The New Zealand Herald

Happy Valley enters A2 market via Longreach

- Jamie Gray — Additional reporting: BusinessDe­sk

Another public entity in the A2 milk space looks likely if Happy Valley Milk’s backdoor listing on the ASX via a reverse takeover of the suspended Longreach Oil goes ahead.

As stands, dual-listed a2 Milk Co is the only company specialisi­ng exclusivel­y in the manufactur­e of A1-protein free products.

ASX-listed shell company Longreach said it had entered into a conditiona­l agreement to buy Happy Valley Milk, which has land use consents from the Otorohanga District Council to establish and operate a fully integrated milk processing, blending and packaging plant near Otorohanga.

Once built, Happy Valley intends to specialise in consumer-ready infant milk formula and other nutritiona­l milk powder formulas using A2 and organic milk.

The company plans to build two eight-tonne drivers and to have a processing and canning facility ready for the 2020/21 season.

Randolph van der Burgh, Happy Valley director and a director of investment company VCFO, said the company intended to go global.

“Whilst we are small at the moment, we obviously have aspiration­s to be a global dairy company,” he told the Herald.

“We need a platform for that and obviously New Zealand is a starting platform in terms of production and milk supply and in top-end nutritiona­l products,” he said.

“But we are also looking at opportunit­ies outside New Zealand . . . so it was decided that Australia was a better option taking that into account,” he said.

Putting in place a global manage-

We obviously have aspiration­s to be a global dairy company. Randolph van der Burgh, Happy Valley

ment team would be easier in Australia rather than New Zealand, he said.

Van der Burgh spent 20 years with Ernst & Young as a internatio­nal tax partner and has experience in the primary industry space.

Longreach was suspended last year, in line with ASX rules, because it had effectivel­y stopped trading.

“It’s a classic reverse takeover — we are selling ourselves to Longreach but in return will be retaining 77.8 per cent of the listed vehicle,” van der Burgh said.

Happy Valley Milk has 12 shareholde­rs, from New Zealand, Australia, Hong Kong, Singapore and South Africa. Van der Burgh said A1 proteinfre­e milk was a way of addressing the needs of people who have trouble digesting standard milk.

“The good thing in New Zealand is that there are many of the herds that are already pretty close to being entirely A2,” he said.

The Longreach transactio­n is conditiona­l on obtaining Waikato Regional Council water consents.

As part of the deal, Happy Valley Milk would raise A$2.5 million through convertibl­e notes while Longreach would raise at least A$3m through a prospectus.

The companies expect the conditions of sale could be satisfied and completed within six months.

Longreach expects constructi­on to start next March and take 12 months, plus three months for commission­ing.

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