SA dairy business to cease operations
Two dairy factories and 159 jobs will be lost as Beston Global Food Company’s administrators announce it will cease operations.
Beston Global Food Company, which employs 159 staff and has dairy factories at Murray Bridge and Jervois, announced to the ASX on September 23 that it had appointed KPMG as its administrator.
KPMG said it intended to continue trading while assessing trading and options for sale and/or recapitalisation.
The administrators yesterday announced Beston and its subsidiary Beston Pure Dairies would be wound down, with milk production operations to cease from December 6.
“Due to significant trading losses being incurred on a weekly basis, the Administrators were not able to fund the business beyond 30 November 2024,” KMPG said.
“Therefore, the Administrators have been left with no alternative but to wind down the business and begin an orderly sale of its assets.”
You might like
KPMG said the administrators would continue operations on a “business as usual” basis until the current production cycle is completed, expected within two weeks.
Administrators said they sought to sell the business as a going concern from September 26, with several parties expressing interest, but none had come to fruition.
“While the Administrators provided certain parties with additional time to finalise the terms of their respective offers, these parties have been unable to put forward a binding offer for a going concern sale,” they said.
“Ultimately, the sales process has failed to secure a buyer in the time frame required given the trading losses being incurred.”
Stay informed, daily
KPMG said a second creditors meeting would be convened in late January or early February, where it would be decided whether to place Beston into liquidation, or whether a deed of company arrangement could be accepted, should one be proposed.
Beston said its dairy business recorded record sales of $170 million in the 2023 financial year but the company had been affected by adverse trends in dairy prices and increasing operating costs leading to a $48.85 million loss.
The company said it had absorbed around $28 million of additional costs in FY23, with a 300 per cent increase in energy prices among “exceptionally high operating costs at a time when Australian farmgate milk prices have been uncompetitive in world markets”.
Before going into administration Beston had been working to address its issues by divesting its meat processing subsidiary, Provincial Food Group, for $4 million in July, and seeking buyers for its Murray Bridge and Jervois dairy factories.
The company said in September that it had received “several” non-binding indicative offers prior to its administration, including an offer from Japanese Megmilk Snow Brands for the acquisition of its Jervois facility and business.
However, Beston said Megmilk had advised on September 20, the same day administrators were appointed, that it would not proceed with its previous offer following extensive due diligence.
Beston CEO Fabrizio Jorge expressed his disappointment in the failed Megmilk offer when announcing the administration.
“The Megmilk offer would have enabled all of the jobs at Jervois to be preserved and would have led to an increase in demand for milk processing at the Jervois factory over time,” Jorge said.
“It would have represented a win for the workers, a win for our loyal dairy farmers and ultimately would have been a win for the whole of South Australia as the significance of the Jervois plant in producing premium quality, health-enhancing products from dairy have become increasingly recognised around the world via the global marketing and distribution networks of Megmilk Snow Brands.”
This was not the first failed international deal for the company, with a proposed long-term agreement between Beston and Thailand-based KCG Corporation for import and distribution set aside due to unresolved matters.
