Noumi raising $26m to clean up Blue Diamond court settlement

Last month the re-named Freedom Foods business paid about $23m in an initial upfront payment to Blue Diamond which began litigation in early 2020 alleging Freedom had stopped paying for branding rights and Blue Diamond almond milk products in mid-2019.

At the time Freedom Foods had long-established Australian distribution rights to the internationally-known Almond Breeze brand.

Six months later Freedom's then chief executive, Rory Macleod, suddenly left the company.

His departure triggered a forensic investigation of accounting irregularities and $600m in writedowns from lost sales and outdated inventory, and a collapse in the company's share price.

The share price continues to limp along in the 20 cents to 30c range - well down from the $3.56 a share quoted prior to its fall from grace.

A sell off of Freedom Foods' cereals division to Arnotts also followed as the company reset its business with a recapitalisation and transformation strategy - and took a new name - under a revamped board and executive team, led by former dairy farmer and major shareholder, Michael Perich.

Noumi's new chairman, Genevieve Gregor, said the business - Australia's biggest UHT beverage processor - was now well progressed in the "transform" stage of its agenda, achieving much improved governance practices and the Blue Diamond's court case settlement.

While 2021-22 first half-year sales of Noumi's long life dairy and plant-based products had been affected by COVID-19 lockdowns and export market disruptions, Ms Gregor said significant domestic and international growth was recorded for its MilkLab almond, soybean, coconut and macadamia alternative milk-for-coffee lines.

Good growth was also recorded for other plant-based product lines sold under the Australia's Own label.

"The company is now well equipped to pursue its ambitions in nut-based beverages locally and in other markets through the MilkLab and Australia's Own brands," she said while launching the capital raising.

"In other words, we are now entering the `grow phase'."

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Noiumi is now planning to issue up to $27.2m in unlisted convertible notes to existing convertible noteholders, having already received commitments for subscriptions to the value of $26m.

The funds will cover a temporary loan raised to cover the Blue Diamond settlement which includes $860,000 in legal costs chalked up by the 3000-strong Californian farmer co-op.

Any surplus funds will be directed to Noumi's balance sheet and to cover transaction costs associated with the capital raising.

Noumi's cornerstone shareholder, the Perich family's Arrovest, has excluded itself from taking up any more convertible notes in the latest offer, which is open until the end of April.

The Perich's including deputy chairman, Tony and his nephew and managing director, Michael, were the primary backers of a $265m recapitalisation last year when the company resumed trading on the stock market, after a nine month hiatus.

Mr Perich has made it know the company's plant-based barista favourite, MilkLab, has been a comforting success story for the reborn enterprise providing a good foothold in the plant-based beverage market.

It is promoted as having textures like regular dairy milk which "produce the perfect pour" for coffee aficionados as well as being versatile for both hot and cold beverages.

MilkLab includes a real milk line specifically targeting the cafe market, too.

Noumi's other remaining lines left after the cereals sell-off to Arnotts include the protein enriched Crankt drinks and health food bar brand, Uprotein protein supplements and Vital Strength protein powders.

It also packs and sells the Vitalife and So Natural UHT milk lines.

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