Synlait snaps up Oceania milk contracts, consents

Synlait snaps up Oceania milk contracts, consents after capital raising stalls

By Jonathan Underhill

Feb. 22 (BusinessDesk) – Synlait Milk Ltd., the dairy company that turned to a Chinese investor after failing to attract local interest, has agreed to acquire the assets of Oceania Dairy Ltd., another fledgling start-up in Canterbury that couldn’t muster enough financial backing.

No price was given for the transaction. Oceania had tried to raise about $75 million to build a milk powder plant near Glenavy that would have processed 220 million litres of milk a year, producing 32,000 tonnes of powder. Oceania has milk supply contracts with about 30 farms and also planned to buy milk from Fonterra. After the transaction, Synlait will have 135 farms supplying milk, it said.

“We’re buying access to a big bucket of milk,” said John Roberts, Synlait Milk general manager of operations. The extra milk will provide some assurance of supply for Synlait Milk’s own milk powder factory at Dunsandel, which is scheduled to be ready in September, he said.

Synlait Ltd. abandoned plans for an initial public share sale in New Zealand to raise capital for its factory in 2009 and eventually found a willing partner in Bright Dairies of China last year in Synlait Milk, its processing arm.

The consents for the Glenavy plant will be kept on hold for now, Roberts said. Synlait is more than doubling the size of its site at Dunsandel and isn’t contemplating any other immediate projects, he said.

Major shareholders of Oceania include Babak Bahador, Peter Castle and William Dwyer. Smaller shareholders include former Reserve Bank Governor Don Brash and chairman Keith Turner.

(BusinessDesk)

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