A surge in infant formula sales to China has driven a big increase in revenue for the a2 Milk Company.
The specialist milk products manufacturer has received the money from its cornerstone investors AMP Capital Investors (New Zealand) and Freedom Foods Group.
AMP Capital agreed to buy 30 million ordinary shares – at 10 cents apiece – an investment of $3 million. Meanwhile, Freedom Foods is exercising a capital raising right to subscribe to 9.1 million shares – or $910,000 – to maintain its 23% holding in the company.
The remainder of the $7.5 million project will be funded by an asset finance facility provided by the company’s bankers.
The company says it is pleased with the endorsement of the milk processing facility and support from its two cornerstone shareholders.
The processing and packaging plant is being purpose-built, to supply demand in New South Wales and will be leased under a long-term arrangement with an option to purchase. Production is expected to come on-line later this year.
A2 Corporation produces dairy products that only contains the A2 type of beta casein protein, which it claims reduces the risk of several health conditions including heart disease, digestion problems and childhood diabetes. Standard milk contains both A1 and A2 beta casein proteins.
Product for markets in other Australian states will continue to be sourced from existing external processors.
Freedom Foods became a shareholder in May 2010, after A2 bought out its 50% stake in joint venture A2 Dairy Products in exchange for shares. This happened after the two companies called off merger talks, which would have created a $62 million ASX-listed company.
A2 shares were unchanged at NZ 8 cents on the NZAX and have traded infrequently in a tight range for much of the year.