Milk key in Organic Dairy Farmers of Australia Geelong business sale
The supply of organic milk to Organic Dairy Farmers of Australia’s collapsed Geelong business may become the key asset in the sale of the group’s operations.
THE organic milk supply provided by members of the Organic Dairy Farmers of Australia may become the key asset to any sale of the dairy group’s Geelong operations.
ODFA was placed in voluntary administration by the group’s board on May 15 but seven days later secured creditor National Australia Bank appointed Tim Norman and Sal Algeri, of Deloitte Restructuring Services, as receivers and managers to protect its debt.
It is not clear what the debt is to NAB, but The Weekly Times understands unsecured creditors are owed about $5 million to $8 million.
Deloitte advertised for expressions of interest in the ODFA assets on the weekend, adding that it had a “loyal base of organic milk suppliers”.
Wattle Health Australia and its new partner, Shepparton Partners Collective, are interested in the business.
WHA and partner Niche Dairy own a half share in the Corio Bay Dairy group, with ODFA holding the other half share.
CBDG is building a spray dryer plant dedicated solely to organic milk next door to ODFA’s dairy plant in North Geelong.
WHA’s business plan is a based on developing organic milk formula for overseas markets, particularly China.
If another dairy company bought the ODFA business, it would place WHA’s plans in a quandary in terms of organic milk supply.
WHA chief executive Tony McKenna made the point in a statement on May 22.
“We also remain committed to the development of a strong organic milk supply base and, despite the challenges of ODFA, dairy farmers will have the opportunity to supply their organic milk into our spray drying facility at CBDG,” Dr McKenna said.
A Deloitte spokesman said the receivers had been in close communication with the milk suppliers and supply from them was continuing during the receivership and while the business was being marketed for sale.
Mr Norman said the receivers were continuing to trade the business and undertaking a process of seeking a new owner.
“The challenges the business has encountered, including around loss-making milk supply contracts in a very niche market, are fairly well known,” he said.
“These losses, and issues with a drying facility under construction, led the ODFA directors to appoint voluntary administrators, and the secured creditor has now appointed the receivers and managers.”
Administrator Scott Andersen, of Worrells Solvency and Forensic Accountants, said he held a meeting of 65 creditors last week, many of which were organic dairy farmer suppliers.
Mr Andersen said it was largely a procedural meeting and another would be held after he completed a report on the company’s business on June 15.
He said he was still fielding calls from a number of prospective buyers of the business, including some wanted to offer a deed of company arrangement to pay out the bank and continuing operations.
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