Christopher Adams

The Business Herald’s markets and banking reporter.

Fay offer for Crafar farms will get a look

Sir Michael Fay. File photo / APN
Sir Michael Fay. File photo / APN

Receivers for the Crafar dairy farms say they will consider a new offer for the properties from a group led by Rich Lister Sir Michael Fay but remain focused on a higher offer already on the table.

KordaMentha's Brendon Gibson says a more lucrative offer has already been accepted for the farms from China's Pengxin International Group, which is subject to gaining Overseas Investment Office (OIO) approval.

KordaMentha has managed the 16 North Island farms, formerly owned by the Crafar family, since they went into receivership in 2009 owing more than $200 million to lenders Westpac, Rabobank and PGG Wrightson Finance.

Yesterday, a group of farmers - including local Iwi interests - led by Fay ramped up its bid for the properties, making a $171.5 million offer for the entire Crafar portfolio.

The offer comes on the back of a $105.1 million bid made by the millionaire businessman's consortium last month for nine of the 16 farms.

In January Pengxin International Group - a Shanghai-based company - reached an agreement with KordaMentha, which must receive the green light from the OIO, to spend $200 million buying and upgrading the 16 farms.

Its offer came after Hong Kong's Natural Dairy and its sister firm, New Zealand-based UBNZ Asset Holdings, had its OIO application to buy farms declined because its directors and frontwoman May Wang failed a "good character" test.

Fay said yesterday that due diligence on the Crafar farms had been completed and the group was "ready to go".

"As soon as we have a signed deal with the receivers they can hand over the keys and we're ready to walk onto the land," he said. "Obviously that's subject to the Overseas Investment Office rejecting the current Chinese contract."

Pengxin International Group had been providing additional information to the OIO and was confident it would get its application approved, spokesman Cedric Allan said yesterday.

Steve Bignell, of Stretton's Chartered Accountants in Taupo, who is the lead negotiator for Fay's group, said 40 per cent of the latest offer came from Iwi farming interests and all of the farmers in the consortium already had dairy interests in the central North Island.

Iwi investor Hardie Peni, chairman of the Tiroa E and Te Hape B trusts, said he saw the Crafar farms as complementary to the trusts' present farming operations.

Fay, whose firms were instrumental in selling assets such as Telecom and the Bank of New Zealand to overseas interests in the 1980s and early 1990s, yesterday reiterated comments he has made about the importance of retaining productive land ownership in New Zealand hands.

Asked about his involvement in the privatisation of formerly state-owned assets Fay said: "I think you can create a lot of banks ... telcos, but you can't create more productive land for the long term."

Fay's group said the latest offer valued the Crafar properties at an average of $28,500 per hectare.

According to Real Estate Institute of NZ figures, the median selling price last month for dairy land across the whole country was $31,050 per hectare.

IN THE RUNNING

Pengxin International Group
* Has signed a $200 million contract with receivers, subject to OIO approval, for 16 Crafar farms.
* The Shanghai-based company has four business arms reaching into property development, infrastructure, mining and agriculture.

Michael Fay's consortium
* Has made a $171.5 million offer for the farms.
* Made up of a group of farmers, including Iwi interests.
* Fay, who is estimated to be worth more than $700 million, has not disclosed how much of his own money is going into the offer.

- NZ Herald

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