Synlait in $30m sale and leaseback deal for Mangere plant

Synlait Milk has entered into a sale and leaseback deal for its Mangere canning facility. Photo / NZ Herald

Synlait Milk said it had entered into a sale and leaseback deal, worth $30.05 million, for its premises at Richard Pearce Drive, Mangere, to pay down debt.

The news follows an announcement from the company on Wednesday that it was looking to trim back staff levels by 150 jobs to save money.

When Synlait acquired Richard Pearce Drive in May 2017, the land and buildings were valued at $12.4m.

Synlait Auckland forms part of the company's North Island manufacturing network providing additional blending and canning capacity, warehousing, and office space.

"The opportunity to sell and leaseback the land and buildings at Richard Pearce Drive is attractive to Synlait as it will free up cash and allow us to pay down debt," chief executive John Penno said.

The lease will have an initial term of 10 years, with further rights of renewal, providing plenty of long-term certainty and flexibility for our business, he said.

Settlement is on October 4.

Synlait is closely allied with dairy and infant formula company a2 Milk, which has a 20 per cent stake in the company.

A2 Milk, whose growth has been stifled by the outbreak of Covid 19 and increased competition in its key market - China - is Synlait's biggest customer for infant formula.

Synlait's annual result is due out on September 27.