Wattle Health’s Corio Bay Dairy to Develop Organic Nutritional Spray Dryer

Wattle Health Australia Limited (ASX: WHA) develops, manufactures, and commercialises dairy, nutritional health, and wellness food products with a key focus on infant formula and dried dairy products.

Generally, Wattle Health supports Australian farmers and promotes soil management practices to cater to the consumer demand for pure organic nutrition. This leads to production of naturally superior products for families across the globe.

On 14th May 2019, the company released a progress update on Corio Bay Dairy Group and the construction of Australia’s first dedicated organic nutritional spray dryer.  

The site construction restarted on 6th May 2019, after land stabilisation work were completed in March 2019. Lately, the site is being prepared for the footings and concrete slab, which is the footprint of the factory. Over the coming months, the factory will start taking shape as the pre-cast concrete panels and steel works, manufactured in Geelong, Victoria will be erected. The dryer/evaporator build continues and remains on track for shipment in early June 2019 from India. This first of five shipments will arrive in Melbourne late July 2019, with the final shipment leaving India in September 2019.

Other pieces of plant and equipment is also being manufactured both locally and overseas such as boiler, wastewater treatment plant, refrigeration units and powder packing lines.

In April 2018, Wattle Health Australia (45%), Organic Dairy Farmers of Australia (ODFA) (50%) and Niche Dairy (5%) came together to form a joint venture, the Corio Bay Dairy Group (CBDG). Currently, CBDG is developing the organic nutritional spray dryer that would process large pools of fresh organic milk through an exclusive supply agreement executed with ODFA. Besides, WHA has also signed an agreement to obtain all of CBDG products to be used in its nutritional dairy range.

ODFA is a farmer owned co-operative formed in 2001 by a group of farmers to commence organic dairy farming in Australia, across its certified organic and bio-dynamic farms across the main dairying regions of Victoria.

Recently, Wattle Health Australia also signed a USD 75-million debt facility term sheet (4 years, 9% coupon rate pa and 15% OID) as announced on 9th May 2019, on behalf of its managed vehicles and funds, with Gramercy Funds Management LLC, a dedicated emerging markets investment manager based in Greenwich, Connecticut in the USA.

The term sheet is subject to final due diligence by Gramercy and final documentation while London-based investment bank Exotix Capital is acting as placement agent.

In hindsight, Wattle Health announced on 11th February 2019, that it had entered into an agreement with Mason Group Holdings Ltd to purchase a majority stake in Blend and Pack (B&P), the largest (by volume) independent, nutritional dairy processing and packaging business in Australia. B&P also has a track record of positive earnings.

Thus, as announced by company on 9 May 2019, the debt facility term sheet was agreed by WHA to ensure limited dilution to shareholders to finance the B&P acquisition.

With a market capitalisation of ~ AUD 141.99 million, the WHA stock price settled the day’s trading session, flat at AUD 0.730 with ~ 372.6k shares traded on 14th MAY 2019.


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