Can Synlait be saved? It's far from obvious and highly conditional
Source: Adobe
If you were trying to rescue people on the Titanic, would you put them into a boat that could potentially spring several leaks?
Because the thing that strikes me most about Bright Dairy's plan to “rescue” Synlait is just how conditional that plan is.
The $130 million loan from Bright Dairy that Synlait shareholders are being asked to approve at a meeting on July 11 doesn't even begin to lift the company out of the mire it has sunk into.
If shareholders approve the loan, Synlait will be able to meet the July 15 deadline set by its banks to repay them $130 million.
If shareholders don't approve the loan, it will be curtains, according to Synlait's board and independent expert Northington Partners agrees; receivership will be the only option.
But the very next deadline is just a couple of weeks later when Synlait is supposed to repay another $46 million on its revolving credit facility plus another $58 million on its working capital facility, both on July 31.
So, Synlait is pinning its hopes on its banks agreeing to postpone these deadlines.