Synlait Milk shares fall to new low as it ponders next moves - Market close

Synlait Milk fell 4.5c or 10.23 per cent to a new low of 39.5c. Photo / NZME

The New Zealand sharemarket took a moderate approach after the big rise last Friday as intrigue surrounded debt-laden Synlait Milk’s next moves including a capital raise.

The S&P/NZX 50 Index had a steady afternoon after falling to a morning low of 11,754.73 and closed at 11,880.54, up 13.25 points or 0.11 per cent.

There were 79 gainers and 63 decliners over the whole market on volumes of 37.79 million share transactions worth $181.59 million.

Ebos Group dominated the trading with $38.3m worth of shares changing hands after rebounding from its MSCI Large Cap Index removal and gaining 95c or 2.87 per cent to $34.

Synlait Milk fell 4.5c or 10.23 per cent to a new low of 39.5c after telling the market its majority shareholder Bright Dairy is lending $130m to repay bank debt in mid-July.

Synlait said it is unlikely to meet three current banking covenants and the banking syndicate is reviewing a package of proposed waivers.

Synlait now expects its full-year operating earnings (ebitda) to be at the lower end of $45m-$60m, excluding a non-cash adjustment of $17m.

Jeremy Sullivan, investment adviser with Hamilton Hindin Greene, said Synlait was carrying $500m worth of debt and it will need to raise a lot of capital as quickly as possible.

Its retail bonds, due for repayment at the end of the year, were trading 65c in the dollar and were presently worth $120m instead of $180m.

He said Bright Dairy was replacing the banking syndicate’s senior debt and this move needed Synlait shareholder approval.

“It will be interesting to see how one of their shareholders, a2 Milk, votes. They may want to get their hands on the Dunsandel processing plant at the lowest possible price and vote against it.”

Fonterra Shareholders’ Fund gained a further 18c or 4.5 per cent to $4.18 on the prospect that the dairy co-operative will gain farmer milk suppliers from Synlait.

The leading energy stocks settled back after the surge at the end of last week following the announcements of new 20-year supply agreements for the Tiwai Point aluminium smelter.

Meridian declined 21c or 3.11 per cent to $6.55; Mercury was down 7c to $6.61; and Contact decreased 14c to $9.08.

Ratings agency S&P Global says the decision by New Zealand Aluminium Smelters to sign long-term electricity supply agreements is a boon for the country’s power generators, providing “solid and long-term demand visibility for the sector”.

Fisher and Paykel Healthcare was up 60c or 2.03 per cent to $30.10; Infratil increased 37c or 3.49 per cent to $10.97; Skellerup rebounded 17c or 4.82 per cent to $3.70; Tourism Holdings gained 4c or 2.14 per cent to $1.91; and Seeka added 11c or 4.35 per cent to $2.64.

Fletcher Building, up 4c to $3.15, has extended banking agreements with two lenders – a facility worth A$424.5m expiring in July 2027 and A$250m ending in May 2029. The new terms enable covenant testing through to the end of next year if required.

Summerset Group increased 35c or 3.68 per cent to $9.85, and Ryman gained 7c or 1.92 per cent to $3.71. German investment group ACATIS Value Event Fonds disclosed it sold all its 5.23 per cent Ryman shareholding, amounting to 35.96m shares.

Ventia Services rose 19c or 4.99 per cent to $4; KMD Brands gained 1.5c or 3.53 per cent to 44c; NZME added 21c or 2.38 per cent to 86c; T&G Global was up 5c or 2.94 per cent to $1.75; and Radius Residential Care increased 1.2c or 9.6 per cent to 13.7c.

Scott Technology was up 9c or 4.07 per cent to $2.30 after announcing a new push into the North American market with its T300 safety bandsaw for in-store supermarket meat cutting and sales of its trusser to three large poultry processors. Mark Host has been appointed vice-president sales – global protein.

Auckland International Airport gave up nearly all Friday’s gains, declining 22c or 2.82 per cent to $7.58, Spark was down 12.5c or 2.99 per cent to $4.05; Michael Hill eased 2c or 4.21 per cent to 45.5c; and Eroad decreased 3c or 2.91 per cent to $1.

PGG Wrightson was down a further 8c or 4.91 per cent to a new low of $1.55; Argosy Property decreased 3.5c or 3.23 per cent to $1.05; and Vital Healthcare Property Trust declined 5c or 2.6 per cent to $1.87.

Move Logistics was down 3.5c or 10.14 per cent to a new low of 31c. Move had earlier told the market its second-half operating earnings (ebitda) were expected to be higher than the first six months.

Move is chartering a larger, more resilient vessel for its transtasman shipping service which has gained “encouraging customer support”.