Under the changes, each legal entity will only be allowed to have three brands with three recipes for infant formula, something that's expected to decimate the number of brands and labels on supermarket shelves in China from more than 2,000 currently to around 200.
On Wednesday, Bellamy's said it now expects FY17 revenue to be in range of A$220 million to A$240m versus a prior forecast of A$240m. In the prior year, revenue was A$244.6m.
It is now tipping FY17 earnings before interest and tax of A$22m to A$26m. In the prior year ebit was A$54.3m. The company also said net profit is expected to be between 6 per cent and 9 per cent of revenue in the first half and between 4 per cent and 6 per cent in the second half.
The Launceston, Australia-based company said McBain will cease to be chief executive effective today but will continue to be employed until March 31 to assist with outstanding matters.
Chief operating officer Andrew Cohen will assume her responsibilities as acting CEO.
Nigel Underwood has been appointed acting chief financial officer while the former CFO, Shona Ollington will remain on the finance team and report to Underwood.
During the trading halt, its biggest shareholder Black Prince Private Foundation sought to dump the bulk of the infant formula maker's board. Singapore-based Black Prince, which owns 14.48 per cent of Bellamy's, has called a special meeting of shareholders where it wants to remove Patria Mann, Launa Inman, Michael Wadley and Charles Sitch from the board, replacing them with Jan Cameron, Chan Wai-Chan, Vaughan Webber and its authorised representative Rodd Peters.
Bellamy's also announced changes to the take-or-pay organic powder contract between the company and New Zealand's Fonterra.
In late 2015 Fonterra Australia and Bellamy's announced plans to enter into a five-year, multi-million dollar strategic agreement to manufacture a range of new baby nutritional powders at its Darnum plant in Victoria which included the take-or-pay organic powder contract.
At the time, Fonterra touted the deal as being part of the plan to turn around its loss-making Australia business, which has underperformed for several years in an environment of fierce competition for milk supply and over-capacity in dairy production.
Bellamy's today said the term of the contract will be extended by a further three years to "apportion minimum volume commitments over a longer period."
The termination rights have also been rejigged with two additional grounds for Fonterra. The first applies if a person or group acquires 50 per cent or more of Bellamy's voting shares and the second applies if a person or group acquires more than 40 per cent and in Fonterra's opinion that person or group has effective control of Bellamy's.
On an investor and analyst conference call this afternoon, Bellamy's management said they were not able to talk about the Fonterra deal further than what was in the business update.
The company said they felt they needed to work with Fonterra but the deal it has with Bega had different metrics and didn't need to be discussed at this point.
Volume commitments to Fonterra have not been cut, the company told investors, but extended over eight years from five years.
Management would not discuss whether Bellamy's was liable for a break fee from Fonterra in the event of termination.
Fonterra was not immediately available for comment.
Before the announcement, Forsyth Barr senior analyst equities James Bascand said the situation will be "frustrating" for Fonterra as they are trying to turn around the Australian business but it won't be material.
