Kiwis have stake in farm buyouts

Kerry Knight says Natural Dairy is looking to raise $1.5 billion. Photo / Dean Purcell

A listed Chinese business behind a bid to buy a privately owned dairy farm business could end up mostly owned by New Zealanders.

Hong Kong stock exchange listed Natural Dairy (NZ) Holdings owns 20 per cent of UBNZ Assets Holdings and is bankrolling the local company as it launches huge expansion plans.

UBNZ Assets has bought four farms that once belonged to the Crafar family and has registered an application with the Overseas Investment Office (OIO) to buy the remaining 20 farms.

The Crafar business went into receivership in October with reported debts of more than $200 million.

Receiver Brendon Gibson of KordaMentha, which was in control of 16 of the Crafar Farms, said an agreement on the price for the farms had not been reached.

"We wouldn't discuss a price in the media, but we are in discussions with them, as we've said," Gibson said.

Auckland lawyer Kerry Knight from Knight Coldicutt represented UBNZ Assets and was yesterday speaking on behalf of Natural Dairy.

Knight said Natural Dairy was trying to raise $1.5 billion to fund an acquisition spree in New Zealand. "But it may be one year, it may be five, it may be 10, it may never happen," Knight said.

"It depends on how much funds they raise."

Natural Dairy became involved in the transaction last May and undertook an initial capital raising of about $150 million, with a plan to build a vertically integrated dairy business, Knight said.

"Which means that as well as managing the cows and owning them and the grass and the land, they own the production facilities and they package it and they send it overseas and they sell it in China.

"The idea is that if they get into more refined milk products such as infant formula and long-life milk, if they can control the whole process they'll get a premium price in China for it."

While the first stage was to buy farms, the second stage was to look at production and the company had spoken to existing operators.

"Whether they try to buy one of those, they buy into one of those or they build their own is yet to be decided."

The bold plan is the brainchild of UBNZ Assets director May Wang, who previously had a business problem with a failed partnership which left her as a sole director holding debts, Knight said.

"She's made an attempt to try to deal with them on a piecemeal basis," he said.

"But she's got a lawyer and a barrister involved and an accountant and a whole crew of people putting together a creditors' compromise to try to pay a certain amount over the next three years based on the hoped-for salary that she's going to get from Natural Dairy, because if they get this over the line they take her on in some sort of executive position."

Wang controls a trust whose New Zealand beneficiaries own 80 per cent of UBNZ Assets.

Under the plan Natural Dairy would buy up the 80 per cent of UBNZ Assets it did not own, subject to OIO approval.

The OIO application covered the buying of the farms, the purchase by Natural Dairy of all shares in UBNZ Assets and the receivers selling farms to an overseas entity.

However, the owners of UBNZ would use the funds from the sale to buy shares in Natural Dairy, giving them majority ownership of the company.

"The New Zealand company will be a majority shareholder of Natural Dairy once this transaction takes place," Knight said.

"And even if they do this next capital raising, while they get diluted down they still have the majority stake shareholding in that company."