The arbitration between The a2 Milk Company and Synlait Milk has been adjourned following the conditional resolution of some of the disputes between the two.
The settlement included Synlait accepting the validity of a2MC’s cancellation of exclusive manufacturing and supply rights for its Stages 1-3 a2 Platinum and China label a2至初 infant milk formula (IMF) products sold in China, Australia, and New Zealand. That exclusivity will end from 1 January 2025.
It also agreed to supply a minimum annual volume of product and retain priority arrangements for a2MC.
The Nutritional Products Manufacturing and Supply Agreement (NPMSA) agreed to puts no restrictions or obligations on A2MC on which supplier it uses and confirms it owns the intellectual property rights for the IMF products.
A2MC has agreed to a one-off NZ$24.75 million payment to Synlait, mainly made up of monies withheld pending a resolution of the dispute.
Synlait still has the Chineses regulatory State Administration for Market Regulation (SAMR) for its Dunsdanel manufacturing facility for the Stages 1-3 of the Chinese labelled a2至初 and will continue manufacturing those products until the registration expires in September 2027.
Synlait will also give a2MC an extra slot at Dunsdanel for a potential new China label, which will be developed by a2MC and Synlait and seek SAMR registration by December 2029.
The settlement is conditional on Synlait completing its equity raise and the refinancing of its existing banking facilities.
A2MC has agreed to support and subscribe for shares, subject to the finalisation of terms.
A2MC said its decision to support Synlait’s recapitalisation plan reflects the strategic importance of its Dunsandel manufacturing site’s continued stability.
