Synlait Finalizes $350 Million Bank Package with FY26 Covenant Changes
Synlait Milk Limited has completed a $350 million refinancing package with a strong banking syndicate, featuring amended financial covenants for FY26 and maintaining key shareholder support.
- Refinancing totals $350 million across multiple secured credit and loan facilities
- Facilities mature mostly on 30 June 2026 with a step-down in revolving credit
- Financial covenants amended for FY26, including net senior leverage and interest cover ratios
- Banking syndicate includes ANZ, China Construction Bank, HSBC, and others
- Maintains $130 million shareholder loan from Bright Dairy International
Synlait Finalizes Significant Refinancing
Synlait Milk Limited has announced the completion of a comprehensive refinancing package totaling NZ$350 million. This move secures the company’s liquidity and capital structure through a combination of secured overdraft, revolving credit, and term loan facilities. The refinancing is a critical step as Synlait navigates the evolving dairy market and positions itself for future growth.
Details of the New Facilities
The new funding arrangement is structured across several facilities – a NZ$15 million secured overdraft, two revolving credit facilities totaling NZ$238 million, and two term loan facilities amounting to NZ$72 million. Additionally, there is a NZ$15 million revolving credit facility denominated in NZD/CNH, reflecting Synlait’s exposure to international currency markets. Most facilities mature on 30 June 2026, with a planned reduction of NZ$50 million in one revolving credit facility by late February 2026.
Support from a Diverse Banking Syndicate
Synlait’s refinancing is supported by a robust syndicate of eight major banks, including ANZ Bank, China Construction Bank, HSBC, and Rabobank. This diverse group underscores confidence in Synlait’s business model and financial outlook. The syndicate’s backing provides the company with a stable funding base amid global economic uncertainties and fluctuating commodity prices.
Amended Financial Covenants for FY26
The refinancing package introduces amended financial covenants for the fiscal year 2026. Key ratios include a net senior leverage ratio capped at 2.5 times EBITDA, a working capital ratio that varies seasonally between 1.35 and 1.5, and an interest cover ratio of 2.5 times. These covenants are designed to ensure Synlait maintains financial discipline while allowing operational flexibility. Additionally, shareholders’ funds must remain above NZ$500 million, reinforcing the company’s capital strength.
Ongoing Shareholder Loan Support
Alongside the bank facilities, Synlait continues to benefit from a NZ$130 million shareholder loan from Bright Dairy International Investment Limited, maturing in July 2026. This related-party funding complements the bank refinancing and reflects sustained shareholder commitment to Synlait’s strategic objectives.
Overall, this refinancing marks a pivotal moment for Synlait, balancing immediate liquidity needs with medium-term financial health. The company’s ability to meet these covenants and leverage its banking relationships will be closely watched by investors and analysts alike.
Bottom Line?
Synlait’s refinancing secures near-term funding but sets the stage for scrutiny on covenant compliance and market conditions in FY26.
Questions in the middle?
- What are the interest rates and fees associated with the new facilities?
- How will Synlait manage the $50 million step-down in revolving credit early next year?
- What impact will the amended covenants have on Synlait’s operational flexibility?
