Maori fish farm collapses under debt mountain

A kingfish farm set up by Maori in the Far North two years ago is folding with debts of $7.6 million.

Parengarenga Fish Farm is shutting down the operation it established by the Parengarenga Harbour, citing financial troubles and constant problems with its land-based aquaculture plant.

The closure has caught many of the 2500 shareholders by surprise. Until recently the fish farm, a Parengarenga Incorporation subsidiary, had been hailed as a prime example of Maori economic development in the North.

Incorporation chairman Winiata Brown, of Te Kao, told shareholders that the venture had attracted too few investors, the plant built by IAA of Denmark had design faults, and ongoing costs were exorbitant.

"Legal action against IAA must be taken in Denmark under Danish legal jurisdiction and we simply do not have the resources to initiate or maintain such action," he said.

A funding shortfall due to a major investor withdrawing when Parengarenga Fish Farm was established had caused concern.

In 2004 the Bank of New Zealand, which had loaned it $7 million to get the venture started, had introduced consultants PricewaterhouseCooper to the company to produce models showing its financial viability.

After finishing the models, PricewaterhouseCooper had spent a year seeking investors, but found none. Last December the consultants had exited t "leaving us with the original problem", Mr Brown said.

Parengarenga Incorporation is understood to have assets of more than $30 million, including the Te Rangi, Te Paki and Paua stations in the Far North, forestry developments and an oyster farm. These were put up as collateral for the $7 million loan, which was being transferred from the fish farm company to the incorporation.

"The loan restructure involves repayments over a 20-year term by the incorporation, which at this stage requires a monthly payment to the bank of $74,427 which comprises interest and principal," Mr Brown said.

"Over time the incorporation has also contributed $7.6 million for establishment and operational costs of the fish farm."

Parengarenga Fish Farm creditors were also owed $600,000, which Mr Brown said had to be paid to avoid the company being forced into liquidation.

IAA had claimed its aquaculture plant would produce 600 tonnes of fish annually, but now conceded it would produce only up to 400 tonnes, he said.

Last year's fish was sold at good prices, but the combined effects of insufficient working capital, ongoing plant failures and spiralling costs had overtaken the business, he said.

However, Auckland shareholder John Yates said management of the farm had been abysmal. He claimed that the PricewaterhouseCooper bill had been $700,000, which was "extraordinary", and he wanted to know why the plant construction contract had gone ahead with dispute procedures that had to be settled in Demark.

Mr Yates noted that the $7 million loan restructure on the terms specified by Mr Brown appeared to involve repayments totalling $17.8 million.

Niwa chief executive Rick Pridmore said the fish farm's closure would not affect operations at Ruakaka, where about 200,000 kingfish bred annually would go to Marlborough Sounds clients.

Niwa aims to produce 1 million juvenile kingfish a year for the finfish farming industry in New Zealand.

- NORTHERN ADVOCATE