Australia-based dairy business Beston Global Food Co. is to be wound down and cease operations after attempts to find a buyer for the stricken company failed.
In a stock exchange announcement today (26 November), the South Australia-based company’s administrator KPMG confirmed the news.
Local media outlets reported that 159 workers and 22 dairy farmers will be impacted by Beston going under.
KPMG said several potential buyers had expressed an interest in acquiring Beston but “ultimately, the sales process has failed to secure a buyer in the time frame required given the trading losses being incurred”.
It added: “Due to significant trading losses being incurred on a weekly basis, the administrators were not able to fund the business beyond 30 November 2024. Therefore, the administrators have been left with no alternative but to wind down the business and begin an orderly sale of its assets.”
The advisory firm was appointed as administrator to the business in September after a deal that might have saved the Australian dairy business had fallen through.
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However, while the proposed “non-binding” transaction with Japan’s Megmilk Snow Brand Co. – for Beston’s cheese and lactoferrin production business in Jervois, South Australia – was terminated, other factors were also cited for the company’s failure.
In its announcement today, KPMG said the winding down notice, which also applies to the wholly-owned subsidiary Beston Pure Dairies, will see milk production operations cease from 6 December.
“The administrators will continue to trade the operations on a ‘business as usual’ basis until completion of the current production cycle, which is expected to occur within the next two weeks,” it said.
A second meeting of creditors is expected to be convened in late January or early February to decide if Beston should be placed into liquidation or another arrangement proposed.
KPMG said detailed findings about the company’s affairs will be reported to creditors in due course and as part of the normal administration process.
The infrastructure at Beston plants at Jervois and Murray Bridge will be auctioned off.
In an announcement to the Australian Securities Exchange on 23 September, Beston highlighted a number of factors contributing to its demise. It pointed to the burden from debt and rising interest rates, under-pressure margins, the surge in energy prices, cheap dairy imports into Australia from New Zealand, Europe and the US and dairy code legislation introduced by the government in 2019.
Group CEO Fabrizio Jorge said at the time the Megmilk “offer would have enabled all of the jobs at Jervois to be preserved and would have led to an increase in demand for milk for processing at the Jervois factory over time”.
Megmilk pulled out of the proposed transaction on 20 September as it “became apparent that agreement could not be reached on the terms and conditions of a sale that was acceptable to all parties”.
