Beston Global Food Company has lost two board members as debt struggles continue

The struggling Beston Global Food Company’s board has been whittled down to just three directors after two board members resigned.

Roger Sexton, chairman of Beston Global Food Company.

Beston Global Food Company, which has been struggling to pay milk suppliers and is labouring under a huge debt load, has lost two board members.

The resignations of deputy chairman Kevin Reid and non-executive director Cheryl Hayman leaves the company with just three board members - founding directors Roger Sexton and Stephen Gerlach, as well as Neil Longtsaff.

In a short release to the ASX late on Thursday the South Australian dairy products company said Mr Reid had resigned for health reasons and Ms Hayman had resigned to pursue other opportunities.

The Australian revealed in early May that NAB has been trying to offload the $55m worth of Beston debt on its books, but had failed to find a buyer.

The company’s most recent financial statements show the debt has blown out to about $70m, with Beston never having turned a profit since listing in 2015.

The company also recently wrote to the farmers which supply it milk, saying they would have to split their payments into an 85 per cent payment with a top up to follow, due to cash flow issues.

It was the second time in recent months Beston had asked farmers for patience, as it blamed a consumer shift to cheaper products and overdue payments from its own customers as the reason behind the slower payments.

“As an organisation we have not left any stone unturned to maximise our on-time payments to each one of you and rest assured that we have not taken this outcome lightly,” chief executive Fabrizio Jorge said in the letter.

“I am confident that together we will continue to support each other during these times of challenging conditions.”

The company is understood to be pinning its hopes on a fall in farmgate milk prices to give it some breathing room on the cash front.

Higher than expected milk flows late last year posed a problem for Beston, which is contracted to pay farmers for all of the milk they supply.

High farmgate prices have also coincided with a 25-30 per cent price drop for dairy products on global markets.

Beston conducted a $28.2m capital raising in late 2022, with $16m of that going towards paying down debts and the rest towards projects designed to turn the company’s fortunes around.

The debt continued to blow out, however, with it owing $69.1m to its financiers at the end of the March quarter.

This is up from about $45m at the end of last financial year, not including trade and other payables of $20.6m at the time.

The company had just $143,000 in cash at the end of the March quarter and undrawn debt facilities of $1.02m.

Beston has been in talks for some time to sell its loss making meat division, however there has not been a recent update on that proposed transaction.

Beston shares were 25 per cent lower at 0.3c on Friday, with the company valued at less than $10m. This compares with about $127m when it listed back in 2015.