Dairy and infant formula maker Synlait Milk said it planned to sell its Dairyworks and Talbot Forest Cheese businesses to pay down debt.

The Synlait board and management have been undertaking a strategy and “capital structure refresh”, which has included an asset review.

Debt-laden Synlait has seen its share price come under downward pressure this year, in part due to investor concern that it may require a capital raise to shore up its balance sheet.

The stock last traded at $1.62, up 7c from Thursday’s close, but down from last December’s peak of $3.77.

“To ensure greater focus and execution of Synlait’s overall business strategy, the company intends to evaluate the divestment of Dairyworks and Talbot Forest Cheese,” Synlait said.

Synlait, which is a2 Milk’s sole supplier of infant formula, said it had a clear competitive advantage in its advanced nutrition and foodservice businesses.

The company also said it had a “disciplined and well-run” ingredients business.

The divestment of Dairyworks and Talbot Forest Cheese would enable Synlait to focus solely on growing the highest margin segments of its value-add, business-to-business advanced nutrition and foodservice businesses.

The company said it had “world class” capability and capacity in terms of its current asset bases and know-how at Dunsandel and Pokeno.

Synlait chief executive Grant Watson said Dairyworks was an excellent business but said it was not core to Synlait’s strategy.

“It delivers cheese products to various channels under a portfolio of well-known household brands.

“Despite having extremely strong capability across consumer, brand, customer, and procurement, Dairyworks is not core to Synlait’s diversified growth strategy and does not leverage our core right to win competencies in advanced nutrition and food service.

“Synlait needs to focus on the business units where we have a clear right to win.

“Although the performance of Dairyworks has met expectations the intended divestment of Dairyworks, and Talbot Forest Cheese, will enable us to help deliver against an increasingly focused strategy.”

Synlait has engaged investment banking firm Jarden to advise on the divestment.

Should a sale occur, the proceeds will be used to pay down debt, the company said.