John Penno, former CEO and co-founder of Synlait, has raised a formal complaint challenging the voting rights of major shareholders Bright Dairy and the a2 Milk Company ahead of a critical shareholders’ meeting on September 18, 2024. The complaint, filed with NZ RegCo and the Takeovers Panel, argues that these shareholders should not be permitted to vote on key resolutions related to Synlait’s recapitalization, due to their significant financial involvement. Synlait has rejected the claims, asserting compliance with all regulatory requirements. The outcome of the meeting is crucial for Synlait’s future, as failure to approve the resolutions could lead to insolvency unless further bank support is secured.
John Penno, the former CEO and co-founder of Synlait, has formally challenged the voting rights of major shareholders ahead of a critical shareholders’ meeting set for September 18, 2024. Penno’s complaint, filed with NZ RegCo and the Takeovers Panel, questions whether Bright Dairy and the a2 Milk Company should be allowed to vote on key resolutions concerning Synlait’s recapitalization.
Synlait Milk Limited, New Zealand, is a prominent dairy processing company renowned for its production of milk powders, infant formula, and other dairy-based nutritional products. The company has established itself as a leader in sustainability, innovation, and quality, serving both local and international markets.
Voting Rights Dispute
John Penno, who served as Synlait’s CEO until May 2024 and currently holds a 2.3% stake in the company, has argued that the voting rights of Bright Dairy and the a2 Milk Company should be restricted in the upcoming shareholders’ meeting. Penno’s challenge is based on the NZX listing rules and the Takeovers Code, contending that these major shareholders, who are collectively investing $217 million into Synlait, should not be allowed to vote on resolutions concerning the company’s recapitalization. If Penno’s complaint is upheld, only the remaining shareholders, excluding Bright Dairy and the a2 Milk Company, would be able to vote on the matter.
Synlait’s Response
In response to Penno’s complaint, Synlait issued a statement via the NZX, firmly rejecting the claims. The company asserts that it has fully adhered to all relevant NZX listing rules and the Takeovers Code. Synlait’s independent chair, George Adams, emphasized the critical importance of the upcoming shareholders’ meeting for the company’s future, stating, “If the resolutions are not approved and the recapitalization is not implemented, Synlait would likely need to cease trading and initiate a formal insolvency process unless further support from existing banks is secured.”
Importance of the Shareholders’ Meeting
The special shareholders’ meeting, which was announced on August 20, 2024, after receiving external advice and approval, is a pivotal moment for Synlait. The meeting will ask shareholders to vote on resolutions related to the proposed recapitalization, including the issuance of $185 million in shares to Bright Dairy Holding Limited and $32.8 million in shares to The a2 Milk Company, as well as settlements with the a2 Milk Company and A2 Infant Nutrition Limited. Despite the ongoing dispute, Synlait has confirmed that the voting process and timing of the meeting will not be affected.
Moving Forward
Synlait is actively engaging with regulators to address Penno’s complaint and ensure that the shareholders’ meeting proceeds as planned. The outcome of this meeting is crucial for the company’s future, as it navigates complex financial and regulatory landscapes to secure its long-term viability and growth.
