The Chinese-owned infant formula producer, which moved into production scarcely a year ago and recently began work on a $5million expansion to its McNab plant near Gore, needs an additional $12million in funding to cover expected production and operational costs for the next nine months.
At its current rate of expenditure, the company directors say it will exhaust its existing bank facilities during September.
In an assurance to company directors, creditors and staff, MVM's financial statements for its first full reporting period to end December 2018, note that it has a letter of financial support from main shareholder China Animal Husbandry Group (CAHG), valid for a period of 13 months from May 27, 2019.
The letter undertakes to "provide financial support sufficient to permit the company to pay its debts as and when they fall due".
The directors of the company have sought independent legal advice on the letter of support and have "no reason to doubt that the letter can be relied upon".
Aaron Moody, accountant, and alternate director for MVM and minority shareholder, former Gore mayor and local business personality Ian "Inky" Tulloch, confirmed the company was seeking a strategic investor to provide an equity injection as well as committing to buying nutritional volumes from the company.
Investment advisers Macquarie Capital and DG Advisory Ltd are understood to have been appointed to assist in the capital-raising process, while CAHG has also identified "potential equity and debt funding providers in China".
It has also advised its lead bank, China Construction Bank (CCB), on the funding requirements. CCB holds security over all of MVM's properties for the loans, totalling $114.5million.
According to the financial statements, CAHG stands as guarantor behind existing bank loans to the company and in January, injected an additional $US6million ($NZ9.5million) into MVM, as a "prepayment" for whole milk powder.
"The price was a negotiated price at similar levels to those achieved by the company for sales to third parties, less a 6% per annum finance charge," the statement notes.
CAHG charged MVM $1.1million (2017: $380,732) in interest and fees related to the guarantee of its loans.
The statements note that a total of $2million remains outstanding to CAHG for interest and fees to date.
In March this year, MVM also entered into a "working capital agreement" with HSBC for an additional $30million.
MVM general manager Bernard May was unavailable for comment when approached by the Otago Daily Times.
