Natural Dairy keeps Crafar farms flame alive

Photo / Christine Cornege

Natural Dairy (NZ), the Hong Kong bidder rejected by the Overseas Investment Office for the purchase of 20 dairy farms, is extending the terms of settlement for the deal to September 30 as it seeks advice on its next move.

The company says it continues to pursue opportunities to process New Zealand milk for products to be sold in Asia, particularly mainland China.

In a statement to the Hong Kong Stock Exchange, NDNZ Holdings said that the holiday period meant its New Zealand and Hong Kong advisers would not be considering the OIO refusal, announced December 22, until the third week of January.

"It will take some time for the board to obtain advice in order to assess and evaluate the situation," the statement from chairman Wu Nengkun said. "Although the applications were declined by the ministers, the company is considering sourcing the milk and manufacturing the finished dairy products in New Zealand for export into the Asia market, including but not limited to the Greater China markets."

In the meantime, the "long stop date" in sale and purchase agreements for the farms has been extended to September 30.

NDNZ Holdings fell foul of the OIO regulations for various reasons, including the fact that its bid was fronted by May Wang, a bankrupt Chinese businesswoman and New Zealand resident, and the fact that four of the 20 farms in question were sold prior to OIO applications being lodged.

While NDNZ cut its ties with Wang and made retrospective applications to purchase the farms, which came on the market because of the collapse of a large scale dairying enterprise owned by the Crafar family in New Zealand, the OIO still ruled against the transaction.

NDNZ is also subject to a Serious Fraud Office investigation, although the SFO has yet to identify which individuals within the NDNZ operation are being targeted and has confirmed it is not investigating the company itself.

NDNZ shares have been in a trading halt since early September, pending price-sensitive announcements.

Nengkun also confirmed that Graham Chin, dumped as vice-chairman and from the board in December, remains an employee of the group, while Yan Feng, another former director who was also ousted late last year, has no further involvement.

The company's Chinese subsidiary, Jiangxi Natural Dairy, previously entered into a 12-month agreement with Wang's UBNZ Funds Management Ltd. to supply and process about 37.5 million litres of UHT milk for some $105 million. UBNZ Funds will have to source about 39 million litres of raw milk from Fonterra Cooperative Group, and has told NDNZ it has leased a vacant factory and sourced three UHT milk production lines.

Still, the fate of the UBNZ group of companies, which also hold a stake in Genesis Research & Development, is up in the air after Wang's bankruptcy.