Beleaguered New Zealand dairy and infant-formula group Synlait Milk has denied that a decision has been made on the sale of assets to peer Open Country Dairy.

Local media outlet BusinessDesk reported that it understood Open Country is expected to sign a deal to purchase Synlait Milk’s North Island milk supply.

However, in a statement filed with the local stock exchange today (22 August), Synlait responded to the report by saying that while the future of the assets mentioned are being considered as part of an ongoing strategic review, no decision has yet been taken.

It said: “In April, Synlait announced it was undertaking a strategic review of its North Island assets, including its manufacturing facility in Pokeno and its blending and canning facility in Auckland.

“The strategic review was expected to take several months. It is now nearing the final stages. The strategic review does include consideration of the continued collection and processing of milk in the North Island.

“Synlait expects to make a further announcement about the outcome of the broader strategic review before it releases its full-year results at the end of September. Synlait reiterates that no decision has been taken as to the outcome of its strategic review.”

Earlier this week, it was revealed China’s Bright Dairy is set to become Synlait’s majority shareholder as part of a “critical” NZ$271.8m ($166.8m) equity raise by the struggling Kiwi business.

Bright Dairy, Synlait’s largest shareholder with 39%, will hold 65.3% in the Wellington-based company after subscribing to the offering, which needs to be approved at a September meeting.

Synlait, which has already recently received a NZ$130m bailout loan from Bright Dairy, warned the business is likely to fail if the additional capital is not secured. A commitment from The A2 Milk Co. to subscribe to the equity offering, part of an agreement reached last week to end a long-running contractual and price dispute, would also not materialise.

A2 Milk would be issued with NZ$32.8m of Synlait’s shares under a placement agreement and would remain the second-largest shareholder with 19.8%. Bright Dairy would subscribe to NZ$185m.

Reaching an agreement with banking creditors to refinance debt would also be another critical step in securing Synlait’s future as a viable business, it was revealed, with chairman George Adams warning in a stock-exchange filing on Tuesday (20 August) the banks could well choose to call in the loans.

Synlait will issue its full-year results on 30 September but in July the business withdrew its EBITDA guidance of NZ$45-60m.