Brownes owner refinances debt

The parent company of Balcatta dairy processor Brownes is understood to have refinanced $72 million in debt that was due to be repaid next month.

Details of the new deal between DairyWest Group and financiers were unclear late yesterday, but the previous loan facility was to expire on March 18.

DairyWest had been in talks about financing alternatives since last month when it lodged financial accounts revealing a $13.5 million loss for 2013-14.

The result followed a $8.5 million loss in 2012-13 and continued a turbulent time for Brownes under the ownership of private equity group Archer Capital.

Brownes parted ways with managing director Ben Purcell last month and Archer is trying to sell the 129-year-old business four years after buying it from New Zealand dairy giant Fonterra.

The milk operations continued to make money in the year to June 30 though earnings before interest, tax, depreciation and amortisation dropped 36 per cent to $10.6 million.

The accounts also shed light on the $53.5 million sale of the Brownes site in Balcatta to property group Stockland in June.

DairyWest had been leasing the land and buildings from Fonterra. The terms of the lease required DairyWest to sell the property on behalf of Fonterra and pay Fonterra $33.5 million. DairyWest then entered into a long-term lease with Stockland.

The financial fallout from Brownes' desperate attempts to shore up milk supply by buying three South West dairy herds in July 2013 was also exposed.

Brownes paid $7 million for the herds attached to its biggest supplier, Lactanz Dairies. It sold the herds back to the Lactanz farms, currently in the hands of receivers Ferrier Hodgson, at a loss of $2 million less than a year later.

Brownes acting managing director Craig Wood declined to comment yesterday.