The administrators of Happy Valley Nutrition have called its creditors together and are recommending they tip the wannabe milk processor into liquidation.
But there appears to be interest in continuing the project to build a milk factory in Waikato, with McGrathNicol’s Andrew Grenfell and Kare Johnstone noting in their report ahead of that vote next week that they’ve recently received two expressions of interest to potentially recapitalise the business.
There is no Deed of Company Arrangement proposed so far, but the pair said those expressions of interest could result in one, and they can adjourn next Thursday’s meeting if there’s enough certainty about them.
Meanwhile, their recommendation is for creditors to vote for liquidation.
Grenfell and Johnstone were appointed to the Australian Stock Exchange-listed entity and its subsidiary early last month.
Happy Valley Nutrition was founded in 2016 and listed across the Tasman three years ago, raising NZ$12 million through an initial public offering.
The company was set to build a factory in the Waikato town of Ōtorohanga, south of Hamilton, but the project was stalled by a lack of capital.
The appointment came after its chief financial officer, Richard Chew, resigned and its shares on the ASX were suspended from quotation by the stock exchange operator over concerns about its financial condition.
At the time, chair Kevin Bush pointed to the “extremely challenging” covid period, which had a material impact on its ability to progress the project.
Bush said the company’s ability to identify and pursue a dairy protein strategy in the past eight months led to a significant amount of interest and it was able to secure offtake agreements.
The project had proposed a 17,000sqm facility with two 8t-per-house spray dryers, with an 11,500sqm dry store.
While construction hadn’t started, initial designs had been completed, the site had been cleared and all regional and district council consents were in place.
In its report, the board told the administrators the companies’ insolvency had come about from the failure to secure ongoing funding for the project.
The directors’ ability to secure finance had been hindered by many factors, including covid border closures, which limited their ability to visit potential investors and led to increased interest rates, the report said.
The board said it had started preparing for a sales process for the project and a database of potential buyers had been collated.
The report noted Merricks Capital, through a related entity, was owed $11.1m as a senior secured lender.
Just over $10.5m was owed in a convertible note, including capitalised interest, to Gleneagles Securities Nominees, with $1m outstanding to Merilyn Ruth Connolly.
Happy Valley had loaned just over $1m to its subsidiary Five Redlands Road, with unsecured creditors owed $110,208.