Born again dairy and plant foods processor, Noumi, is set to cut its partnership ties and a long association with China's biggest agribusiness, cashing in its stake in large scale dairying outfit Australian Fresh Milk Holdings.
Debt-burdened Noumi wants shareholders to approve the sale of its 9.4 per cent stake in AFMH, which it owns jointly with China's New Hope Group and east coast dairy farming dynamos the Perich and Moxey families.
Australian Fresh Milk Holdings owns dairy farms in Central West NSW and northern Victoria and the recently acquired Ladysmith Feedlot in the Riverina.
The share sale is expected to net the dairy and plant-based foods processor about $28.6 million.
Most of the money will go straight to paying off a weighty financial obligation outstanding after Noumi, whose brands include Australia's Own dairy and plant-based beverages, MilkLab, Vitalife and So Natural, settled an embarrassing legal dispute last year with Californian almond farming and beverage marketing co-operative, Blue Diamond Growers.
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Noumi has already paid Blue Diamond about $23m but is committed to forking out about $26m more in the next four years, starting with an instalment in September.
Blue Diamond, which had allowed its brand to be marketed in Australia by Noumi (then known as Freedom Foods) initiated the court action after payments for those branding rights on almond milk products ceased in 2019.
Noumi has since negotiated an $US18m bank guarantee with HSBC to assure Blue Diamond it can pay, but still needs to raise at least $25m to honour its debt.
Last November management decided the only option was to divest its shares in the burgeoning Australian Fresh Milk Holdings farming business to meet its obligations.
Farm success story
AFMH had formed in 2015 when the then Freedom Foods teamed up with the Perich and Moxey families and New Hope's local entity NewAustralia, to establish a corporate scale farming business which could feed Freedom's fast growing UHT milk processing and export operations.
Freedom had already cultivated a solid relationship with China's New Hope as a significant supplier of Australian-packed long life milk products to the Chinese market.
New Hope, led by self-made food billionaire, Liu Yonghao, had earlier made agribusiness waves locally in 2013 taking a $100m majority stake in Kilcoy Pastoral Company's abattoir in Queensland as Elders quit its stake.
The AFMH dairy partnership began by taking over the big Moxey Dairies farm at Gooloogong in NSW's Lachlan Valley, expanding to acquire other nearby dairies, then Coomboona Farms near Shepparton in northern Victoria, and later established a 4000 hectare Murray River heifer raising aggregation to the west at Torrumbarry, Victoria.
It now produces about 180 million litres of milk a year to supply Noumi, Bega Dairy and Drinks and the A2 Milk Company.
The business includes 3700 milkers on the Moxey Farms portfolio, 2500 on Coomboona Farms and the 6500 head capacity Ladysmith Feedlot, which also produces fodder crops near Wagga Wagga, bought earlier this year for about $16m.
Perich buys more
The Perich family's Leppington Pastoral Company, which itself is one of Australia's biggest dairying operations, based on Sydney's south western outskirts, currently owns almost 38pc of AFMH, as well as being Noumi's cornerstone shareholder.
It has bid $1.40 a share to buy Noumi's 9.4pc stake in AFMH.
The Moxey family holds 13.6pc of the business, but declined the chance to expand its shareholding, while New Hope Group is currently the largest stakeholder with 39pc.
Noumi shareholders have been told if they do not approve the sale to Leppington at the August 17 extraordinary general meeting, the big UHT processor will need to explore other ways to meet its bank guarantee obligations.
However, since flagging its sell-off plans late last year, Noumi has not received interest from any potential investors outside the AFMH partnership.
If its 20.4m shares in the farming business were not sold to the Perich family, company chair Genevieve Gregor said the consequences could significantly reduce available liquidity and constrain the company's ability to fund its transformation and growth initiatives.
Since offloading its Freedom cereals and snacks business last year Noumi generates about two thirds of its revenue from dairy and nutritional products, including lactoferrin and contract packed UHT products, and the remainder from plant based lines.
Sales to China and South East Asia represent about 30pc of its revenue base, with most earnings coming from Australia and New Zealand.
The company is continuing to push its export opportunities, particularly focusing on South East Asia, which currently makes up about a third of overseas sales.
It has also cranked up its field marketing activities to drive awareness and sales of plant based beverage lines, notably MilkLab.
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Andrew Marshall
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
Andrew Marshall is the group agribusiness writer for ACM's state agricultural weeklies and websites. He is a former editor at The Land and has worked in various Rural Press group roles in Canberra, North Richmond (NSW) and Toowoomba (Qld).
