SML - Synlait

[BlackPeter]

Wonder 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.

[Minimoke]

Looks like we will find out in the next 10 minutes

[Left Field]

Looks 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).

[allfromacell]

Wow, wasn't expecting that.


Bright wins

[Minimoke]

Looks like massive dilution and retail holders screwed.

[Greekwatchdog]

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.

[winner (n)]

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.

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

[Greekwatchdog]

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

Why not offer xxx amount to other shareholders? Surely if they had a choice and they had the funds they would have bought in.

[Basil]

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?

[Breezy]

Yes you would have to think buying in around current sp is pretty good buying in the grand scheme of things.

[Left Field]

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?

Effectively a takeover of Synlait by Bright, supported by ATM.

And no, I don't think they have raised enough.

[Basil]

Yes 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.

[Breezy]

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.

Watching with anticipation, it could very well move upwards of course now the numbers are out there.

[Minimoke]

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.

[Ferg]

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.

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.