Friday, July 1, 2022

Christmas start for Chinese owners

The failure of iwi appeals against the Crafar farm sale will see ink finally drying on the deal in only a matter of weeks.

Chinese buyer Shanghai Pengxin has 30 days to complete due diligence on the properties throughout the central North Island and is confident its operator Landcorp will be on farm in the first week of December.

The court decision rejecting iwi claims Shanghai Pengxin lacked business acumen finalises a sale that comes three years to the month since the Crafar family farms were placed in receivership.

The failure of the farm businesses left the family owing over $200 million to Rabobank, Westpac and PGG Wrightson finance.

Estimates are that in the meantime the venture has accrued a further $40m in additional costs as receivers worked to rectify animal welfare, infrastructure and staffing issues that plagued the farms at the time of receivership.

“We feel we have run a marathon rather than the short sprint we first envisaged,” Shanghai Pengxin spokesman Cedric Allan told New Zealand Farmers Weekly.

He said it was “hard to say” if the company would have continued with its offer, first filed 18 months ago, if it had known the length of time taken to complete.

The company also appears resigned to the reality that should it choose to purchase more land here, there will be further Overseas Investment Act hoops to jump through.

Allan tacitly acknowledged the company would be considering consolidation of the expansive Crafar portfolio as it decides how they would fit into the context of a milk processing operation.

“Over time any corporate farm owner involved in milk processing has to examine how the farms fit into that.”

The two most obvious properties sitting more isolated from the bulk of the portfolio are the Benneydale farms, subject of controversy and claim by local iwi. Allan said Shanghai Pengxin remained open to negotiations with iwi over possible purchase.

Earlier deals had fallen over on grounds of price, totalling around $60m across three farms, the Benneydale properties and the large Taharua property on the Napier-Taupo highway.

As new owner, Shanghai Pengxin has undertaken to invest a $14m into all properties through further capital improvements.

The company will be operating as a joint venture company with Landcorp acting as sharemilker, and called Milk New Zealand Farm Management Limited (MNZFML).

Requirements placed upon MNZFML under the purchase agreement enforced by the Overseas Investment Act include the provision of a training facility within the farms and provision of two scholarships worth $5000 a year to students at the facility.

On-farm requirements include protection of sacred areas on properties and providing walkways around certain parts of the Benneydale properties.

Dialogue with iwi was still an option to negotiate Benneydale farm purchases by them.

Allan believed now Shanghai Pengxin had clear title to the properties and “all the emotion has been taken out of it” a deal could still be discussed.

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