Synlait Milk (ASX:SM1) agrees to new funding arrangements

• Synlait Milk (SM1) agrees to new funding arrangements to refinance its maturing syndicated banking facilities
• Synlait has been in discussions with its banking syndicate regarding ongoing funding arrangements, after a waiver was granted for the relevant financial year covenants
• Synlait CFO Robert Stowell says Synlait has been proactively engaging with its banking syndicate for some time
• Synlait Milk last traded at $3.58 on July 30

Synlait Milk (SM1) has agreed to new funding arrangements to refinance its maturing syndicated banking facilities.

Synlait has been in discussions with its banking syndicate regarding ongoing funding arrangements since May, after a waiver was granted for the relevant financial year covenants.

The new arrangements involve a working capital facility of $250 million, extended for 12 months to mature October 1, 2022. Additional funding will also be required to bridge the seasonal working capital requirement. Therefore, a temporary $80 million increase in this facility will go ahead.

A revolving credit facility of $100 million will also take place, amortised down to $66.7 million at the end of July 2022, and then to $33.3 million at the end of July 2023.

Finally, a revolving credit facility limit of $100 million maturing on 1 October 2023 as also outlined in the contract.

In addition to the syndicated bank facilities, Synlait listed $180 million of five-year unsecured subordinated fixed rate bonds on the NZX Debt Market in December 2019. The key financial covenants in place include a total debt leverage ratio set at 4.5x and a senior debt leverage ratio set at 3.0x.

Synlait CFO Robert Stowell says Synlait has been proactively engaging with its banking syndicate for some time.

“The syndicate is supportive of Synlait’s story and strategy, and we are pleased to have completed this refinancing exercise so we can provide increased certainty for our shareholders, customers, suppliers and staff,” Robert Stowell said.

Synlait Milk last traded at $3.58 on July 30.