Synlait Milk has provided an update on its relationship with The a2 Milk Company, including an update on their exclusivity arbitration and other disputes.
The two companies are engaged in a confidential binding arbitration process to determine the validity of a2 Milk's cancellation of the exclusivity arrangements under their Nutritional Powders Manufacturing and Supply Agreement.
They have appointed an arbitrator and are working on an arbitration agreement and timetable, with a resolution expected in 2024.
The arbitration will also address other issues, such as the obligation of Synlait to procure a minimum annual volume of product and certain priority arrangements, the ownership of intellectual property and related know-how, and responsibility for one-off airfreighting costs.
In addition to the arbitration, Synlait and a2 Milk have entered a good faith negotiation period regarding pricing for products manufactured by Synlait.
However, the negotiation period has expired and Synlait will now refer the pricing matters to confidential binding arbitration.
Synlait has also received notice of potential claims from a2 Milk, relating primarily to the Nutritional Powders Manufacturing and Supply Agreement.
The claims involve costs associated with product services, packaging materials costs, new product development, lost profit on delayed deliveries, and alleged failure to share cost savings.
The parties are currently in good faith negotiations to resolve these matters.
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