Synlait Milk Limited (NZSE:SML) may place its most valuable asset on the market in an effort to drive down debt. Synlait is listed in Australia and New Zealand and has a $428 million market value, less than its NZD 518.6 million ($481 million) debt. Its processing plant in Dunsandel, Canterbury could sell for between NZD 400 million and NZD 500 million should it be put up for sale, say sources.

Observers believe this may be the case, given the company has ruled out an equity raising in a statement to the ASX on April 26, 2023. The Dunsandel facility is Synlait's best asset, collecting more than 800 million litres of milk annually and capable of processing 4.2 million litres of raw milk per day from which up to 450-500 tonnes of milk powder can be produced. Should Synlait sell the asset, it would leave it with a far smaller business including its milk processing facility in Pokeno, south of Auckland, which produces 1.5 million litres of raw milk daily for skim milk powder and 1.3 million litres for whole milk powder from which up to 180 tonnes of milk powder can be produced.

Synlait says it is reviewing its capital strategy, focusing on debt levels, to ensure it has the funding for the 2024 financial year and beyond that would not consider a capital raising.