Left Field on Jul 30, 2025, 08:36 AMSML update..... slowly reducing its losses......but not without risks going forward.
https://www.nzx.com/announcements/455851
Still with $300m net debt!
Quote from: Minimoke on Jul 30, 2025, 09:29 AMStill with $300m net debt!
...and, yet more problems! Now the much vaunted Dunsandel facility had unspecified problems generating unrevealed costs.
Quote from: Hectorplains on Jul 30, 2025, 09:49 AM...and, yet more problems! Now the much vaunted Dunsandel facility had unspecified problems generating unrevealed costs.
" manufacturing challenges at its Dunsandel facility across a range of product segments" Thats pretty vague. Is it lack of raw material, lack of people, machinery malfunction, supply chain issues. Oh well - at least they are resolved.
Silence on Pokeno and Dairyworks
Probably useful back referencing their March forecast which said "Synlait is targeting a closing net debt balance of $250 million to $300 million and a net senior debt to EBITDA ratio of below 2.5x in FY25, positioning the company well for its bank refinancing process in the second half."
So they are at the worst end of their for 24 March 2025 forecast. So in four months they have undershot by $50m
At half year net profit was was $4.8 million. They are now saying net loss of -$27 to -$40m. So definitely a profit downgrade.
Half year EBITDA was $63.1m. Now expected to be $100 - $110m. So have definitely lost traction second half of year.
Gosh it never ends....but no worries, another capital raise of a few hundred million will fix things for a few more years lol
The ship is sinking again.
Quote from: anotherday on Jul 30, 2025, 01:43 PMThe ship is sinking again.
Certainly time to look at those banking covenants again.
Good call by Bell Potter recently.
QuoteReuters • BUZZ • 31 Jul, 2025
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Shares in New Zealand's Synlait Milk rise 3.3% to NZ$0.62 after 7.7% drop in previous session
●
Dairy producer on Wednesday said it expects FY25 underlying EBITDA of NZ$100 million ($59.04 million) - NZ$110 mln, around Bell Potter's estimate of NZ$108.5 mln
●
Bell Potter stick to "hold" call on stock, but lowers PT to A$0.585 from A$0.92
●
Lowers estimate for volumes in co's nutritional business and cuts EBITDA FY25 forecast by 4%
●
Brokerage says potential for larger rival A2Milk to vertically integrate into supply chain assets throughout 2025
●
Stock up ~42.5% YTD ($1 = 1.6938 New Zealand dollars)
Gosh, I don't see how any of the announcements today by ATM are good for Synlait, in fact quite the opposite. Buying a milk processing factory with Chinese licenses right next to Synlait's Pokeno facility really is getting right up in their face with competition. Nothing subtle whatsoever about that move ! I think its fair to say relations between ATM and Synlait are at an all time low. What percentage of Synlait do ATM now own ? Happy to burn that investment in the pursuit of their own goals ? (Disc: Don't hold and don't follow closely anymore...just have a morbid fascination with train wrecks)
Quote from: Basil on Aug 18, 2025, 12:20 PMGood call by Bell Potter recently.Gosh, I don't see how any of the announcements today by ATM are good for Synlait, in fact quite the opposite. Buying a milk processing factory with Chinese licenses right next to Synlait's Pokeno facility really is getting right up in their face with competition. Nothing subtle whatsoever about that move ! I think its fair to say relations between ATM and Synlait are at an all time low. What percentage of Synlait do ATM now own ? Happy to burn that investment in the pursuit of their own goals ? (Disc: Don't hold and don't follow closely anymore...just have a morbid fascination with train wrecks)
Todays news is terrible for synliat.
A2 now producing directly out of China. So thats a door closed for Synliat
A2 alluding many times to supply issues from Synlait, and to airfreight. I bet A2 isnt carrying those costs
A2 know there is a spanking new processing plant up in Auckland, but they aren't interested in buying off Synlait even at what must be bargain basement valuations
A2 purchasing processing facilities with 2 Chinese Label licences already attached so there ifs no opportunity here
Seems to me A2 is rapidly distancing itself from Synlait. I have to admit to not following synlait so much lately - but I recall A2 is pretty much their only customer. Synlaits debt levels still astronomically high.
A2 have shown they dont mind loosing $130m on Mataura. So probably wont shed any tears if they loose out on Synlait.
Quote from: Minimoke on Aug 18, 2025, 12:51 PMSeems to me A2 is rapidly distancing itself from Synlait. I have to admit to not following synlait so much lately - but I recall A2 is pretty much their only customer. Synlaits debt levels still astronomically high.
Thanks mate. If I recall correctly ATM did not participate in the most recent passing of the hat around begging for donations, (AKA Synlait capital raise) so their shareholding is diluted and they obviously don;t care anymore about Synlait. Its clear they have had enough of their excuses and poor performance over the years.
A2 did pump more inro Synlait.. As per AR
Shareholding in Synlait Milk Limited
The listed investment is a 19.8% holding in shares in Synlait Milk Limited (Synlait). Synlait is a dairy processing company
No dividends were received from this investment during the year (2024: $nil).
In October 2024, the Group participated in Synlait's recapitalisation via an equity raise, acquiring a further 76,283,104 shares for
$32,802,000. For the purposes of ASX quotation requirements in respect of the new shares issued to the Group, it entered into a
voluntary escrow deed poll under which it undertook not to sell, assign, or otherwise dispose of, or transfer the effective control
of, the 76,283,104 shares acquired under the placement for a period of 12 months from the date of allotment. This restriction is
subject to certain exceptions.
There was no change to the Group's total percentage holding in Synlait, which remains at 19.8% (2024: 19.8%).
A fair value gain of $31,618,000 (2024: $62,211,000 loss) was recognised in other comprehensive income for the year
Thanks Winner, I haven't been following this train wreck very closely for a while now. ATM's stake now worth $69m.
Quote from: Basil on Aug 18, 2025, 02:41 PMThanks Winner, I haven't been following this train wreck very closely for a while now. ATM's stake now worth $69m.
....total investment $322m
Quote from: Basil on Aug 18, 2025, 02:41 PMThanks Winner, I haven't been following this train wreck very closely for a while now. ATM's stake now worth $69m.
At half year Synlait was carrying $440.934m of debt.
With over half their assets being tied up in stainless steel.
The updated the other day with expected loss of $27 - $40m
Once they have their other production facilities they can very easily shed Synlait.
Or buy it off Bright fro a song.
Quote from: winner (n) on Aug 18, 2025, 02:53 PM....total investment $322m
I reckon A2 totally ignore that number. The only value for them is what Synlait can produce. Which synlait hasn't been above to produce to expectations this last 1/4.
Despite chucking $322m in the pot A2 still have over $1b in cash. I would say Synlait is far from being out of the woods at the moment
Quote from: Minimoke on Aug 18, 2025, 02:57 PMI would say Synlait is far from being out of the woods at the moment
Its nothing yet another capital raise of a few hundred million won't fix ROFL
Announcement today that someone appears to be interested in Pokeno. Wont be A2.
" A report in The Australian overnight said Abbott Laboratories was believed to be in talks with Australian-listed milk producer Synlait to buy its Pōkeno factory south of Auckland.
US-based Abbott is a customer of Synlait's at the site."
discussions are incomplete, no binding terms are agreed, and there is no certainty that a transaction will occur
Why is it that often the best/first source of developments in NZ is often Australian publications??
Quote from: Sideshow Bob on Aug 19, 2025, 10:44 AMWhy is it that often the best/first source of developments in NZ is often Australian publications??
The Australian's Dataroom column seems to have a reputation for publishing flimsy rumours. But to counter that, just because a rumoured transaction doesn't always play out, doesn't mean it wasn't genuinely considered and discussed.
My pet theory is that columns like this function as an 'information laundering' service, for converting 'inside info' into 'public info', thereby giving insiders legal ass-coverage for trading.
Quote from: bulltrap on Aug 19, 2025, 02:13 PMThe Australian's Dataroom column seems to have a reputation for publishing flimsy rumours. But to counter that, just because a rumoured transaction doesn't always play out, doesn't mean it wasn't genuinely considered and discussed.
My pet theory is that columns like this function as an 'information laundering' service, for converting 'inside info' into 'public info', thereby giving insiders legal ass-coverage for trading.
I reckon they look at the broker accounts who subscribe to them. And when brokers want to off load shares this is helped by positive "news"
Quote from: Minimoke on Aug 19, 2025, 02:30 PMI reckon they look at the broker accounts who subscribe to them. And when brokers want to off load shares this is helped by positive "news"
If the rumour is '<fund> is understood to be "running the ruler" over <company/asset>', that might be code for '<fund> already decided not to bid for <company/asset> and wants to sell their stake' - particularly if <fund> is actually quoted in the article as saying they were interested.
For current case though, SML's announcement this morning all but confirmed the rumour was accurate.
As for the Aussie angle, both A2 and Synlait are dual-listed on the ASX, so the news is relevant to West Island readers at least. But why NZ journos don't field or publish such chatter is a very good question still.
(Abbott BTW is US-based and in the S&P 100.)
Debt announcement today. Okay so Synlait has bought itself some breathing space... but not much. They're still constrained by short-dated funding (most facilities only run to June 2026), tight covenants, and reliance on Bright Dairy.
Strengthens the possibly of them needing a CR before the next rollover.
$130m borrowed from Bright
Now with an extra $350m in bank funding.
Still 8 banks with Kiwi bank-out and East Asia-in. A lot of banks for a business of this size...
NZX's worst kept secret confirmed: entry into a binding conditional agreement to sell the North Island assets to Abbott for $307 million.
They shelled out over $450m building Pokeno, it sits on their books at $340m and now a sale of $300+ will be considered... a success.
https://www.nzx.com/announcements/461267
Seems the debt management hasn't made them a better run company. Just awful results today and market doesn't like it. Down 19.7% to $0.51
Does a leopard change its spots ?
Before buying shares in any company people need to have a long hard look at their most recent history as that's the very best guide to the future.
"The bitter taste of poor quality lingers long after the thrill of an apparent bargain"
Sadly this well known saying applies to many companies on the NZX including some who used to be market darlings many years ago.
even when share price was $12 odd the signs were there that Synlait was never going to great .... just look at Cash Flow Statement over the years
HEY basil - didn't you bail at $12?
Somewhere around there mate.
I have to admit SML has ben quite kind to me.
My last trade was in Aug 2024. I bought then sold 2 weeks later for a nice 12% gain.
Prior to that I was buying back in 2017/18 and sold with a 25% gain.
Am I interested in buying now. Not on your nelly!
There was a time someone could have written a text book on this company. Now I reckon they would be up to volume 4.
Quote from: Minimoke on Feb 04, 2026, 12:09 PMSeems the debt management hasn't made them a better run company. Just awful results today and market doesn't like it. Down 19.7% to $0.51
Just to be clear this is an update .
And I appreciate that synlaits management are actually updating with news good or bad in this case penno effect still lingering.
Quote from: Auto Rower on Feb 05, 2026, 04:40 PMJust to be clear this is an update .
And I appreciate that synlaits management are actually updating with news good or bad in this case penno effect still lingering.
The pink trucks are still around so it seems the ghost of Leon Clement still haunts them.
I wonder if they still do paid tree planting day?
Quote from: Minimoke on Feb 05, 2026, 07:47 PMThe pink trucks are still around so it seems the ghost of Leon Clement still haunts them.
I wonder if they still do paid tree planting day?
Yes I think they are still planting native weeds ,in the pink P C trucks .
Just wonder what company is the most P C synlait & the warehouse probably up there looks unprofitable eh !!
Synlait also not feeling the love. Dropped down to a 12 month low of $0.46 today. With A2 loading itself up with more cash (they still have $900,000,000 in the bank) Synlait might be concerned they are going to loose even more of A2's business to something else A2 buys.
Synlait result out today for HY 2026.
https://www.nzx.com/announcements/469645
The highlights
~ Revenue of $949m (up $32.3m)
The lowlights:
~ Gross profit of $3.1m (down $83.9m).
~ EBITDA loss of $34.7m
~ net loss after tax of $80.6m
~ Net debt of $472m (up 88%)
There is probably some nuance to these figures but meh.....
Quote from: Ferg on Mar 23, 2026, 11:21 AMSynlait result out today for HY 2026.
https://www.nzx.com/announcements/469645
The highlights
~ Revenue of $949m (up $32.3m)
The lowlights:
~ Gross profit of $3.1m (down $83.9m).
~ EBITDA loss of $34.7m
~ net loss after tax of $80.6m
~ Net debt of $472m (up 88%)
There is probably some nuance to these figures but meh.....
Terrible results.
Sales down $1.5 m. You wouldn't think that would be much of a problem.
But!!
Cost of sales UP $94.5m
Net profit / loss has swung $85.2m to the loss side.
Looks to me like they aren't paying their bills on time. Payable have increased $158m. Which is odd because loans have increased $193m. So they money cant be going to suppliers.
Liabilities up $155m. While assets have dropped $707m
They only have $32m cash on hand worse than the $49m they had in Jan 2025 and the $78m in July 2025
Cashflow is dire. They were short $12m in Jan 2025. They are $183m short jan 2026
Where are they going to find the $130m they need to repay Bright Dairy in July 2026?
Quote from: Minimoke on Mar 23, 2026, 12:09 PMTerrible results.
Sales down $1.5 m. You wouldn't think that would be much of a problem.
But!!
Cost of sales UP $94.5m
Net profit / loss has swung $85.2m to the loss side.
Looks to me like they aren't paying their bills on time. Payable have increased $158m. Which is odd because loans have increased $193m. So they money cant be going to suppliers.
Liabilities up $155m. While assets have dropped $707m
They only have $32m cash on hand worse than the $49m they had in Jan 2025 and the $78m in July 2025
Cashflow is dire. They were short $12m in Jan 2025. They are $183m short jan 2026
Where are they going to find the $130m they need to repay Bright Dairy in July 2026?
I suspect the sale of their NI assetts to Abbott might cover that.
But yes, things certainly looked better 8 years ago when the SP was above $13. Just shows that even the almighty market has no clue whatsoever about the future of stocks.The only thing one can predict with hype driven stocks is that things tend to change ... and after big ups often come long downs.
Quote from: BlackPeter on Mar 23, 2026, 12:32 PMI suspect the sale of their NI assetts to Abbott might cover that.
But yes, things certainly looked better 8 years ago when the SP was above $13. Just shows that even the almighty market has no clue whatsoever about the future of stocks.The only thing one can predict with hype driven stocks is that things tend to change ... and after big ups often come long downs.
That $307m will get gobbled up in no time
CEO going. Is he walking the plank?. Is this related to the recent product recall of A2M formula in the USA. Or the manufacturing problems?
Just footnoting A2 today announce they have got SAMR approval for pokeno and expect product by end of calendar year. A2 now even more less reliant on Synlait.