Photo: RNZ
Embattled dairy company Synlait has received a major boost after key shareholder A2 Milk indicated it will vote in favour of the company receiving a $130 million loan.
Synlait needs the loan from its 39 percent shareholder - China's Bright Dairy - to repay its debt to banks by Monday.
Bright Dairy cannot vote but the indication by A2 Milk is a crucial step ahead of the special shareholders meeting on Thursday afternoon.
A2 Milk owns about 20 percent of Synlait, but institutional and retail investors - who own the balance of the company - also have to vote in favour of the loan.
If the resolution is approved at the meeting, Synlait said it will fully draw down the loan from Bright Dairy.
A2 Milk, which is also a key customer of Synlait, said the parties have been in discussions.
"Those discussions relate to Synlait's broader recapitalisation plan, which includes the shareholder loan as well as Synlait's proposed equity raising and concurrent refinancing of its bank facilities, and various other matters," A2 said.
A2 said the company continued to have concerns and would engage in discussions with Synlait in coming weeks.
"In the meantime, the company confirms that it has advised Synlait that it will vote in favour of today's resolution," A2 said.
The shareholders meeting is scheduled for 2pm.