Synlait Milk (ASX:SM1) shares jumped 52% yesterday after shareholders approved the first step of a complicated refinancing of the struggling company's debt and finances.

The shares leapt to a day's high of 38 cents before settling back to trade around 34 cents after shareholders at a special meeting in New Zealand approved a $NZ130 million loan deal with major Chinese shareholder Bright Dairy.

That approval effectively saved the company from being put into administration early next week, as Synlait did not have enough funds to repay the loan as its banks had demanded.

Shareholder approval for the loan deal was needed because it was a related party transaction with a major shareholder. It looked doubtful earlier this week when the second biggest shareholder, a2 Milk, was slow in revealing how it would vote its 19.9%.

The two companies have fallen out over a supply deal Synlait has with a2, which is being terminated due to underperformance and other concerns.

a2 revealed before the meeting that it would vote in favor of the Bright Dairy loan. That helped the shares surge, and the approval gave another boost.

The money will go to repay a bank loan of the same amount that is due next Monday.

That will help reduce debt, which at the end of May totaled $NZ585 million.

Now Synlait shareholders have another meeting to be held later this year to consider the terms of a proposed retail issue and the refinancing of $NZ180 million in bank debt. Both are expected to be done at the same time.

The terms and size of the issue will be revealed early next month, with another shareholders meeting in late August or early September, and the 2023-24 annual results to be published late that month. Those figures are not expected to be good.

In outlining Synlait's future on Thursday, Chair George Adams said it would aim to raise capital in the next two months, but that would be challenging as it was looking to raise capital equal to several times its current market value (around $A57 million).

Adams told Thursday's meeting that the company was still reviewing its North Island operations, including the future of its Pkeno plant, which can produce plant-based milks.

Synlait had tried unsuccessfully to sell its Dairyworks consumer business, which owns the Alpine and Rolling Meadow cheese brands, but ended the process after not getting high enough bids.

He said Synlait would focus on business-to-business and its food service business, with its high-end dairy products, like infant formula.

Adams said a priority would be trying to improve relations with a2 Milk.