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Synlait to take milk processing arm public

Synlait to take milk processing arm public, raise funds for second plant

Nov. 12 (BusinessWire) – Synlait Ltd., the Canterbury-based dairy group, plans to take its milk processing division public, taking advantage of resurgent global prices to raise funds to expand.

No details were given of the funds to be raised, though media reports put the target at around $150 million. The closely held company plans to build a second plant at its Dunsandel site south of Christchurch, doubling capacity.

The company expects to register a prospectus and open the offer later this month. First NZ Capital is to manage the sale.

Synlait’s chairman is Graeme Milne, a former CEO of Bay Milk prior to the amalgamations that led to the formation of Fonterra Cooperative Group. Directors include former Finance Minister Ruth Richardson, former Fonterra executive and NZ Rugby Union chief Chris Moller and managing director and founder John Penno.

Shareholders include Japan’s Mitsui & Co., which acquired a 14% stake in 2007 for $13.5 million, implying a capitalisation of $96 million, and made a further $16.5 million available by way of a loan.

Synlait Milk’s initial public offering would comprise offers to institutions in Australia and New Zealand, clients of NZX firms and staff and suppliers of the company, it said in a statement. The shares would trade on the NZX.

The milk processor’s existing plant at Dunsandel, south of Christchurch, processes raw milk into milk powder for export. The parent company also runs a herd of 15,000 cows on 4,100 hectares and has total assets of $400 million, according to its web site.

The IPO comes as global dairy prices are emerging from their slump. Fonterra this month raised its forecast pay-out to farmers by 19% to $6.05 a kilogram and prices in its monthly online auction of milk powder have soared 88% in the past four months.


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