The company, which earlier this year had been eyed up by a2 milk as a potential investment target, reported a projected funding deficit of $26 million by December 2020.

Financial statements were filed with Companies Office on July 14.

Shareholder China Animal Husbandry Group would provide financial support by helping to pay debts as well as offering possible cash injections and shareholder loans. The latter would not require principal or interest repayments if it would cause the company to default on debts.

China Animal Husbandry also stood as the guarantor behind existing bank loans to the company.

The company said it was in breach of banking covenants with the China Development Bank and China Construction Bank over loans of US$52.6m ($79.79m) and US$116.6m respectively.

Neither had provided a waiver of their right to call their loans as a result of the breach. The loan agreement with China Development Bank required China Animal Husbandry’s shareholding not to drop below 60 per cent. It currently held more than 80 per cent of shares.

Mataura had been seeking strategic investors since 2019.

It would continue to actively seek investors that could provide both equity – $100m to $150m – and supply agreements to buy nutritional volumes of milk powder from the company, which would underpin future profitability. The funds would be used to pay down debt.

In June, the a2 Milk Company told the NZX that despite having a policy of not responding to media speculation, “a2MC confirms it has had, and continues to have, various discussions with a number of parties in relation to potential strategic options relating to participation in manufacturing capacity and capability, as stated in our half year results announcement on February 27, 2020”.

Mataura still considered itself a going concern. In February, China Animal Husbandry paid the company US$1.9m for whole milk powder to be supplied between May and August.

It also entered a working capital agreement with the China Development Bank in March, for additional funding of US$19.5m, and another in May with Cooperative Rabobank, Hong Kong for US$20m.

Despite operating through lockdown as an essential service, Mataura suffered from the 16.7 per cent drop in the value of the US-to-New Zealand exchange rate.

“As a consequence, the New Zealand dollar value of the US dollar liability to China Development Bank increased by $15.7m, with a corresponding reduction in shareholder equity through the 2020 statement of Profit or Loss and Other Comprehensive Income.”