Beston Global Food Company’s debt nears $70m with NAB the big holder

Beston Global Food Company’s debt has blown out to almost $70m, with the company, which has never turned a profit, owing NAB alone more than $55m.

Beston’s high milk inflows are causing a cash flow crunch.

Beston Global Food Company’s debt has blown out to almost $70m, with the dairy company, which has never turned a profit, owing NAB alone more than $55m.

The South Australian dairy and meat producer – which is currently in talks to sell its loss-making meat division – said in its quarterly released late Tuesday that it had experienced the highest milk flows on record this financial year.

This poses a problem for the company, which has to pay its contracted farmers for all of the milk they supply.

“The higher than expected milk flows have occurred at a time when farmgate milk prices have been the highest on record for more than 30 years (and currently amongst the highest in the world),’’ the company said in its quarterly report.

“Farmgate milk prices have risen by more than 35 per cent over the past two years (and are currently around 25 per cent higher than farmgate milk prices in New Zealand.

“The high milk volumes and high farmgate milk prices have coincided with a fall of 25 to 30 per cent in the prices received for dairy products in global markets and has placed significant strain on the cash resources of the company.’’

Beston Global Food Company chair Roger Sexton.

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

The debt has continued to blow out, however, with the company now owing $69.1m to its financiers.

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 NAB is on the hook for slightly more than $55m across five facilities, while another $11.4m is owed in debtor financing.

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

It delivered a record full year loss last financial year of $47.5m, with $29.8m of this coming from its decision to “derecognise’’ a deferred tax asset related to carry-forward losses.

Stripping out that figure, the company made a pre-tax loss of $19m, and a pre-tax loss from continuing operations of $11.6m, on revenue of $169.5m, up 33.7 per cent.

Beston told the ASX late on Tuesday it was continuing with its plan to sell the meat division, and was also looking to reduce its milk intake further in the fourth quarter and in the next financial year to “right-size the company to respond to the cash flow pressures currently being experienced’’.

“Corporate advisors appointed by the company are assisting with the identification and evaluation of a range of options to provide the structural flexibility needed to address the challenges of the current market conditions,’’ Beston said.

“Some of the actions currently under way include negotiations on alternative funding arrangements to refinance the existing debt and provide working capital for the corporate needs of the company, including growth initiatives and further cost saving opportunities.’’

Beston told the ASX it “expects to be able to continue its operations and meet its business expectations’’.

Beston, chaired by Roger Sexton, listed in mid-2015 valued at about $127m, however has never turned a profit.

Its shares closed at 0.5c on Wednesday, valuing the company at about $10m.