Synlait Milk Limited (SML) Earnings Call Transcript & Summary

Good morning, everyone, and thank you for joining us today. I'm Hannah Lynch, Synlait's Head of Strategy and Corporate Affairs. Before our Chair, George Adams, formally opens today's meeting, I will cover off several housekeeping points. The Special Shareholders' Meeting is being held in person at Synlait's head office here in Dunsandel and online. Thank you once again for taking the time to vote on these important resolutions which are critical to Synlait's future. We appreciate your engagement on these matters. For those of you who have joined us in person today, welcome. Here are several health and safety reminders. Number one, you completed a declaration on entry to our manufacturing sites today. If you feel unwell at any point during your visit, please let a member of our Synlait team know. Number two, the nearest evacuation point is on the lawn, which is to my left or your right. Should we need to evacuate during the meeting, the alarm will sound continuously and the meeting will be suspended. Please follow the directions of your Synlait team. Number three, a reminder that smoking and vaping is not permitted while you are at Synlait. I will now explain how to vote and ask a question. There are 3 resolutions to vote on today, 2 ordinary resolutions and 1 special resolution. All resolutions will be conducted via poll. To provide online attendees with enough time to vote, online voting is now open. If you are joining us online, click on the vote tab and select your preferred option. Once your vote has been cast, a tick will appear. A reminder, there is no submit or send button. Once you have selected an option, your selection is automatically recorded. To change your vote, simply click on the words Click Here to change your vote. For those of you in-person, you should have received a white voting card on arrival to Dunsandel today. If you are a shareholder, proxy holder or corporate representative and you do not have a white voting card, please raise your hand now and a member of the Computershare team will assist you. Voting cards will be collected at the end of the meeting by the Computershare team. Computershare will act as scrutineers and the resolution will be posted to the New Zealand and Australian stock exchanges before lunch time today. [Operator Instructions] Our team will be monitoring the questions to ensure they are addressed at the relevant part of the meeting. Please note that your question may be moderated or if we receive multiple questions on one topic, amalgamated together. For those shareholders in the room today, if you have a question, raise your hand when asked and a member of the Synlait team will bring the microphone to you. The first question-and-answer session will be held following the address from our Chair, George, and our Bright-appointed Director, Julia. There will also be an opportunity to ask questions following each of the resolutions. Finally, if you have difficulty connecting online -- to the online platform, asking a question or voting, please refer to the online voting guide on the first instance issued with the Notice of Meeting. If you are still having difficulty, please use the Q&A function to message the Computershare team. And if you're still having difficulty, you can call the Computershare team at any time. Their phone number is on screen now and will be on screen during the resolutions part of the meeting. With the housekeeping out of the way, I will now hand over to our Chair, George Adams, to formally open today's meeting.

Good morning, everyone, and thank you for joining us. My name is George Adams, and I'm the Independent Chair of Synlait. And I hope you're sitting comfortably. Before we begin, I would like to confirm that there are no new announcements today. The Notice of Meeting you received goes into extensive detail around what we're asking you to vote on. However, recommended that all shareholders ensure they have read the Notice of Meeting and the Independent Report in their entirety before voting. I'm pleased to confirm that we have a quorum and declare the Special Shareholders' Meeting open. Firstly, a summary of our agenda today. I will speak first, and then we will hear from Julia Zhu on behalf of our Bright-appointed directors. We will then move on to the formal business of the meeting and vote on the resolutions. The purpose of this meeting is to vote on the proposed issuance of approximately $217.8 million of new equity capital and a settlement with The a2 Milk Company. In summary, shareholders are being asked to approve a $185 million issue of shares to Bright Dairy, increasing its holding from 39.01% to 65.25%. This is referred to as Ordinary Resolution 1. A $32.8 million issue of shares to The a2 Milk Company, resulting in its holding of 19.83% being retained, and a settlement with The a2 Milk Company with respect to various disputes. This is referred to as Ordinary Resolution 2. The above matters are inter-conditional such that if one resolution is not passed, neither of the resolutions will be implemented. Shareholders are also being asked to approve certain administrative changes to Synlait's constitution, which would become effective on completion of the issuance of shares to Bright Dairy, resulting in its shareholding increasing above 50%. This is referred to as Special Resolution 1. In accordance with the NZX Listing Rules and Takeovers Code, the Board commissioned an independent report from Northington Partners to support shareholders in their consideration of the resolutions. You can find this report in the appendix of the Notice of Meeting. We encourage all shareholders to read the report in full. A summary of some of the key conclusions reached by Northington Partners is set out in Section 7 of the Notice of Meeting. The seriousness of today's resolutions should not be understated. I strongly encourage you to exercise your right to vote on this important matter. The Board is of the view that if the resolutions do not pass, Synlait would be unable to repay its debt and reset its balance sheet. In this situation, Synlait would likely need to cease trading and initiate a formal insolvency process unless it would become clear that further support would be forthcoming from its existing banks. The Board does not want this to happen. We want to thank those shareholders who have already voted in support of today's resolution. So before I make a short presentation, I would like to introduce you to your Board. We have today our Bright-appointed directors, Julia Zhu, Edward Yang, Tao Zhang and Leon Fung. And we also have our Independent Directors, Paul McGilvary and Paul Washer, along with our CEO, Grant Watson. Now on to our business for today. I will now move to my formal address. I want to start with an overview of Synlait's current position. We cannot hide from the reality of our current financial situation. Debt levels are well above where they should be. We also have more than 900 bondholders who are required to be repaid in December. All of our banking facilities, bar one tranche of approximately $62 million, are due for repayment on October 1. And we have more than 1,400 employees and 200 farmers whose livelihoods rely on our business. The situation the company finds itself in is extremely challenging and requires a multifaceted solution, which the Board has been working extremely hard to deliver. This included Bright Dairy's shareholder loan of $130 million in July, finding a sustainable pathway to profit for Pokeno, raising approximately 3.4x our market capitalization in fresh equity, negotiating a suitable settlement with The a2 Milk Company and putting in place a new banking syndicate to enable us to look forward. However, despite that, Synlait retains all of the components that have underpinned its earlier financial success. Its world-class facilities have exceptional capability in quality and innovation. Synlait can deliver products that other New Zealand companies cannot. It is the largest infant milk formula manufacturer in the Southern Hemisphere. This is why it has a committed global customer base. And in addition, at Pokeno, we now have a facility that can produce advanced nutritional products incorporating plant-based ingredients. This makes Synlait a company worth saving as long as we can make our forthcoming payments and get our debt to sustainable levels. We presented a 2-step plan to reduce debt earlier this year. The first step was delivered in July when shareholders almost unanimously approved a $130 million loan from Bright Dairy. Thank you for that. Today, we hope you will approve step 2 and deliver us $217.8 million in new equity. This will be used to reset Synlait's balance sheet and repay our bondholders. The passing of both resolutions today will also enable our bank refinancing package to take effect, along with our settlement with The a2 Milk Company. As indicated, we have been busy since our last special shareholder meeting in July. Three major pieces of work have been completed. Each of these is a significant step forward in our business recovery plan. Our North Island strategic review has been completed. Financial losses from these assets have been a major factor in Synlait's poor financial performance. So reshaping their future is critical. The review provided an insight that has informed a robust strategy to deliver sustainable and profitable growth for these assets. And as you will have seen in our recent market announcement, we are already acting on that. In summary, we have decided to focus Pokeno's operations solely on producing advanced nutrition products, which do not require raw milk processing. Switching between processing plant-based proteins and dairy hindered the facility's operational efficiency. And transportation and manufacturing costs meant it was not financially viable to keep processing raw milk. The Dunsandel facility will remain our focus for our dairy operations. We have also conditionally settled the disputes with The a2 Milk Company. These have been a significant and unhelpful distraction for both companies. The settlement includes new ways of working together that will benefit both businesses. As you'd expect, negotiating this settlement was a long and complex process, which we hope will be officially completed with the equity raising we are discussing today. The final piece of work has been establishing a refinancing package with our banking syndicate. Again, this was a complex undertaking given Synlait's financial position, and we are grateful to have support on a $450 million package in place, which will be activated if today's resolutions are passed. I'm particularly grateful to ANZ, our syndicate lead, and Bright Dairy for its support in facilitating the syndicate. I would also like to welcome and thank our new banking syndicate who, in addition to ANZ will include the Bank of China, Bank of Communications, China Construction Bank, HSBC, the Industrial and Commercial Bank of China, Kiwi Bank and Rabobank. We turn our attention to the resolutions now. So Resolution 1 seeks to raise $185 million in new equity through the issue of shares to Bright Dairy. They were asked to participate at an issue price of $0.60 per share, representing a 100% premium to the undisturbed share price of $0.30. Bright Dairy's decision to participate and continue to back our business if voted in support today. We'll see their shareholding increase to 65.25%. Director Julia Zhu will address this when she speaks shortly. When Bright Dairy first invested in Synlait, they acquired a 51% stake in 2010, which reduced to 39% when they elected not to take part in our IPO in 2013. Bright is a 113-year-old business and has been our largest shareholder for nearly 15 years. Their substantial actions to back Synlait, as evidenced by their $130 million shareholder loan facility and this proposed $185 million capital investment, are playing lifeline roles to help Synlait reset its financial position and put us in a much stronger position to drive our turnaround plan forward. Subject to the outcome of today's vote, Synlait will still have a job to do to further reduce its debt and a need to grow its customer base both in China and Southeast Asia. Bright is well positioned and committed to helping us achieve this. So I want to take this opportunity to acknowledge the scale and significance of Bright Dairy support to Synlait at this time. Thank you. This has not been lost on your independent directors. And we hope this is equally apparent to all of our shareholders today. Resolution 2 seeks to raise a further $32.8 million in new equity through the issues of -- issue of shares to The a2 Milk Company. The issue prices again are a premium at $0.43, a 43% premium to our undisturbed share price of $0.30. And we'll see a2 retain its shareholding of 19.83%. Tied to this resolution is the approval of the settlement between Synlait and The a2 Milk Company. This is an important milestone for both businesses who are looking forward to putting the disagreements behind us. The key aspects of the settlement are set out in the Notice of Meeting, but I wanted to note a few particular items today. Firstly, the exclusivity option or obligation under The a2 Milk Company will only order certain products from Synlait ceases from 1st of January 2025. However, The a2 Milk Company has agreed it will not exercise a contractual rate to terminate exclusivity following the change of control of Synlait that will occur on the completion of the equity raising transactions we are discussing today. We will make available another SAMR registration slot at Dunsandel for The a2 Milk Company, and we'll work with The a2 Milk Company on a new product registration. We have resolved pricing disputes, primarily being which costs are our account and where we can pass these on to The a2 Milk company. And we have resolved terms around a new product for the U.S. market. We are also working more closely with The a2 Milk Company on operational matters, providing greater access to our site, people and information relating to The a2 Milk Company products. And we are genuinely very pleased to have the settlement in place and believe it resets the relationship between us. As mentioned, the 2 resolutions today are interconditional with each other. They're also interconditional with our bank refinancing. That means that all of those things must happen or none will. If both resolutions are passed, we will have a number of positive outcomes, including, obviously, $217.8 million of new equity, a deleveraged balance sheet, $450 million in new banking facilities and the ability to repay Synlait's bondholders and current banking syndicate. Most of all, we will have the opportunity to support Synlait returning to profitability, which should benefit all stakeholders in time. Before we get to your vote, it's worth taking some time to explain how today's equity raise was established. It is the 3 independent directors, myself, Paul McGilvary and Paul Washer, who have led this process. Bright Dairy appointees were well aware of their conflict and appropriately stood aside from the process. As you know, I joined the Board in March of this year, and both Pauls did so in 2022. All of us come with experience and are committed to getting this right. We act always as we are legally required to do in the best interest of the company and have taken into account the interest of all of its stakeholders. The directors took a careful open-minded and strategic approach to analyzing options for the future and we examined a wide range of scenarios. The options explored are on the slide. Asset sales were considered in respect of dairy works, but ultimately, a binding offer did not materialize at a level that was acceptable to the Board. We also explored the sale of assets as part of the North Island strategic review. But again, following a comprehensive review process, the Board did not conclude that the best option was a sale for the site. Discussions have taken place regarding various ownership structures for parts of our business and alternative recapitalization options. This was, of course, a very prudent step by the Board. So we worked through all options to conclude that raising equity in this form was the best option for Synlait. Hence, we are here today voting on this important matter. I will cover in more detail on why this equity raising structure was the optimal one on the next slide. We have been extremely clear that should the resolutions not passed today, Synlait would likely need to cease trading and initiate a formal insolvency process unless it would become clear that further support will be forthcoming from its existing banks. We know that there have been some speculation as to what might be achieved in the breakup of the company by receivers or administrators. To be clear, the Board does not believe that insolvency is the best option for Synlait or the best way to ensure creditors are paid and returns are delivered to shareholders. A lot of effort and independent advice was put into the structuring of the equity raise. This was not an easy job. It was complicated by the urgency, the high level of funds required and the poor financial position of the company. I know there has been some disappointment with the structure of the raise, and I want to acknowledge that and point out that there wasn't really an option that would have been ideal for everyone. While a pro rata structure that would have enabled retail shareholders to participate alongside our major shareholders was closely examined, analysis showed it was unlikely to deliver the level of equity required. Given this would also have been a high-risk investment due to Synlait financial position, the independent directors concluded the recapitalization should only be undertaken with major shareholders who have a detailed understanding of the business and were willing to subscribe at a premium to the market price. Synlait is fortunate that our 2 major investors operate in the same sector as we do. Both have a long relationship with and a deep understanding of our business. Each was able to undertake due diligence on Synlait in an expedited process and form their own view on the merits and the risks of participating. The structure that we went with provides the greater certainty of raising the amount we needed in the shortest time frame. We concluded that a pro rata offer to all shareholders would ultimately have been largely taken up by the 2 major shareholders by way of their own entitlements as well as having to take up the shortfall not taken up by other shareholders. We assessed the likely take-up rate by other shareholders as being low, particularly if we were offering shares at a premium to the market price. And of course, if we offered shares at a discount, the major shareholders would have been buying those shortfall shares at a lower price, and there would have been a greater dilution for nonparticipating shareholders. So we are grateful that both Bright Dairy and The a2 Milk Company are supportive of our business, and we're willing to take part in the raise to ensure Synlait survives. There's not a lot more I can add to this other than to highlight that today's vote is critical to the future of our business. In accordance with the NZX Listing Rules and the Takeovers Code, the Board commissioned an independent report for shareholders to support the consideration of the resolutions. This is a robust piece of work. It concludes that the overall -- that the merits of today's resolution resolutions outweigh the negative aspects and are in the interest of existing Synlait shareholders. It also says that the terms and conditions are collectively fair to shareholders that aren't associated with Bright or The a2 Milk Company. Finally, I want to look at the pathway forward from today and reassure you that the Synlait Board knows our work here does not end today. On the 30th of September, we will be presenting our results for the past year. The team is currently focused on preparation for that. Our FY '24 guidance remains withdrawn. The following day on 1st of October, the completion of the equity raise will occur. Beyond that, we have several critical work streams to ensure Synlait is on a path back to sustainable profitability. We remain focused on expanding our early life and adult nutritional offerings in China and throughout Southeast Asia, alongside the expansion of our food service UHT cream business. In the shorter term, we have a strong commitment to cost control and embedding in new operational processes with The a2 Milk Company. Other than the interconditional nature of the ordinary resolutions, there were some other conditions precedent to the capital raising transactions and the settlement that are included in the commitment letters we entered into with the major shareholders. We are pleased to confirm that we are well placed for the satisfaction of these conditions. In particular, we have signed the banking documents to give effect to the refinancing. There are the usual sorts of completion funding conditions remaining but none that we expect to delay the refinancing. We have been seeking counterparty consents to various change of controls under customer and supplier contracts. We are well progressed on those and believe that we have met our obligation to use reasonable endeavors to obtain these consents, and we've had good engagement with our key customers and suppliers. There are some conditions that will only be satisfied at completion, such as there being no breach of material warranties and no material adverse changes affecting Synlait. We are not expecting any of these to apply. So that includes -- that concludes my address today. And I will now invite Julia Zhu to speak on behalf of the Bright-appointed directors. And then we will open the floor to any questions. Thank you, and I'll now hand over to Julia.

Hello, everyone, and thank you for the introduction, George. Me and my fellow colleagues from Bright Dairy are very pleased to be here with you today. So I would like to cover 2 things with you today. First of all, the background on Brightfield Group and Bright Dairy and also the comment into today's vote and our outlook for Synlait. Before I do that and from a Bright Dairy perspective, I wanted to share that, first of all, Synlait is a great company, but its strategy has been hit hard by certain events that largely beyond its control. It is now adapting at pace to get back on its feet. It has good assets supplied by some of the best farmers in this amazing country and owns some of the best assets around the world. While the Synlait's turnaround plan has a way to go yet and requires us all to put together to help make this happen, we believe this company's long-term growth potential across Asia remains significant. So to get started, let me share some background of our company. I would like to give you some introduction on the Brightfield Group first, who is the holding company of Bright Dairy. Brightfield Group is a comprehensive food industrial group, integrating modern agriculture, food processing and manufacturing and city service. It is a large Chinese food and beverage company headquartered in Shanghai, China, with the revenue size of approximately USD 19 billion. Brightfield Group maintains an investment grade rating from Standard & Poor, Moody's and Fitch. It has 18 secondary subsidiaries across China and overseas, out of which 5 are Chinese Asia-listed companies and 1 dualistic company in New Zealand and Australia. So across the whole group, the international business accounts for approximately 30% of the revenue, which has become an important part of the group's overall business and assets. Bright Dairy, on the other hand, our business spans multiple sectors, including pasture farming, dairy processing and market sales through an omnichannel strategy. We are one of the Shanghai's very modern, large-scale, state-owned enterprises, driving the integrated development of primary, secondary and tertiary industries. We own 27 farms across China, with a total of 121,000 dairy cattle and producing, on average, 11.5x annual yield per cattle. We operate over 20 dairy processing facilities and 65 cold chain storage logistic warehouses across China. The image on this slide on the right-hand side is our East China Central factory, which is [ 106,000 square meters ] and has a daily production capacity of 2,600 tonnes of fresh milk. In year 2023, our operating revenue was approximately CNY 26 billion. And today, we are recognized as the leader in low-temperature fresh milk industry across China. We hold approximately 25.5% of the national market share for fresh milk in China and accounts for almost 50% in East China and 68.6% market share in Shanghai stand-alone. So committing to this vote today. Bright Dairy has done everything within its control to support recapitalizing Synlait's balance sheet. Our shareholding rising to just over 65% reflects the fact that we are doing the right thing at the right time by Synlait and to help protect all of our assets and investments in it. Looking to the future, more work will, in time, be required to further strengthen its balance sheet and accelerate the growth. And Bright Dairy is going to advocate to ensure that every shareholder is afforded an opportunity to participate in future capital management initiatives. However, the priority right now is to recapitalize urgently and then move to the next phase of turnaround work. We see a pathway through this economic cycle, where our extensive China and overseas operations, networks, research capabilities mean we are well placed to help Synlait rebuild it even stronger. We will continue to engage and listen carefully to the views of all stakeholders to help maximize Synlait's long-term development potential. And we do see a stronger, healthier future for the business coming. Thank you.

Thank you, Julia. So we'll now take any questions you might have.

So anyone in the room or anyone online? You've got a question in the room, we'll bring a microphone to you. If not, we'll move to questions online. Oliver?

Thank you, George. Oliver Mander from the New Zealand Shareholders Association. So look, I think we -- I think Julia point on the urgent priority today makes absolute sense and the commitment to future investor involvement in capital management is very appreciated and very understood. So thank you for that. Just in terms of the operating risk you have going forward, and you've touched on that already briefly, the company does remain significantly indebted even after this capital raise. Is there any commentary you want to add around that in terms of how soon that potential future might be in terms of capital management?

Look, I don't think it's going to be imminent, Oliver. We haven't discussed this. So I'm -- can't give you what I think -- we don't think it's imminent. If we look at the facility that we have, Synlait has got a very tall requirement during the middle of the year for working capital. So while that number will rise certainly close to 4, we expect -- if we measure kind of the end to year, end to year number, which is the one that we probably look at more often that number will have a 2 in front of it in terms of EBITDA cover. So I think that's actually not an unreasonable position. I'd prefer it to be lower, clearly. But ultimately, we've got to drive that through performance. And ultimately, that performance, I think, then will enable us in time to then give consideration to what are the next investment opportunities that we want to have. But I think given the recent history, we need to earn our stripes a little bit before we come back to shareholders and ask them for money for investment. So it's not imminent.

Very clear answer. Thank you.

Thank you. Anybody online, Hannah?

Yes. Our first question online comes from Peter. Why not give other shareholders the chance to buy shares even if it dilutes their holding?

Yes. We did think about it. And essentially, hopefully, I've addressed that in the commentary during the session. There were a number of different factors that led us to this point, including essentially the risk around doing that. We delivered effectively the cap raise to our large shareholders because they're effectively wholesale shareholders and, therefore, able to do some DD and figure out what they needed. I think the directors would have been quite reluctant to have issued PFI or PDS-type documentation because the risk around that to individual shareholders, I think, would have been too great.

Our second question comes from Michael. Does Bright Dairy need OIO approval for its majority holding in Synlait?

The answer to that is no. It's fine up to shares of 75%. And it clearly is not at 75%. So if we broke the 75% threshold, it clearly would.

Michael has asked another question. When do you expect the North Island assets, in particular, Pokeno, to breakeven on plant-based products?

Look, on the basis of current forecast, that will be 24 months.

At this stage, we have no further questions online. Is there any further questions in the room?

[ Robin Duff ], just a small shareholder. Mr. Chairman, what is the implication for bondholders from the assumed passing of the resolutions today? There's been some speculation that early repayment is a possibility rather than waiting until December. Could you comment on that, please?

Yes, certainly can. Thank you for your question. So the bondholders, given there's a change of control, will have, I believe, an option -- so the bondholders will convene. They then have 10 days to vote on whether or not to initiate an early repayment, which then takes place 30 days after that. So I would fully expect bondholders to be requesting repayment in 10 days, which then we will process in 30 days. So absolutely -- the good news is that the bondholders will be repaid in full.

Are there any further questions in the room? Otherwise, another one online. Another question from Peter. Are any of the directors that got the company into this mess still on the Board? If so, why?

None of the directors -- none of the independents are and I think all the Bright directors are fairly new. We do have one director who has been here quite a while, but we really like Edward. So the answer is, no, it's a very fresh board.

There are no further questions online. [Operator Instructions] Any further questions in the room?

Fantastic. Thanks, Hannah. Okay. So thank you, everyone, for those questions. We'll now move to the formal part of the Special Shareholders Meeting. So a reminder, there are 3 resolutions to vote on today: 2 ordinary resolutions and 1 special resolution. A reminder also that the matters you are voting on today are interconditional, such that if ordinary Resolution 1 or Ordinary Resolution 2 does not pass, none of the resolutions will be implemented. Our first resolution today is an ordinary resolution and must be approved by the majority of the votes cast by shareholders entitled to vote and voting. I will read the screen resolution in full and the full text is on the screen. So Bright placement, Ordinary Resolution 1, to consider, and if thought fit, pass the following resolution that subject to ordinary solution 2 being passed, the issuance of 308,333,333 shares to Bright Dairy Holding Limited at an issue price of $0.60. Contemporaneously or substantially contemporaneously with the occurrence of the matters contemplated in the Ordinary Resolution 2 and the bank refinancing as described in the Notice of Meeting dated 20th August 2024 be approved for all purposes, including under ANZX Listing Rule 4.2.1 and 5.2.1 and Rule 7(d) of the Takeovers Code. In summary, ordinary Resolution 1 asks shareholders to vote on Bright Dairy's holding increasing from approximately 39% to 65%. And through the issuance of new shares at a total of approximately $185 million. Synlait's Independent Directors unanimously recommend that shareholders vote in favor of this resolution. Bright Dairy cannot vote on this resolution. As such, the directors appointed by Bright Dairy have abstained from making a recommendation. Prior to today's Special Shareholders Meeting, The a2 Milk Company confirmed it intends to vote in favor of this resolution. Are there any questions on this resolution?

Confirming there are no questions online.

Thank you. There being no further questions, I invite you to vote by marking your voting option on Resolution 1, either on your printed or electronic voting card. I'll give you a second to do that. [Voting]

So we now move to ordinary Resolution 2, which is also an ordinary resolution and must be approved by a majority of the votes cast by shareholders entitled to vote and voting. I will read the resolution in full and the text is on the screen. So a2 Milk Company placement and A2 milk Company settlement, Ordinary Resolution 2. To consider and, if thought fit, pass the following resolution. That's subject to Ordinary Resolution 1 being passed. One, the issuance of 76,283,104 shares to The a2 Milk Company Limited, or at its discretion, a wholly owned subsidiary of The a2 Milk Company Limited at an issue price of $0.43 per share; and two, the settlement dated 16th of August 2024 between Synlait, Synlait Milk Finance Limited, a2 Infant Nutrition Limited and The a2 Milk Company Limited becoming effective, in each case contemporaneously or substantially contemporaneously, with the occurrence of the matters contemplated in the Ordinary Resolution 1 and the bank refinancing and as described in the Notice of Meeting dated 20th of August 2024 be approved for all purposes, including under the NZX Listing Rules 4.2.1 and 5.2.1. Once again, in summary, Ordinary Resolution 2 asks shareholders to vote on a $32.8 million issue of shares to The A2 milk Company, resulting in its holding of 19.83% being retained and a settlement with The a2 Milk Company with respect to various disputes becoming effective. Again, Synlait's independent directors unanimously recommend that shareholders vote in favor of this resolution. The A2 Milk Company cannot vote on the resolution. Ahead of today's meeting, Bright Dairy confirmed its intended to vote in favor of this resolution. Are there any questions on this resolution?

Confirming once again, there are no questions online.

Being no questions, I invite you to vote by marking your voting option on Resolution 2, either on your printed or electronic voting card. The third resolution is a special resolution. For this special resolution to pass, 75% or more of the votes of those shareholders entitled to vote and voting are required to be in favor. Once again, the full resolution text is on the screen, and I will read it in full. So Constitution Amendments. Special Resolution 1. To consider and, if thought fit, pass the following resolution. That, subject to ordinary Resolution 1 being passed, Synlait Milk's Limited's Constitution be amended with effect from the issuance of 308,333,333 shares to Bright Dairy Holding Limited contemplated by Ordinary Resolution 1. As described in the Notice of Meeting dated 20th of August 2024. In summary, shareholders are being asked to approve certain changes to Synlait's constitution, which would become effective on Bright Dairy shareholding increasing above 50%. All directors support the constitutional amendments and unanimously recommend that shareholders vote in favor of this special resolution. Are there any questions on this resolution?

Confirming there are no questions online.

Thank you. There being no questions, I invite you to vote by marking your voting option on resolution -- on the resolutions, either on your printed or -- Special Resolution 1, either on your printed or electronic voting card. So I'll give you a minute or 2 to do that. [Voting]

So as you can see on the following slide, the proxy votes cast ahead of today's meeting. As the slide shows, we are thrilled to have such strong support from our shareholders. Thank you all very much. This concludes the meeting's formal resolutions. We will shortly be closing our voting online, so please finalize your vote. Can I now ask Computershare to collect all the voting papers in the room, please? [Voting]

Okay. A reminder, that the results will be published to the NZX and ASX stock exchanges later today. And I can confirm that online voting is now closed. We will now move on to any of the business and take any final questions. Are there any other questions in the room or online? Thank you. There being no further business for discussion, I'd like to end by thanking all of you for taking the time to attend today's meeting. It is anticipated that the equity raise will occur on the 1st of October 2024, concurrently with the refinancing of Synlait's existing bank facilities and the settlement with The a2 Milk Company. It has been a challenging period for Synlait, however, today represents a significant milestone for our company. This equity raise is critical for Synlait's future, and I thank all of our shareholders for your support. I'd like to make a special mention of the continued support of our 2 major shareholders, Bright Dairy and the A2 Milk Company. Their investment demonstrates their deep commitment to Synlait's future. Thank you. The recapitalization of Synlait enables our bondholders to be paid, provides a refinance option for our banks and ensures a viable future for more than 1,400 employees and hundreds of farming businesses. We are confident in our plan to prioritize returning Synlait to a strong, free cash flow position again and in time, sustainable profitability and growth. I want to thank everyone who has played a role in helping to make that possible. I now declare the meeting closed. Thank you all.