Sold in 2017 to infant formula company Mead Johnson Nutrition, the milk dryer remained in Tatura and was run by Tatura Milk on behalf of Mead Johnson until recently.
The deal with Mead Johnson, owned by British company Reckitt, included services and access agreements with Reckitt for the spray dryer and finishing plant until December 31, 2026.
Under the agreement Tatura Milk operated the spray dryer on Reckitt's behalf and was provided with 25 per cent of the plant capacity for its use.
Reckitt has also previously informed Tatura Milk's owner Bega Cheese it will terminate the services and access agreements related to the company's Derrimut infant formula finishing plant.
The decision to end the agreement early will see Bega Cheese paid a $21.1 million termination fee to be paid across the 2020-21 and 2021-22 financial years.
When asked if the early end to the agreement would affect any jobs in Tatura, Bega Cheese said the situation was still being worked out.
In an ASX announcement, Bega Cheese said the agreement required Reckitt to provide nine months’ notice of its intention to terminate.
“Reckitt (parent company of Mead Johnson) has advised Bega that it is considering its strategic and financial options with respect to the Tatura and Derrimut facilities,” the announcement said.
“To compensate for the loss of future payments to be made by Reckitt to BGA under the agreements, a further contractual termination fee calculated to be in the region of $34.4 million (exlcuding GST) is expected to be received by BGA across FY2021 and FY2022.”
Mead Johnson is a United States brand which produces milk powder-based products for Asia and the Americas, including chocolate milk for Mexico and a children's nutritional drink for the Philippines.
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