Synlait Plans $130 Million Loan Replacement as Senior Facility Refinancing Nears

Refinancing on Track with Replacement Shareholder Loan

Synlait Milk Limited (NZX:SML, ASX:SM1) is progressing steadily towards refinancing its senior syndicated bank facilities, which mature on 30 June 2026. Central to this refinancing is the replacement of the $130 million shareholder loan provided by Bright Dairy International Investment Limited in July 2024 with a new loan on substantially similar terms but with a fixed two-year term and adjusted interest margins.

The Replacement Bright Loan retains its subordinated status behind the senior facilities and continues to be secured on a second-ranking basis. Notably, the loan’s interest rate will track the 3-month Bank Bill Benchmark Rate (BKBM) plus a margin aligned with the weighted average margin payable on the senior facilities, resetting upon any refinancing in 2027. The new loan removes legacy provisions no longer applicable and excludes any financial covenants favoring Bright, consistent with the existing loan.

Independent Oversight and Arm’s-Length Negotiations

Synlait has appointed an independent directors’ committee (IDC) to negotiate the Replacement Bright Loan terms, ensuring arm’s-length dealings. The IDC, chaired by independent director George Adams and including Katherine Turner since May 2026, excluded Bright-nominated directors and used separate legal advisors for each party. This governance structure underscores Synlait’s commitment to transparency and independent oversight in refinancing negotiations.

Trading Update Reveals Net Loss and Asset Sale Impact

For the four months ending 30 April 2026, Synlait reported a preliminary net loss after tax of NZ$12.0 million and net assets of NZ$720.8 million. The company attributes much of the negative financial impact to January 2026, amid ongoing operational headwinds previously disclosed in its half-year results. The reported figures also include a preliminary gain from the successful sale of Synlait's North Island assets during this period.

This trading update is based on unaudited management accounts and covers a period with no directly comparable prior data. Synlait plans to release its full audited consolidated results for the financial year ending 31 July 2026 in due course.

Conditions and Next Steps for Refinancing Completion

The Replacement Bright Loan is expected to become effective on 30 June 2026, contingent on approvals from Synlait’s lending group, the IDC, the new senior facilities lenders, and relevant regulatory waivers under NZX Listing Rules. The loan’s proceeds will be used exclusively to repay or prepay Synlait’s and its guarantors’ debts. Synlait is also permitted to prepay the loan early without penalty, subject to senior lender consent and certain financial milestones.

Acting CEO Leon Fung and non-IDC directors have been excluded from the Replacement Bright Loan negotiations to maintain independence, following the recent leadership transition announced in May 2026. This refinancing effort comes as Synlait navigates persistent supply chain challenges and market volatility in the dairy sector.