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The shareholders of specialty milk producer Synlait have a stark choice to make this week to either approve a capital injection or risk putting the company in the hands of a receiver.
Shareholders were being asked to approve a $218 million cash injection by its two largest shareholders, along with financial restructuring to fix its most immediate financial problems.
However, the deal excludes all other shareholders and would result in their stakes being diluted, as the largest shareholder China's Bright Dairy will increase its stake to 65 percent, and A2 Milk will preserve its near 20 percent stake.
Synlait chair George Adams said the alternatives were far less appealing.
"We're pretty much at the end of the road," Adams said.
He said time was ticking for the business, with bank financing to run out at the end of this month.
"If we don't get this through, then really the independent directors will, I think, have very little choice other than to look at receivership options for the business."
Synlait founder, chief executive and minority shareholder John Penno attempted to derail the meeting with a complaint to regulators about a breach of NZX and takeover rules, which was rejected.
While smaller shareholders will end up with a smaller stake in the company, Adams said their shares would be worth more.
The market value of the company was about $27m before it announced the plan to raise capital, but would be closer to $42m if the deal was approved.
"So even though it's a smaller percentage, it's actually worth more," Adams said.
Despite that, Adams said there was no certainty of winning the necessary shareholder approval.
"I wish it was a slam dunk. It genuinely isn't," he said.
"I'm not counting my chickens, frankly, and we're just working really hard to make sure we can get shareholder support for this across the line."
