A2 Corp plays down overdue $561,849

Milk technology company A2 Corporation yesterday played down the significance of an overdue US$400,000 ($561,849) payment from its American licence holder, IdeaSphere.

The payment, the balance of US$500,000 of royalties for the period from September 2003 until October 2004, was due by January 24.

A2 Corp owns technology that enables the production of a variety of milk containing just A2 proteins. The company claims its milk may offer health benefits relating to diabetes and disorders such as autism.

Chief executive Andrew Clarke said the lack of the payment would not "immediately" upset A2 Corp financially. He said the relationship with IdeaSphere, a Michigan-based natural foods company, remained good. Talks with the US firm were continuing. 

IdeaSphere was contractually obliged to pay the US$400,000, Clarke said.

A2 Corp shares fell 2c to 8c yesterday.

A review by Ferrier Hodgson last year led to a management restructure and changed strategy. A2 Corp now wanted a more hands-on role in establishing, implementing and driving the A2 Milk brand, Clarke said.

This month A2 Corp sold its Australian marketing and distribution business for $1.1 million to Fraser & Neave Dairy Investments in a move described as the start of a new international strategy. A2 Corp retained a licence for production and distribution of milk in Australia.

"This is the model we believe should be applied in the US," said Clarke.