Beston Global Foods will update market on its massive debt pile

Beston Global Food company, which has a debt load which dwarfs its valuation – largely held by NAB – is poised to update the market on its funding and milk supply.

Beston has had a cash flow crunch over the past year.

Almost two months after failing to flog $55m worth of NAB debt, Beston Global Food Company is poised to make an announcement on its funding position, with its liabilities sitting at more than ten times its market value on most recent figures.

The South Australian dairy company, mostly focused on cheese and lactoferrin, has been trying to shore up the balance sheet on a number of fronts with limited success to date.

The company’s loss-making Provincial Food Group meat division has been on the sale block for some time, with a sale originally expected to be finalised by the end of 2023, however this is still dragging on.

The company’ said in its March quarterly that the business was “in the advanced stages of negotiation for divestment and all proceeds will be used to further pay down debt’’.

The Australian revealed in May that Beston had been trying to offload $55m in debt held by the NAB, but had not been successful in seeking a buyer.

The company’s March quarterly showed Beston had drawn down $69.1m of an available $70.2m in finance facilities, and operating cash flow was still strongly negative to the tune of $3.4m.

During the past half year the company wrote to its milk suppliers telling them they’d have to split their payments into an initial 85 per cent payment followed by the residual due to the company’s cash flow crunch.

Beston experienced its highest milk flows on record over the first nine months of the past financial year, and given the company is obligated to pay for all the milk it is delivered, this put pressure on the company’s working capital.

There are hopes among company watchers that a reset in the milk price paid to farmers will take some pressure off, and the pending market announcement also says there will be a milk supply update.

Beston lost two board members in late May with deputy chairman Kevin Reid and non-executive director Cheryl Hayman departing, leaving the company with just three board members – founding directors Roger Sexton and Stephen Gerlach, as well as Neil Longstaff.

Late last week former KeyInvest managing director Ian Campbell joined the board.

Dr Sexton has chaired KeyInvest since 2003, and was chair for all of the 14 years Mr Campbell was in the top job.

Beston shares last traded at 0.3c, valuing the company at just $6m. It has not turned a profit since listing in late 2015 and last year turned in a record loss of $48.8m, even as revenue surged to a record $169.6m.

The trading halt is expected to stay in place until Wednesday morning.

Originally published as Beston Global Foods will update market on its massive debt pile