Cameron Henderson: Synlait Supplier on the company's shareholders voting in favour of a $130m loan

There's a belief South Island dairy processor Synlait has been handed a lifeline, but not a life saver.  

Shareholders voted 99.6% in favour of taking out a $130 million loan, meaning it can meet its debt payment to banks, due on Monday. 

It comes after the company plunged into a $96.2 million first half loss.  

Synlait supplier Cameron Henderson told Andrew Dickens that Covid-19 and China's lowering birth rate contributed.  

He says the impact on infant formula —as the company's highest valued export— was likely one of several straws breaking the camel's back.  

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Episode Transcript

Speaker 1 (00:00):
Dairy company Sinley have been handled a lifeline, but it's
not a lifesaver. The shareholders have approved a one hundred
and thirty million dollar loan to keep the business afloats.
That money comes from Bright Dairy, which is a Chinese
firm with a thirty nine percent stake in Sinlay, even
though they abstained from the vote. But you've got to
take that as a side of confidence. It went through
with a ninety nine point six percent majority. Now Cameron

(00:24):
Henderson supplies Sinley and he joins me.

Speaker 2 (00:26):
Now, Hello Cameron, good morning Andrew. How are you?

Speaker 1 (00:29):
I'm good? Are you feeling relieved?

Speaker 2 (00:33):
Absolutely? On very hippy dairy farmer this morning. It was
a very nervous wait for that result yesterday.

Speaker 1 (00:38):
Could they have actually wrapped up the whole company?

Speaker 2 (00:41):
Look, that's basically what the counter advice was that if
they didn't vote for this, that they were looking at
seizing trading, in voluntary administration or receivership so as a
supply to the company. That made us all very very nervous.

Speaker 1 (00:53):
So Siddley ended out in a hole for a whole
heap of reasons, partly the construction of a new pocino plant.
They did that at a bad time, and China's stopped
having children, and they did that at a bad time.
You know, how is that Pergono plant going to Is
it a white elephant? Was it going to come into
its own?

Speaker 2 (01:10):
Yeah? Look, my understanding is that it was. It was
built at the state of the plant for certain markets
that readly just didn't develop as fast as what Sinla
had planned. So I think a great vision, but probably
a little too visionary, and the market just wasn't there
for it. So it's just caught it out at a bad.

Speaker 1 (01:25):
Time, okay. And the China problem with the lowering birth
rate and the economic slow down and the diigu system,
what's the answer to that.

Speaker 2 (01:32):
Yeah, that's that's a tricky one. You know, a lot
of Cinele's value has been built alongside A two's on
that infant formula market, shipping infant formula two to China,
whether through official channels or through this you know, the
diguge trade. And so both companies got hit pretty hard,
with COVID obviously unexpectedly or wasn't part of their plan,
and that's part of this recovery as well. What's next?

(01:54):
And I guess as a farmer, that's that's what we're
waiting for now, is what's the plan?

Speaker 1 (02:00):
Is there a move to diversify markets? I mean all
New Zealand businesses are being told this. You know, we've
got thirty percent of all our trade with China and
that's actually putting too many eggs in one basket. Either
other markets for the particular sin name product.

Speaker 2 (02:13):
Yeah, they look, they do export a number of products.
The highest value was clearly the infant formula, so they
are I think scrambling to find where that value is
going to come from long term. But it's just I
think the infant formula is just one of the many
straws that broke the Kemel's back. I guess you could say, yeah,
a number of issues are spat with A two is
a major shareholder, perhaps some poor implementation in the company itself,

(02:39):
and obviously there was a purchase of Dairy Works and
a few other companies as well that probably haven't gone
to plan. So yeah, a whole lot of perhaps on hindsight,
some poor decisions coming home to Rust.

Speaker 1 (02:51):
Really Okay, so this ninety nine point six percent vote,
that's pretty extraordinary. Were you surprised about it?

Speaker 2 (02:56):
Ah? Yeah, absolutely, Look, I think that does show that
this is the right right path forward, and I think
most shareholders recognize that, you know, if they vote to know,
virtually they're voting their shareholding out of existence. So I
think it was a pretty clear cut decision for most people.
And then look suddenly mounted a very strong campaign to
try and get this over the line, probably one of

(03:17):
the biggest board lead campaigns for a vote that I've
ever seen.

Speaker 1 (03:21):
So you'd say you're on the back of the right cow.

Speaker 2 (03:24):
Well, I'm hoping. So look, I think you heard earlier
in your program that you know there's a long road
to go. This is one step forward and a long pathway.
There's a number of other issues to get over the line.
But as a shareholder, as a supplier, you know we're
along for the journey. Our contract says that we're with
certainly for at least another two years, and it makes
up over ninety percent of our income, so that we're

(03:46):
definitely vested in the outcome of this. We really want
them to do well because it has a massive impact
on our business.

Speaker 1 (03:51):
Cameron, I'm sure you've got some cows and milk, so
I'll let you go, and I thank you so much
for your time today, all the very best. Thank you mate.
Cameron is a supply to suldn't they.

Speaker 2 (04:00):
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