① Subsidiary Xinlai intends to allocate 0.308 billion shares to Bright Dairy & Food Holding Limited at a price of NZD 0.6 per share, raising NZD 0.185 billion. ② Xinlai does this to repay its debts. ③ Two months ago, Bright Dairy & Food provided a RMB 0.561 billion loan to Xinlai's debt repayment.
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According to Caixin, Bright Dairy & Food's overseas operations is in an awkward position, with its New Zealand subsidiary constantly asking for financial support.
Tonight, Bright Dairy & Food announced that its subsidiary, New Zealand Neway Dairy Co., Ltd., plans to issue 0.308 billion shares at NZD 0.6 per share to Bright Dairy & Food Holding Limited and raise NZD 0.185 billion for debt repayment. After this private placement, Bright Dairy & Food Holding will increase its shareholding in Neway Dairy from 39.01% to about 74.7%.
Bright Dairy & Food Holding is a subsidiary of Bright Dairy & Food, which is wholly owned by its subsidiary, Bright Dairy & Food International. The capital increase will be first made by Bright Dairy & Food to Bright Dairy & Food International, and then through Bright Dairy & Food Holding to Neway Dairy. The source of funds for the capital increase is self-financing.
Just two months ago, Bright Dairy & Food has used Bright Dairy & Food International's resources to provide a loan of NZD 0.13 billion (approximately RMB 0.561 billion) to Neway Dairy. In the announcement on June 21st, "Neway Dairy's consortium loan amount is NZD 0.5 billion, of which the NZD 0.13 billion loan will expire on July 15th this year", and Neway Dairy itself has difficulty in repayment. The loan provided by Bright Dairy & Food International will be due 12 months from the first drawdown date, up to 24 months from the first drawdown date, with an annual interest rate of 8% for the first year.
Neway Dairy, which now needs financial support, was acquired by Bright Dairy & Food in 2010. Its main products are industrial milk powder, infant formula, cheese, and liquid milk, and it is listed in New Zealand and Australia. Among the top five shareholders of Neway Dairy, Bright Dairy & Food Holding holds 39.01% and is the largest shareholder. The second largest shareholder is a2 Milk Company with a 19.8% stake.
A2 Milk Company is also an important customer of Neway Dairy. However, in September 2023, a2 Milk Company announced to cancel Neway Dairy's exclusive production and supply rights for stage 1-3 infant formula sold in China, New Zealand, and Australia. Neway Dairy objected to this and entered into an arbitration process with a2. The changes in major customers may have affected Neway Dairy's performance. In 2023, Neway Dairy's net income was a loss of about RMB 0.296 billion, and its performance from January to May this year continued the loss status of 2023, with unaudited losses of RMB 94.3798 million. As of May 31 this year, Neway Dairy's total liabilities were RMB 4.334 billion, and its liabilities-to-assets ratio was 57.63%.
Despite this, Neway Dairy remains the main overseas base of operations for Bright Dairy & Food. Looking back at the 2023 financial report, Bright Dairy & Food's revenue in domestic areas both in and outside of Shanghai declined, with only overseas revenue increasing year-on-year. The importance of overseas markets is self-evident.
On August 20th, 2023, Bright Dairy & Food's overseas operations is in an awkward position, with its New Zealand subsidiary constantly asking for financial support.