Greenwood is leaving the business after 10 years that saw the processor go from being in breach of its banking covenants in 2010 to reporting its maiden profit two years later to now having a market capitalisation of $1.3 billion.
His replacement, Angela Dixon, is coming in at a pivotal point in the business,” he said.
“The time is now right for a transition from me to someone new,” he said.
His main advice, however, is to be prepared to find out the business is a lot more complex than it might appear from the outside.
When Greenwood took on the role Synlait was a holding company with two main subsidiaries, Synlait Farms, which owned about 16 dairy farms and 10,000 cows, and Synlait Milk, aimed at manufacturing.
Both were in breach of their banking covenants with two separate banking syndicates.
“Part of my responsibilities coming on deck was to work with (then chief executive) John (Penno) and the board to get the companies out of breach because whilst you are in breach you are really operating at the whim of the banks,” he said.
It sold a 51% stake in Synlait Milk to Bright Dairy for $80 million that resolved the breach and let the company finish building its first infant formula dryer at Rakaia.
“The initial dryer that Synlait had was really a commodity dryer or an ingredients dryer and really didn’t enable us to pursue the strategy the company had to become an infant formula manufacturer,” he said.
On the farming side he negotiated with a new banking syndicate and the farms were eventually spun out completely though they continue to supply Synlait Milk.
The company didn’t make its first profit till 2012.
“It was quite a challenging period for the business as we tried to get on our feet … there were plenty of sleepless nights,” he said.
“Working in a growth company the challenges just keep on coming. You are constantly having to focus on managing the balance sheet, managing the capital strategy.”
When asked about his main achievements he pointed to the Bright Dairy transaction and the initial public offering in 2013, which had the added challenge of finding a model that let Bright Dairy dilute its stake from 51% to 39% while still being able to consolidate Synlait’s accounts into its own statements as an in-substance subsidiary.
“It ticked all the boxes and was quite clever the way it was all put together,” he said.
He also pointed to a receivable financing scheme the firm has used with four major customers. It means Synlait invoices a company and its banks take the credit risk on the customers, which have high credit ratings. They give Synlait the cash, funding it at a lower cost than the working capital costs it normally faces.
“It’s just sweet. It’s a very effective way to manage capital financing,” he said.
He also pointed to the 2016 capital-raising that saw it raise $97.6m in new equity and was a big undertaking, in particular given the major Chinese shareholder.
“I have been on the plane to China way too many times to work through these things,” he said.
Finally, he is proud of the country’s first environmental, social and governance linked loan that was a “feather in our cap” and the $180m bond issue that happened at lightning speed late last year.
Regarding anything he would have done differently, he said he would have put greater emphasis on ensuring the systems, processes and technology kept improving at the same pace as the company was growing.
“You are going so fast and trying to change the wheels on the bus while you are going down the motorway at 100 miles an hour is pretty difficult.”
He noted, however, the company has always had clean audits but “I’d like to think I could have put more effort into that”.
That said, the ability of the finance team to work through the covid-19 restrictions was impressive, he said.
“Within half an hour of closing the ledger we know our result for the month … it just shows what can be achieved. You don’t have to all be physically in the same place to do that.
“Working in a growth company you learn to sleep faster,” he said.
“The hours, the commitment, the work, the belief, you have these challenging times, you have sleepless nights sometimes but jeez you wake up in the morning with the adrenaline going and you just love the excitement and the achievement.”
“It’s been a hell of a journey.” – BusinessDesk
