SML - Synlait

[Breezy]

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.

[Minimoke]

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

[Minimoke]

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!"

[Minimoke]

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!

[Minimoke]

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.

[winner (n)]

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

[winner (n)]

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?

[Basil]

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!

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!

[Auto Rower]

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

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   

[winner (n)]

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

[Basil]

How sure are you that you're going to get your $100 back in December 2024?

[Minimoke]

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

let me just dig out my barge pole. At current spend with no new capital i dont see them lasting to december 2023

[Whome]

Expect SML to call on 20% shareholder ATM for a cash injection....in return for a controlling share.. that ATM may not necessarily want.

[Minimoke]

Expect 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.

[Left Field]

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.