a2 Milk has about a 20 percent stake in Synlait. Photo: Getty Images
- Former CEO John Penno has questioned who can vote at a special meeting.
- He says two major shareholders providing a rescue package should be barred.
- Bright Dairy and a2 Milk have bankrolled a $218m cash injection.
- The Synlait chair says if a deal is not approved, the company will go into insolvency.
The former head of dairy company Synlait Milk is threatening to upset a vital meeting to save the financially strapped business.
The company said it had received a complaint from former chief executive and chair John Penno, that Synlait's two major shareholders Bright Dairy and a2 Milk should not be allowed to vote on the $218 million capital raising.
The two big companies are putting up all the money needed, which would result in Bright Dairy's stake rising to 65 percent and a2 Milk preserving its near 20 percent stake, resulting in the stakes of minority shareholders being diluted.
A special meeting to approve the deal is due next month, with the big two shareholders not able to vote to give themselves new shares, but allowed to vote for the other to receive shares.
Penno's complaint is that the votes breach stock exchange and takeover rules, and that only minority shareholders should be able to vote. Penno holds 2.3 percent.
John Penno. Photo: Supplied
Synlait rejected the complaint and said it had been in touch with regulators before calling the meeting, which it said was critical to its future.
"If the resolutions are not approved and the recapitalisation is not implemented, Synlait would likely need to cease trading and initiate a formal insolvency process unless it were to become clear that further support would be forthcoming from Synlait's existing banks.
"Synlait notes that such support from the banks will be hard to secure in such circumstances."
