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Synlait supplier Willy Leferink.
Last week's approval of a recapitalisation plan for troubled milk processor Synlait is good for Canterbury and gives farmer suppliers a lot of security going forward, says farmer Willy Leferink.
However, the Ashburton-based former Federated Farmers dairy chair believes it's now up to the company board and management to come up with a sound business plan that will make farmers change their mind and withdraw cessation notices filed earlier this year.
While Leferink says that while he can't speak for the other 280 farmer suppliers, he will look at what the Synlait farm supply has to offer.
"Some farmers are still bitter around what they were paid last season, and they will be looking at the repair work Synlait does. It's up to the farm supply team how they create loyalty with farmers."
In June, Synlait announced that many farmer suppliers had handed in cessation notices. Under Synlait's milk supply agreement, the cessation period is two years, so farmers would have to issue cessation notices by May 31 next year to end their supply contract on May 31, 2026.
Leferink says Bright Dairy of China, which will own 65% of Synlait from October 1, is an impressive dairy player and has been around for over 100 years.
He says the decision to recapitalise Synlait and save the company from collapse is good for the region and for competition with major players like Fonterra.
Leferink, who attended the special shareholders meeting last week, says while not everyone is happy with the outcome, it is what it is.
Synlait shareholders voted in favour of an equity raise by issuing extra shares to major shareholders Bright Dairy and a2 Milk Company (a2MC). Bright chipped in $185m and a2MC $32.8m.
Under the deal, the extra shares resulted in Bright increasing its stake to 65% and a2MC maintaining its 19.8% stake. However, minority investors' overall stake in the company will reduce from 41.2% to 14.9%.
In the end, more than 90% of votes were cast in favour of the three resolution for Bright and a2MC to put in the new money and to amend the firm's constitution.
Bright Dairy representative Julia Chu expressed its confidence in Synlait.
"Our decision to participate in this process has been about protecting the long-term value of Synlait and further reflects the scale of our commitment to see it rebuild stronger, while restoring farmer supplier confidence over coming years," she says.
Synlait chair George Adams says this was a watershed vote for Synlait.
"Shareholders have given us the opportunity to create a positive future for the company, its investors, farmer suppliers, customers, suppliers and for our 1400 employees.
"Thank you for your support."
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