The news comes the day after the company announced up to 15% of its staff could lose their jobs as the company restructures its organization.
Synlait Auckland forms part of the company’s North Island manufacturing network providing additional blending and canning capacity, warehousing, and office space.
Synlait CEO John Penno said, “The opportunity to sell and leaseback the land and buildings at Richard Pearce Drive is attractive to Synlait as it will free up cash and allow us to pay down debt. The lease will have an initial term of 10 years, with further rights of renewal, providing plenty of long-term certainty and flexibility for our business.”
The sale price is NZ$30.05m, and the initial lease term is 10 years. Settlement will take place on October 4, 2021. When Synlait acquired Richard Pearce Drive in May 2017, the land and buildings were valued at NZ$12.4m.
The sale comes a day after Synlait updated staff that it has commenced a consultation process to update its organizational structure.
Penno said, “Synlait has been through a lot of change over the last 12 months. This means some areas are now over resourced, and some areas are under resourced. We need to review and reset the structure of our business to match our current goals to be successful.”
The company said the proposed changes are designed to align leadership and resourcing around key business units (nutritionals, ingredients, and liquids) and remove any unnecessary hierarchy from the organization.
Penno added, “As part of this, we are also on a journey to transform our culture. We need to build teams that are working together with clear roles and responsibilities, and the systems needed to chase the growth we are looking to achieve. This is not just a cost out exercise, it is a complete reset of how we operate as a business.”
The proposed structure would see Synlait’s overall headcount reduced by approximately 15% and generate potential annual savings of approximately NZ$10m (US$7.1m) to NZ$12m (NZ$8.5m).
According to the company’s most recent annual report (2020), Synlait had 838 staff at its Dunsandel site, 17 at Palmerston North, six at Synlait China, a satellite office in Christchurch with an unspecified number of staff, 110 at Pokeno and 97 at the Auckland site. It also has 76 staff at Talbot Forest Cheese and 229 at most recent acquisition Dairyworks. Synlait did not give details of which sites may suffer the cutbacks, meaning the 15% reduction could mean anywhere from 100 to 200 job losses.
Synlait is discussing the proposed changes with impacted team members and union representatives. The consultation process will take place over the next two weeks.