Debt-laden Beston Global Food Company fielding proposals on core dairy business

The beleaguered company has offloaded its meat division and is now courting proposals relating to its core dairy business in a bid to stay viable.

Beston is considering selling its core dairy business.

Beston Global Food Company has sold its loss-making meat division to pay down debt and is considering “a number of proposals” relating to its core dairy business in a bid to stay afloat.

Shares in the South Australian dairy company have been suspended since July 1 as Beston tries to find a solution to its mounting debt woes.

The company’s most recent quarterly report for the March period put its debt load at $69.1m.

Beston has never turned a profit since listing in 2015.

On Friday the company said it had sold its meat division, Provincial Food Group, for $4m, with the money to be paid to its major creditor, NAB, which was owed $55m as at the end of March.

Beston failed in a bid to refinance that debt earlier this year.

The company said it had sold PFG to a Victoria-based consortium of six parties led by private company Milne Bay.

“With the completion of this divestment, Beston will continue to focus its resources and efforts on its dairy and dairy nutrition businesses, where the company has built world-class capabilities and capacity,” Beston told the ASX.

“As previously advised, Beston has been working on several corporate actions to respond to the challenges of current market conditions and cost price pressures and provide the structural flexibility needed to address these ongoing industry challenges.

“Some of the actions include negotiations on alternative funding arrangements to provide working capital for the corporate needs of the company, including for further cost savings opportunities. As a result of these actions, Beston has received a wide range of interest in relation to its core businesses of dairy and dairy nutrition, and is engaged in live discussions on a number of proposals.’’

Beston said a lot of the interest was focused on the lactoferrin operations it had built up in recent years, which “generated strong profits results” in the 2024 financial year.

“The expansion of the dairy fractionation plant in late 2020 has provided Beston with the capacity to produce 25 tonnes of freeze-dried lactoferrin with consistent levels of purity above 95 per cent, thereby ranking the business amongst the top 10 producers of high quality lactoferrin in the world,” the company said. “The interest received by Beston is subject to non-disclosure agreements, and the company is not as yet in receipt of a binding offer or formal proposal which is in a form capable of acceptance.”

Beston said its bankers had extended the expiry of its debt facilities from July 31 to September 30 while the discussions took place.

“The board and management of Beston believe that the discussions and negotiations which are currently under way could, if implemented, provide an opportunity to reset the financial foundations of the company and help ensure that the hard work which has been done in building the business from scratch over the past 10 years yields benefits for all stakeholders,’’ Beston said.

“Until such time as these discussions and negotiations are brought to a satisfactory and material conclusion, the company’s cashflow will remain constrained and trading in the company’s shares will remain in suspension.

“Such a transaction is necessary for Beston’s continued financial viability.”

Beston has been struggling with high milk prices it has to pay to its milk suppliers along with increased import competition.

It said on Friday its annual sales revenue were flat at $170m.

Beston said it had “right-sized’’ its milk supply agreements through direct farmer contracts for the current financial year and would also become a more seasonal manufacturer in a bid to improve profitability.

Beston shares last traded at 0.3c.