Synlait Ltd investors may sell 19M shares into Synlait Milk

Synlait Ltd investors may sell 19M shares into Synlait Milk IPO, Bright won’t participate

June 24 (BusinessDesk) – Shareholders of Synlait Ltd may sell 19 million shares of Synlait Milk as part of the dairy company’s initial public offering while Bright Dairy won’t participate in the sale, according to Synlait Milk’s prospectus.

The Rakaia-based Synlait Milk will raise about $120 million from the IPO, of which $75 million will come from new shares and the remaining $45 million from a selldown by Synlait Ltd investors, who include Japan’s Mitsui & Co and Synlait Milk chief executive John Penno.

Synlait Milk is currently 51 percent owned by China’s Bright Dairy & Food Co and 49 percent by Synlait Ltd. After the IPO, Bright Dairy’s holding would fall to between 38.5 percent and 40.7 percent and the holding of Synlait Ltd investors would fall to between 24.2 percent and 25.6 percent.

Bright Dairy’s shares would be unchanged at 57.2 million, while the Synlait Ltd shareholders reduce to 36 million. Total shares on issue jump to between 140.6 million and 148.8 million from 112.3 million currently. The actual split will depend on how many shares the Synlait Ltd investors sell.

The indicative price range for the stock if $2.05 to $2.65, giving the company a market value of between $305 million and $372.5 million and an indicative enterprise value of $375.5 million to $442.8 million.

The $75 million raised is to be used to repay debt and help fund construction of a new lactoferrin extraction and purification facility, an on-site blending and consumer packaging plant, a new dry store, a quality testing laboratory, a butter plant, and a new spray dryer, according to the prospectus.

The company is forecasting strong sales growth this year and in 2014. Sales are forecast at $426.4 million in 2013, up from 2012’s $376.8 million, and for 2014 sales are forecast to rise to $524.4 million. Underlying earnings before interest and tax are forecast to almost double this year to $26.9 million and rise to $32.1 million in 2014.

Synlait Milk, which operates the largest purpose built infant formula plant in the southern hemisphere, said in May it would spend $15 million to expand production of lactoferrin as a spray dried powder to pharmaceutical standards.

(BusinessDesk)

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