Ann: WHA Enters into JV with ODFA, page-62

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Jeff Long

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11/04/18

10:14

Post #: 32368705
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Originally posted by MOTU ↑

Yoda I suggest you read the announcement properly. WHA is providing debt funding which will be secured against the assets of the joint venture. All profits will be used to repay the loan in priority to any distribution to JV shareholders. WHA will control the board of the JV until the loan is paid down to $30M.

When the loan is repaid (assumedly there will be interest payments as well), WHA will end up with 45% of the JV. It will have the right (but no the obligation) to take up to 46M litres of organic milk, and a first right of refusal on all products manufactured by the JV.

That sounds like a pretty good deal to me. It is all about ensuring security of supply from 'paddock to tin'. You will recall that the reliance on others to supply raw milk and manufactured product was where Bellamys came unstuck last year.

Not only do we have secured 'paddock to tin' supply or organic milk products, we also have distribution contracts in place. An order for 5.5M tins into China, which is conditional only on CFDA, which there is no reason to believe will not be forthcoming.

I can go on, but it is simply too simplistic to say that this is a bad deal because "they are providing 90% of the funding but only get a 45% in the said joint venture". There is much, much more to this.

Respect the fact you have a different opinion, but I think it is important to note that there is much more to this than the points in your recent posts.

GLTAH

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Does anyone have a read on the supply pool of organic milk which WHA will draw from for it's 200K Litre/day spray dryer?

I could be mistaken, but from the last data I saw Australia only produces about 150K/L per day. All these farmers we assume would be on supply contracts already. I would love to see an announcement on Organic Milk procurement strategy before I backed this idea....

WHA Price at posting: $2.26 Sentiment: Hold Disclosure: Not Held
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Ann: WHA Enters into JV with ODFA, page-62

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