Latest / Best of Business / Oliver Mander: NZ Shareholders Association CEO on Synlait's biggest shareholders rescuing the company

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Oliver Mander: NZ Shareholders Association CEO on Synlait's biggest shareholders rescuing the company · Best of Business

• 0:09
  Speaker 1: You're listening to a podcast from Newstalks'd be follow this
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  Speaker 2: Sinley was thrown a bit of a lifeline today, but
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  Speaker 2: it is going to have to massively lift its game
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  Speaker 2: if it wants to avoid another bailout in the near future.
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  Speaker 2: The shareholders voted in favor of a two hundred and
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  Speaker 2: eighteen million dollar equity raise. Bright Dairy obviously contributed the
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  Speaker 2: Lion's share It's now got sixty five percent of Sinley
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  Speaker 2: and a two put in about thirty three million bucks
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  Speaker 2: and keeps its almost twenty percent stake. Olive Amander from
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  Speaker 2: the Shareholders Association was at the meeting this morning.
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  Speaker 3: Is with us? Now, hey, Oliver, good evening.
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  Speaker 2: HA tough on the minority shareholders, say, very tough on.
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  Speaker 3: The minority shareholders. I mean, look for minorities. This really
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  Speaker 3: is a bit of a dead rat. But they've swallowed
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  Speaker 3: that dead rat today. They've taken the medicine and Sinnay
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  Speaker 3: lives to fight another day.
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  Speaker 2: What was the vibe at the meeting? Did you get
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  Speaker 2: the feeling that people were reluctantly on board with us
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  Speaker 2: or you know, pretty enthusiastic.
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  Speaker 3: I think that summarizes it well. I think the word
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  Speaker 3: reluctantly on board makes thatsolute sense. I mean, certainly we
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  Speaker 3: heard a range of us previously in the lead up
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  Speaker 3: to the meeting in terms of some shareholders who wanted
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  Speaker 3: to contribute to maintain their pro rata holding to avoid
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  Speaker 3: that dilution that you mentioned in your intro. Others were
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  Speaker 3: quite happy that the Bright was coming to the rescue,
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  Speaker 3: and I think most shareholders, myself included, would recognize and
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  Speaker 3: acknowledge the support, the immense support that Bright has provided
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  Speaker 3: to the company.
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  Speaker 2: Are you convinced that the plan is going to work?
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  Speaker 3: Well, I guess there's things you do when you're desperate,
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  Speaker 3: and that Sinlay was certainly in a very distressed state,
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  Speaker 3: and that the most urgent priority was to make sure
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  Speaker 3: that the company could actually restructure its balance sheet, that
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  Speaker 3: it was in a position to repay its debt, to
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  Speaker 3: meet the demands of its banking syndicates and so on.
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  Speaker 3: So look, that's got to be the first priority. And
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  Speaker 3: if you can survive today, you can always live to
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  Speaker 3: fight tomorrow, and that now becomes the next set of priority.
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  Speaker 3: So it's gone from extremely distressed to now now they're
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  Speaker 3: just stressed, but they'll have to take the company will
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  Speaker 3: have to focus really hard and it's operating performance over
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  Speaker 3: the coming twelve months, they'd have to focus really hard
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  Speaker 3: on the activities that sought out. It's operating issues, particularly
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  Speaker 3: in the North Island. Now they've taken steps to do that,
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  Speaker 3: but there's a long way to go, so you know
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  Speaker 3: all the rest of them.
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  Speaker 2: Yeah, are they going to be able to convince the
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  Speaker 2: farmers to stick it out with them?
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  Speaker 3: That's and that was discussed today and actually the chair
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  Speaker 3: did go into some detail around some of those initiatives
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  Speaker 3: that they're undertaking. Yes, the North Island Strategic Review is
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  Speaker 3: really important to them. The farmers in the South Island
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  Speaker 3: that supply the Dune Sandal facility really important to them.
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  Speaker 3: There will be a lot of focus the company has
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  Speaker 3: placed will place in those key supplier relationships. So I've
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  Speaker 3: got no doubt that the work will already have begun
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  Speaker 3: on that and it needs to continue. So the company
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  Speaker 3: still was carrying, as you say, some significant operating risks
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  Speaker 3: going forward, and the proof and the pudding will be
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  Speaker 3: over what happens in the next twelve months. There's a
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  Speaker 3: marker on the way they've got in less than a
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  Speaker 3: month's time. They will be a couple of weeks time
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  Speaker 3: they'll be announcing their financial results for the previous financial year,
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  Speaker 3: and no doubt at that point will be a bit
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  Speaker 3: a bit of an update as well.
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  Speaker 2: Wasn't you who asked at the meeting today whether they
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  Speaker 2: might need another bail out, another equality raise in a year.
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  Speaker 3: It was the answer, I think yes, but and a
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  Speaker 3: look that the company did respond really clearly on that,
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  Speaker 3: and he George Adams' comment quite appropriately was that they
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  Speaker 3: have to earn their strips before they come back to
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  Speaker 3: the market. In other words, they've got to have some
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  Speaker 3: proof on the board that they have actually delivered something
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  Speaker 3: and that that is a reasonable answer, and that the
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  Speaker 3: key that what was behind my question was signaling that firstly,
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  Speaker 3: that that operating performance over the next twelve months is
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  Speaker 3: absolutely critical for them to be able to still cope
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  Speaker 3: with what is a significant level of debt that they have.
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  Speaker 3: They've just refinanced their banking syndicate with a four hundred
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  Speaker 3: and fifty million dollars that's still a lot of money,
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  Speaker 3: so they are still reliant on a good performance over
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  Speaker 3: the coming twelve months. And look, George Adams did acknowledge
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  Speaker 3: that as well, so it was a very clear answer.
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  Speaker 3: But it's not imminent. They're not going to come to
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  Speaker 3: the market tomorrow and want more capital, but they do need.
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  Speaker 3: They still have a lot of work to do to
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  Speaker 3: make sure the company can operate well. There are still
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  Speaker 3: inherent risks that they need to deal with.
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  Speaker 2: Olive, it always good to talk to you. I really
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  Speaker 2: appreciate your time. That's Olive Amanda, New Zealand Shareholders Association.
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