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- Synlait Milk to retain North Island plants
- Sees a path to profitability for the money losing plants
- Sale was a possible solution to Synlait's financial woes and debt burden
- Future of company rests of 18 Sept meeting to approve $218m injection
Beleaguered dairy company Synlait Milk has decided against selling its North Island processing facilities to restore its finances.
The company had been reviewing the future of its processing and manufacturing plant at Pokeno, and a blending and canning facility in Auckland and looking at possible sales to reduce its large debt burden.
Chief executive Grant Watson said the review had looked at selling, mothballing the plant, and rebalancing operations at the plant.
"The review has been detailed and thorough. It's given us the insight needed to lift the financial performance of these world-class assets. We now have a pathway to profitability in our North Island operations."
He said the review showed the it was not financially viable to keep processing milk at Pokeno, and it would now focus solely on making the advanced plant-based nutrition products, which did not require raw milk.
The company would not actively seek a buyer for Pokeno, but would consider a "compelling offer".
Synlait has 54 farmer suppliers in Waikato and the company would meet its contractual obligations to them, including incentive payments, but their milk would collected and processed by Open Country.
Watson said the Dunsandel facility in Canterbury would remain the hub of the business for dairy operations.
The possible sale of the money losing North Island plants was one option to bolster Synlait's financial woes of falling sales, big losses and debt.
However, Synlait's two biggest shareholders have agreed to inject $218 million into the company to fix its most immediate financial problems, which will be voted on by shareholders on 18 September.
