Beston Global Food Company and Beston Pure Dairies - Case Update

Beston Global Food Company (ASX:BFC) and Beston Pure Dairies are set to be liquidated after a buyer could not be found.

Beston operated as a South Australian dairy company which, outside of multinationals, was the largest in Australia, employing 22 farmers who supply milk to the company and approximately 160 people across its two sites in Jervois and Murray Bridge.

Tim Mableson, James Dampney, Gayle Dickerson and David Kidman of KPMG were appointed voluntary administrators on 20 September 2024 after the company suffered from a challenging operating environment, including persistent cost pressures, unusually volatile global dairy prices, and higher-than-expected milk volumes at a time when farmgate milk prices have been uncompetitive versus global markets. The final nail in the coffin appears to have been when Japanese company Megmilk Snow Brands pulled out of a deal to buy the company.

The administrators continued to run the business whilst exploring options for a sale or a recapitalisation via a DOCA. Ultimately, the administrators received 12 non-binding offers by the 9 October deadline. Three parties who proposed a transaction for the whole of the business — a private capital fund, an industry body led consortium, and Roger Sexton, on behalf of the directors — were shortlisted. All three confirmed they were still interested by the requested date of 25 October, but no party submitted a binding offer capable of being accepted by the administrators. Negotiations continued and some of the parties requested additional time to conduct due diligence and/or seek funding prior to submitting a binding offer. Unfortunately, due to ongoing trading losses and limited funding, further extensions past 30 November 2024 (approximately 10 weeks post appointment) were not possible.

As a result, the administrators announced that the company would undergo an orderly wind down and commenced an asset sale process, engaging Pickles to undertake an expression of interest campaign for all major plant and equipment lines located at Murray Bridge and Jervois in December 2024. Pickles have realised $12.7 million for the plant and equipment and processing lines at Jervois. The remaining plant and equipment at Jervois will be offered for sale via public auction which is likely to occur in late March 2025.

The administrators also received an offer for the Murray Bridge facility (including the land, buildings and plant and equipment assets) which they accepted in late December 2024, with settlement to occur in late March 2025. Further details have not yet been released. This sale excluded the cream cheese business and assets at Murray Bridge, which was subject to a separate deal.

Interestingly, the administrators have concluded that the company may have been insolvent from at least 4 April 2024, and that the company’s directors engaged a safe harbour advisor in November 2023.

Priority employee creditors are expected to be paid in full, while secured creditor NAB is expected to receive between 26 and 34 cents in the dollar.

The administrators’ report can be found HERE.