Speciality dairy company Synlait will raise $200 million through share issue to strengthen its balance sheet and complete the investment required under a new partnership it has with a global company.
There had been speculation the company would raise funds after it was placed in a trading halt yesterday.
The placement has been underwritten at a fixed price of $5.10 per share, which represents a 14 percent discount to the last trading price of $5.93.
The company confirmed its cornerstone shareholders Bright Dairy Holding Limited and a2 Milk Company were onboard.
A company statement said: “With pro rata pre-commitments to take up shares by them and guaranteed allocation amounting to approximately $114m in total which have been excluded from the underwrite. Further, each of Synlait’s New Zealand resident directors has committed to participate in the equity raising.”
Synlait said the raise would allow the final phase of its investment at Pokeno to be completed and assist with commercial production for an anonymous global company to begin mid-2022.
When it announced the new partnership company chief executive Leon Clement said it would require a $70m investment over the next two years to meet the new processing and packaging requirements at its Pokeno and Auckland processing facilities.
It would also allow debt to be repaid and provide more financial headroom as the impact of Covid-19 continued.
The company’s debt levels have risen to more than $500m.
Synlait said demand for infant formula had been softer in the first half of the new financial year and would result in a lower half year profit.
It expected demand to pick up in the second half.
Source: RNZ News – www.rnz.co.nz
