George Adams: Synlait Board Chair on Bright Dairy's plans to increase ownership of Synlait

The largest investor of struggling Canterbury milk processor, Synlait, will increase its ownership if its planned equity raise gets approval. 

China's Bright Dairy's committing to pay 60 cents per share for $185 million of stock to lift its stake of the company to 65.3%. 

Board chair George Adams says it's critical for Synlait's future - after it told the Australian securities exchange more than half of its 280 suppliers want to leave in June. 

Adams told Mike Hosking the farmers' cessation notices were a message to the business as they take two years to take effect. 

He says he's thrilled for their group of loyal farmers. 

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Episode Transcript

Speaker 1 (00:00):
Time for sin Lay update. We may have a lifeline
China's Bright deary who already owned thirty nine percent. If
you followed this story, they could end up taking two
thirds of the company. Shareholders are going to have to
vote on this. It's a recap plan and they'll do
this in about a month's time. Sin Lay's board chair
George Adams is with us. George, very good morning to you.

Speaker 2 (00:16):
Good morning.

Speaker 1 (00:17):
Make you're enjoying this. This is a fun time for you.

Speaker 2 (00:21):
Yeah, it's certainly providing lots of entertainment.

Speaker 1 (00:23):
Mike, I can the a two thing. Did we come
to this particular conclusion mutually we're all happy now or not?

Speaker 2 (00:31):
We're all very happy. Make good.

Speaker 1 (00:33):
That's sorted once and for all. Bright the Dairy. If
they end up taking two thirds, do they see what
others don't or are they just locked in? They got
to do something to save themselves.

Speaker 2 (00:46):
Look, it's great, a very interesting company. It's very old company, Mike,
and I think like many of our farmers, they would
describe themselves as well as intergenerational investors in Derry. So
when this company was brought on as a shareholder in
twenty ten, I believe they were very keen that they

(01:06):
were there full long term and so that's what we've got,
a very long term committed sure.

Speaker 1 (01:12):
Sure if you are used to leave your funds dropped down, yes,
I am oh good. Sorry the banks and where they
say are they happy with the way things are going?

Speaker 2 (01:23):
The banks are yeah. So I mean as part of
our as part of our deliveraging the we had to
essentially completely refinance the business. So that's in process and
we have committed facilities from our banks as we speak,
which some text us through for another for another year.

Speaker 1 (01:38):
Do they or does their view and the deals you
have with them, are they contingent in any way, shape
or form on what right there we may or may
not end up doing.

Speaker 2 (01:48):
Yes. So essentially we have a capriage from break Cabrias
from A two, and we've got the bank refight and
all our intercontingently. So you know, we're we're working hard
to make sure that every thing happens on the same day.

Speaker 1 (02:01):
And where do the farmers in the contract sit.

Speaker 2 (02:04):
So the farmers essentially put us on notice, as you
will know, and what they were telling us, and I've
spoken to a lot of them, is that essentially they
would they would they wanted our advance rates to match
the market. We were probably behind a big ten percent
last year and they wanted the balance heat deleverage for security.
So we've matched the advanced rates this year and this

(02:24):
is the deleverage that they'll be looking for them. So
I think they'll be considerably more comfortable to start with
throwing cease notices once this is.

Speaker 1 (02:32):
Done, fantastic. And if the ones who have left or
going to leave, could you change their minds or could
you bring people back on board if this thing goes
aheit In other words, could you solve the problem?

Speaker 2 (02:43):
Yeah, we could. I mean we haven't had any substantial
even minor volume leave. Frankly, people have to give us
a two year cease notice. So at this stage it's
a look. I mean, I think it's a message to
the to the board of the business. You need to
sort your stuff out, and once you've done that would
be good. So genuinely, we have a group of very

(03:04):
loyal farmers and over time they've actually done pretty well
forcingly and biasonally, so I'm really filled for them.

Speaker 1 (03:11):
I know which way you want the vote to go,
Will it go that way? Hand on hat?

Speaker 2 (03:16):
I don't know hard. Look, I think I think the
vote that and again they're all contingent on each other.
So I think the vote for for for A two
will go well because clearly Bright or the majority of
the voting on the other side, the vote for the
Bright one I think is going to be closer. So
it's certainly, you know, a too indicated they'll support it.
So they're a third of the vote. So it means

(03:37):
that essentially it's still hangs in the balance with our
shareholders and as they did last month, one hundred and
thirty million their loane, they came out and they and
they and they voted, so it is genuinely in their
hands and encourage them to have their say.

Speaker 1 (03:50):
If it doesn't cross, is it iba for the company?

Speaker 2 (03:56):
Well pretty much, pretty much.

Speaker 1 (03:57):
Yeah, good luck with that one, George. Appreciate your time.
George Adams sin Lay board chair. It's been a fascinating
story to follow. The votes and dunsandal in about a
month's time. For more from the Mic Asking Breakfast, listen
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