Synlait Milk on track for critical debt refinancing

New Zealand dairy processor Synlait Milk (ASX:SM1) has confirmed it is on track to finalise the critical refinancing of its senior syndicated bank facilities ahead of a June 30 maturity deadline.

As part of the restructuring requirements imposed by new lenders, Synlait is negotiating a "replacement bright loan" to swap out its existing $130 million shareholder loan from Bright Dairy International Investment.

Bright Dairy has approved entry into the new arrangement, announcing its intention to channel the loan via the Shanghai Stock Exchange.

While the replacement facility retains the original $130 million principal sum, it introduces key structural modifications.

Unlike the previous one-year term with an extension option, the new agreement establishes a strict two-year term with no option to extend.

Furthermore, the interest rate will lock into the 3-month BKBM plus a variable margin tied directly to Synlait’s senior banking facilities.

The agreement remains subject to final documentation approvals from Synlait’s lending group, its independent directors’ committee, and compliance with NZX listing rules.

Representatives noted that the replacement loan will remain subordinated to senior facilities, carrying no financial covenants in favour of Bright, whilst existing security and guarantees will continue on a second-ranking basis.

The refinancing push follows Synlait's half-year investor presentation on Jan 31.