Dairy company Synlait posts $96m half-year loss, looks to sell assets to reduce debt

Dairy company Synlait is looking at ways to reduce increasing debt after posting a $96 million dollar half-year loss.

However, the company warns that without successful 'deleveraging' Synlait may not be able meet financial obligations as they fall due.

Synlait is trying to raise money and has announced a strategic review of its underperforming North Island assets, including the manufacturing facility at Pōkeno and blending and canning facility in Auckland. The company says discussions have commenced with prospective investors and purchasers.

The company has also got an extension on a $130 million repayment which is now due on July 15. However, significant loan repayments of half a billion dollars will fall due over the next 12 months.

Synlait processes milk in facilities on the North and South Islands and also owns Dairyworks, which produces butter cheese and yoghurt products.

A message from the Chair and CEO called it a "challenging half-year" where the company is continuing to reset its balance sheet and reduce elevated debt levels.

Earnings (EBITDA) for the six months was $19.9 million while net debt increased to $559 million.

The financial challenges have seen an increasing number of farmers who supply milk to Synlait for processing opting out of their supply arrangements. The company did not state numbers but 'cessation notices' have a two-year notice period and Synlait says this poses limited risk to its future financial performance.

Synlait shares, which were placed in a trading halt pending the release of the half-year results, have dropped almost 15% to 64 cents when the NZX re-opened post-Easter break.