Embattled dairy processor Murray Goulburn (MG) will close three facilities and scrap $148 million in farmer debts under its controversial milk price clawback scheme, the Milk Supply Support Package (MSSP).
MG said it will close facilities at Edith Creek in Tasmania, and Rochester and Kiewa in Victoria in stages, with around 360 employees to be affected.
The Edith Creek facility will be closed by Q2 FY18, the Rochester facility by Q3 FY18 and the Kiewa facility by Q1 FY19.
MG has also said it would not proceed with proposed major capital investments in dairy beverages and nutritionals.
The decision was the result of its asset and footprint review conducted in recent months following the reduced milk intake across its network, MG said.
Once completed the closures are expected to deliver the company an annualised net financial benefit of $40 million to $50 million, with a net financial benefit in FY18 of approximately $15 million.
MG also announced it would “forgive the MSSP”, a step that will see MG scrap repayments from farmers and record a write-down of $148 million ($104 million post-tax).
“MG is taking this step in recognition of the unintended impact of the MSSP,” the company said.
The MSSP was created by MG to claw back loans to farmers after its surprise milk price cut in April last year.
Last week, the ACCC announced it had launched legal proceedings against MG, claiming it engaged in unconscionable conduct and made false or misleading representations over the milk price decreases.
