Beston Global Food Company has collapsed into administration putting dairy jobs at risk

Beston Global Food Company has collapsed into administration after a failed bid to sell the company, putting about 160 jobs in South Australia’s southeast at risk.

Beston was focused on cheese and lactoferrin production.

Beston Global Food Company has collapsed into administration after a bid to sell the struggling dairy company failed, putting almost 160 jobs at risk.

Administrators KPMG have restarted a sale process for the ASX-listed company’s assets and operations in a bid to save the South Australia-based business.

Beston has never turned a profit since listing on the ASX in 2015, and at last count, was carrying $69.1m in debt, with $55m of that owed to NAB.

That debt figure was as of the end of the March quarter, with Beston not having filed its full-year results due to the ongoing attempt to sell the company’s core dairy division.

The company’s shares have been suspended from trade since July 1 while the sale process played out. However, Beston revealed on Monday that Japanese company Megmilk Snow Brands, which also owns Adelaide Hills-based Udder Delights, had ­walked away after doing extensive due diligence.

KPMG’s Tim Mableson, James Dampney, Gayle Dickerson and David Kidman have been appointed as voluntary administrators of Beston and are seeking urgent expressions of interest to buy the company. They will continue to trade it in the meantime.

“Beston is a listed company and a major processor to the Australian dairy industry with two significant production facilities in regional South Australia processing butter, milk, mozzarella, certain other cheeses as well as capturing the lactoferrin protein from the state-of-the-art plant,’’ KPMG said.

“The administrators have now assumed day-to-day control of the Australian operations of the company and its subsidiaries with the intention to continue trading as an immediate assessment of the business is undertaken.

“The administrators are seeking expressions of interest to recapitalise or acquire the business.’’

KPMG said all dairy farmers, suppliers, customers and key stakeholders would be contacted in coming days and a meeting of creditors was scheduled for October 2.

Beston on Monday said it had “experienced exceptionally high operating costs particularly due to onerous energy prices at a time when Australian farmgate milk prices have been uncompetitive in world markets’’.

“An unintended consequence of the Australian Dairy Code legislation introduced in 2019 has been to keep farmgate milk prices at high levels and disconnected from the global prices of dairy commodities,’’ Beston said.

“The government-regulated operating model between dairy processors and dairy farmers embodied in the Australian Dairy Code does not recognise the volatile nature of dairy markets globally, nor allow appropriate price signals to be captured through the movements in supply and demand, and has contributed to the closure of 11 dairy processing businesses in Australia during the past 18 months.’’

Beston was locked into contracts that required it to pay for all of the milk its suppliers delivered, which caused significant cashflow problems for the business in the past year.

The company’s problems predate high milk prices, however. Beston, which on listing was diversified across several agricultural investments, posted losses every year it operated, despite growing revenues strongly. Over time it shed all of its business units – including rock lobster, meat and water assets – except for dairy, where it focused on lactoferrin and mozzarella production.

Beston said it had received several non-binding offers for the business in recent months, around both debt-refinancing and equity solutions.

The company received an offer from Megmilk to acquire the cheese and lactoferrin operations at Jervois in South Australia, but on September 20 the offer was rescinded.

“Accordingly, the directors have formed the opinion that Beston should be placed into voluntary administration and allow time to evaluate options for Beston.’’

An updated debt figure for Beston is not available at this time.

The shares last traded at 0.3c.