Challenge Australia Dairy, one of the state's big three dairy producers, has been placed in voluntary administration after attempts to raise additional funds from the company's shareholders, bankers and prospective investors failed.
Challenge Australia Dairy, one of the state's big three dairy producers, has been placed in voluntary administration after attempts to raise additional funds from the company's shareholders, bankers and prospective investors failed.
The directors appointed Jeff Herbert and Simon Theobold from PPB as administrators, after which secured creditor National Australia Bank appointed PwC partners Kate Warwick and Derrick Vickers as receivers and managers.
Capel-based Challenge Australia Dairy is jointly owned by Challenge Dairy Cooperative (51 per cent) and Singapore company QAF Ltd (49 per cent).
In its recent report for the half-year to June 30, 2010, QAF said its share of losses of associated and joint venture companies was $1.6 million.
"The share of losses was attributable to Challenge which continued to face low selling prices in 1H 2010," the report said.
The failure of Challenge followed attempts to raise fresh capital.
"Discussions with a number of prospective investors were in process when, for reasons beyond our control, we ran out of time. However, we are very encouraged by the responses received and will work with the voluntary administrators to pursue these options," said a spokesman for the Board of Challenge Dairy.
Mr Herbert of PPB said that his immediate priority would be to follow up on these opportunities and to hold detailed discussions with shareholders, other stakeholders and the WA Government, while the receivers were examining the current financial position of the company and issues relating to its continued operations.
Challenger Australian Dairy runs several well known dairy brands including Capel Valley Cheese.
PwC's Mr Vickers said, "Challenge Australian Dairy Pty Ltd will continue to trade while we assess the financial situation of the company."
Earlier this month New Zealand-based Fonterra completed the break up of WA dairy business Peters & Brownes, selling Brownes to private equity investment firm Archer Capital, following last year's sale of Peters to Nestle.
See statement from PPB below:
The directors of Challenge Australia Dairy Pty Ltd ('CAD') advise that they have appointed Jeff Herbert and Simon Theobald of PPB as voluntary administrators and have requested the company's bankers, National Australia Bank, to appoint receivers.
These measures were taken after attempts to raise additional funding from the company's shareholders, its bankers and prospective investors to enable the company to continue normal operations were unsuccessful.
The directors will work closely with the voluntary administrators and the receivers to preserve the company's business and assets, including its well known brands, while the voluntary administrators urgently examine options to recapitalize and restructure the company.
A spokesman for the Board of CAD advised that "discussions with a number of prospective investors were in process when, for reasons beyond our control, we ran out of time. However, we are very encouraged by the responses received and will work with the voluntary administrators to pursue these options".
Mr Herbert of PPB said that his immediate priority would be to follow up on these opportunities and to hold detailed discussions with shareholders, other stakeholders and the WA Government, while the receivers were examining the current financial position of the company and issues relating to its continued operations.
" The major creditors of the company, apart from the debt owed to NAB, are CAD's shareholders , Challenge Dairy Co Operative Limited ('CDC') and QAF Limited.
However, we realize that CDC owes substantial amounts to its farmer members for the milk supplied to CAD and that this has caused great hardship with many of them", Mr Herbert said. He also said that the company produced a wide range of outstanding dairy products which are sold through the major supermarket chains and that the prospects for
the sale of the business as a going concern are excellent.
The Directors wish to express their appreciation for the support given to the company by its employees, suppliers and, indirectly, by CDC's farmer members.
