SML - Synlait

[Poet]

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.

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)

[Basil]

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)

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?

[Breezy]

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?

Complaint will go no where at the end of the day, just temporal noise like the A2 class action

[Basil]

How its being reported in the media
https://www.nzherald.co.nz/business/synlait-co-founder-john-penno-lodges-complaint-over-recapitalisation-plan/Z7SU5DKPIVGN5OXI57JBQZDWFI/

[Minimoke]

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"

[Basil]

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.

[CG]

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"

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?

[Poet]

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?

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.

[CG]

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.

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?

[Poet]

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?

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

[Minimoke]

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?

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.

[Minimoke]

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

[Teitei]

More fees for lawyers - waste of everybody else's time and money.

[CG]

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.

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?

[CG]

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

There is nothing wrong with having some conditions when negotiating a deal.