Beston relinquished its convertible notes in Paris Creek and also agreed to sell its Wellington dairy farm in South Australia to Paris Creek for A$2m (US$1.5m), as the farm has become an integral part of Paris Creek’s operations.
The transactions will provide Beston with A$7m (US$5.3m), which the company says it will use to expand its Beston Pure Dairies operations.
Beston acquired a 26.5% indirect interest in the form of a convertible note in B-d. Farm Paris Creek prior to the IPO of Beston.
Investment in United Dairy Power changed landscape
At the time of subscribing for convertible notes in Paris Creek, Beston did not have its investment in United Dairy Power (now Beston Pure Dairies).
That acquisition came about through a public tender process, when Beston acquired the assets of United Dairy Power for A$4.5m/US$3.4m (minus the Mozzarella plant, which was sold separately to Murray Goulburn and removed from the factory at Jervois).
Competition without conflict of interest
Paris Creek now operates as a fully integrated dairy supply, processing and export business with products in both the organic and non-organic dairy categories.
Beston says that the businesses of Paris Creek and Beston Pure Dairies are beginning to compete, and as time progresses, this will increase.
The Beston board decided allocating capital solely to Beston Pure Dairies will generate greater returns to shareholders, without causing conflicts of interest with Paris Creek.
Beston also announced its Parmesan cheese is back in production at its Murray Bridge factory after a five-year hiatus.
It started production of its first batches of the cheese destined for the internal and overseas markets.
Beston’s cheesemakers are also gearing up for the commissioning of the new mozzarella line at the Murray Bridge plant towards the end of 2017.
The former United Dairy Power milk-processing factory at Murray Bridge was re-opened by Beston in September 2015.
Since it re-opened, Beston has produced a range of soft and hard cheeses under the Edwards Crossing and Beston Pure Foods brands.
The Parmesan production has led to five additional staff being hired, while the wider expansion in hard cheese represents 15 new local jobs.
In June last year, the South Australia State Government announced it was providing A$2.5m (US$1.9m) to Beston for the development of the facility.
In November 2016, Beston entered signed a distribution agreement with TMT Trading Company Limited in Ho Chi Minh, Vietnam, for a period of five years to cover its Edwards Crossing cheese and Kyubu cheese.