South Island dairy company to list on NZX and expand

South Island dairy company Synlait Milk has confirmed it will hold an initial public offer (IPO) of shares and list on the NZX.

The final terms of the offer have yet to be determined but the proposed IPO is likely to comprise three parts - an offer to institutions, to clients of NZX firms and to suppliers and staff.

Most of the money raised will be used to build a second milk processing plant on Synlait Milk's existing site at Dunsandel, Canterbury, doubling its capacity to process raw milk into a variety of milk powders for export.

Synlait, which milks about 15,000 cows, left Fonterra Co-operative Group and started its own processing plant in 2008 to maximise earnings from its herd and benefit from increasing dairy prices.

It is anticipated that the prospectus for the offer will be registered and the offer will open this month. First NZ Capital has been appointed lead manager for the offer.

In March Synlait announced plans to double its capacity, suggesting that it would look to raise $100 million.

The company said it had milk contracts that would increase production to 300 million litres in the next year, and the second drier would almost double the size of the factory and boost processing capacity to 550 million litres a year by 2011.