Tamar Valley Dairy buys time from creditors

Creditors of troubled Tasmanian yoghurt company, Tamar Valley Dairy, have granted the company more time to sort out its financial problems.

The company's major creditors unanimously gave their approval for it to continue trading while it looks at different options to get back on its feet.

Last week the company was offered a cash lifeline of up to $8 million by four Australian food companies including Victorian dairy manufacturer Bulla.

However, company owner and managing director, Archie Matteo, has since said his preference would be to keep the company in its current structure and ownership.

He said while Tamar Valley Dairy might consider outside offers, the creditors' decision had given the company more time to talk to potential investors and purchasers and greater strength to negotiate.

The company is blaming its financial woes on problems encountered during the commissioning of its new $20 million factory. The facility reportedly cost $2m more to build than budgeted and opened eight months later than expected.

The business has, as a result, accrued significant debts, and though it's not insolvent, it is having a short-term liquidity problem, according to the company.