SA dairy processor Beston has notified investors and suppliers that it is seeking funding to refinance debt and provide working capital as the situation continues to cause uncertainty for milk suppliers.
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Today, the company notified the ASX that it was seeking an extension to its trading suspension until it could find "alternative funding arrangements".
"Interest has been provided from parties who are currently undertaking due diligence on the company to determine if a refinancing will be offered as indicated," Beston Global Food Company's statement said.
"Such a transaction is necessary for Beston's continued financial viability."
Beston expects to provide an update by August 5 at the latest.
The company has previously reported debt liabilities of about $70 million.
The situation is causing concern not only among suppliers, but the wider SA dairy industry, with Beston the purchaser of 165 million litres of SA's 500mL output last year.
A Fleurieu dairyfarmer told Stock Journal they were waiting on 15 per cent of their May milk payment - about $70,000 - and were unsure if they would receive $750,000 for their June milk, due by mid July.
They said the developing situation could lead to a crisis for the SA industry, saying the additional challenges of low milk prices, rising input prices and huge feed bills caused by a dry start to the season were all weighing very heavily on dairyfarmers.
"We're in the sh*t. There's no support from banks. It's also been a dry year so we've had to buy about $300,000 worth of additional feed," they said.
"With the lack of payments, it's making it almost impossible to do.
"This situation will send farmers broke and we could be one of them. That's how bad it has become."
A South East dairyfarmer told Stock Journal they had switched to another milk buyer as of June 30, saying the uncertainty created by Beston's financial situation was the primary driver behind the decision.
They said they were still waiting for 15pc of payment - or $30,000 - for milk supplied in May, which should have been paid in June.
"We haven't heard anything about when that will be coming," they said.
"It makes running the business hard, because you don't know when you're going to get the payment, or if you're going to get it.
"We've still got to wait to see if we get paid for our June milk, which is about $170,000.
"At least we know we will get paid for our July milk, because we've switched suppliers."
The farmer said the SA dairy industry needed Beston's factories to run, given it would leave a 165m litre hole in the market.
They said it would be especially difficult for suppliers around Murray Bridge and the Adelaide Hills, who don't have many alternative options, that would be able to take large volumes.
Another SE dairyfarmer, who is a current Beston supplier, said they've had issues with late payments for the past three months.
They said it was causing difficulty in running their enterprise and while they would like to stay with the company because of the favourable milk prices offered (quotes have been in the $7.80 a kilogram to $8.10/kg milk solids range this year), the future was up in the air because of the company's uncertain future.
"We're still contracted with them and we've had really good rapport with them previous to this hiccup," they said.
"We'd like to stick with them and our contracted price is higher than what we'd get with any other company.
"We're up in the air a bit. We hope things turn around and they can make their payments on time in the future.
"Hopefully we can ride it out with them, but it does leave you with some uncertainty in the mindset."
Beston has been contacted for further comment.
