Pain at Australia’s biggest milk producer, Murray Goulburn (MGC) for employees who are taking the brunt of the hit from last year’s managerial incompetence under the old board and management regime headed up by former CEO, Gary Helou.
Murray Goulburn announced yesterday that it will close three processing plants, write off almost $150 million in loans made to farmers following last year’s milk price fiasco and sack hundreds of people.
The company told the ASX yesterday that 360 workers would lose their jobs when its closes its facilities in Edith Creek, Tasmania, and Rochester and Kiewa in Victoria by early 2019.
Murray Goulburn said on Tuesday it would also write off loans made to its farmers under the controversial Milk Supply Support Package.
The company offered the loans early last year after it slashed its farm gate milk prices (as did Fonterra Australia) after stuffing up the pricing of milk promising prices that were too far in excess of world prices for too long.
Farmers who had budgeted on the higher price Murray Goulburn had promised were thrown into financial turmoil, with many having their livelihoods and family farms threatened.
Total cost of all the changes, dropping the $150 million in debt, plant closures, redundancy payments, refunds and guasranteeing the farmgate price at $4.75 a kilo of milk soilds could be as high as $410 million, the company said yesterday.
Unit holders in the listed trust will be hit by the costs of the restructuring which will see the divided dropped
"MG remains committed to ensuring a strong balance sheet throughout the footprint restructure and into the future. MG has suspended dividend payments with immediate effect including the final FY17 dividend. MG will consider its dividend payout ratio and will provide an update on progress at an appropriate time.
“This dividend suspension will generate additional capital, to support the balance sheet,” The company said.
"Following the completion of this asset and cost review, MG does not currently intend to proceed with the proposed major capital investments in Dairy Beverages and Nutritionals.
"MG will also write-down the carrying value of these projects and various other assets totalling $62 million (post tax $53 million). On the closure of the three plants, the company said it will write-down assets of $99 million (post tax $69 million) and expects to incur cash restructuring costs of approximately $37 million (post tax $26 million),” the company said in yesterday’s statement.
