Synalit Milk has received a cease and desist letter regarding its Pokeno land but believes a practical solution is attainable.
Synlait has begun building a second nutritional powder manufacturing site that had been set to be commissioned in the upcoming 2019-2020 dairy season.
When Synlait purchased the land in February 2018, that was conditional on the seller, Stonehill Trustee, procuring the removal of the covenants on the land which restricted its use to grazing, lifestyle farming or forestry.
Stonehill had ignored a previous cease and desist letter from the owner of adjacent land,Ye Qing and his company New Zealand Industrial Park, after Synlait started earthworks in March last year and began building the factory in May.
A High Court decision in November last year had removed the covenants and then Synlait took title to the land. But Ye won his appeal against that decision earlier this month.
"Yesterday, Synlait received a cease and desist letter from the beneficiary of the covenant while the beneficiary considers its options following the Court of Appeal decision," Synlait chief executive Leon Clement said in a statement.
"We are taking advice and talking to all parties, and we believe a practical solution is attainable," he said.
He acknowledged, however, that the covenants, if left in place, could "hinder Synlait's intention to develop the site."
The shares last traded at $9.95 and are down 3.4 per cent over the past 12 months.