Crafar farms: Near the end of the road

The 13 dairy farms, including this one near Lake Taupo, and three drystock properties are thought to be worth about $200 million. Photo / Supplied

State-owned Landcorp Farming will meet today to decide whether to bid for 16 farms from the Crafar empire being sold by receivers.

Interested parties have until 4pm on Wednesday to bid for the farms, which include 13 dairy farms and three drystock properties, milking more than 16,000 cows, with projected production for the 2010/11 season of 4.9 million kilograms of milksolids.

Based on dairy farm sales during recent months the portfolio could be worth up to $200 million.

Landcorp chief executive Chris Kelly said the company would have a board meeting today and depending on the outcome may put in a bid.

"If we do put in a bid it'll probably be on Wednesday," Kelly said.

"The reason we've expressed an interest at this stage is a commercial one," he said.

"Some of the farms are nearby some of our existing farms.

"We believe we've got an ability to manage large numbers of farms, we already own 105, and we believe if we can put our own management processes over these we could probably add value to them."

Landcorp would bid for all the farms if it decided to make a tender, Kelly said.

"I think we would have a better chance of being successful because we know KordaMentha as receivers on behalf of the banks want to try to have as clean a deal as they can and if we can present them something that's favourable in that regard it might help us."

Meanwhile, as the deadline for the tender process approaches, investors fronted by Auckland businesswoman May Wang will have to wait and see if their separate sale agreement will win.

Last month receivers Michael Stiassny and Brendon Gibson said a sale and purchase agreement for the portfolio of 16 farms had been signed with UBNZ Funds Management conditional on consent from the Overseas Investment Office (OIO). The agreement with UBNZ was structured to allow the receivers to accept any better or more favourable offer.

A spokesman for May Wang said Hong Kong stock exchange listed Natural Dairy (NZ) Holdings - a 20 per cent shareholder of UBNZ Assets Holdings - had completed a new OIO application and related business case and would lodge it "any day now".

Landcorp's Kelly said he had heard rumours about the value of the UBNZ conditional offer.

"We're going to bid a fair value, we've had the farms valued ... but if the rumour mill is correct it's likely to be lower than UBNZ's bid," he said.

"What we might be able to bring to the table is a clean bid of course, it won't be subject to [OIO] approval and maybe that might be more attractive to the receiver."

Agriculture Minister David Carter in May was reprimanded by Prime Minister John Key for publicly remarking that the sale of the farms to interests associated with Natural Dairy NZ was unlikely to go through.

Kelly said there had been no encouragement from the Government for Landcorp to make an offer.

"I can say absolutely, categorically, the answer to that is no," he said.

"We informed our minister as a courtesy that we were interested some time ago.

"Through his offices and not directly through him we have been told that that's all very well and interesting but that's an operational matter, that's why we put boards on [state owned enterprises]."

Stiassny did not comment on the response to the tender or the timeframe after Wednesday's closing date. "Not something we would engage with at the moment," he said.

Selling the farms

The properties:
16 farms and more than 16,000 cows.

Price estimate:
Based on returns, could be worth up to $200 million.

The vendor:
Receiver KordaMentha is trying to salvage funds from the Crafar family empire which went into liquidation owing more than $200 million to banks.

In the running:
* A Chinese-owned company fronted by Auckland businesswoman May Wang (right), which has already signed a sale and purchase agreement to buy the farms.

* Possibly Landcorp, which may tender by the Wednesday deadline.