Kurow-Duntroon Irrigation Company put into receivership

Work to move a section of the Kurow-Duntroon Irrigation pipeline below road level being completed in April last year. Photo / Rebecca Ryan

A "significant" dispute about a cost blowout has left a North Otago irrigation company in receivership.

Last week, the Kurow-Duntroon Irrigation Company Ltd (KDIC) was put into receivership and voluntary administration by Crown Irrigation Investments Ltd.

KDIC had been undertaking a $45 million upgrade to the Kurow-Duntroon irrigation scheme.

The project, which began construction in 2019, involved laying 59km of piped irrigation infrastructure that would double the irrigation area from just under 2000ha to 4000ha, with a capacity to expand to service 5500ha.

The project had been partly funded by Crown Irrigation Investments Ltd (CIIL) - the Crown entity set up to fund large-scale irrigation schemes - through a $388,000 grant and a $34.4 million secured loan in the form of a general security agreement from November 2018.

It also received a $3 million loan from the Waitaki District Council.

In August 2019, KDIC was issued an abatement notice by the Waitaki District Council because a section of the new pipeline blocked the view of the Waitaki River west of Kurow, which breached its consent.

Work then had to be carried out to move the section underground and out of sight.

Calibre Partners insolvency practitioner Brendon Gibson said there was a "significant" dispute between the KDIC and the project's designer Monadelphous over who was liable for the increased cost caused by the consent breach.

Gibson was appointed joint receiver of the company alongside Neale Jackson, also of Calibre Partners.

The dispute was still subject to arbitration, he said.

The pair had taken control of the assets and the company's management.

Their focus would be to get the best outcome for the company's shareholders while keeping it operating.

No timeframe could yet be put on the receivership, he said.

KDIC was officially put into receivership by its board last Tuesday and shareholders were informed at a meeting on Wednesday in Kurow.

BDO partners and insolvency practitioners Colin Gower, of Christchurch. and Rees Logan, of Auckland, were appointed joint administrators.

Waitaki Mayor Gary Kircher said it was reassuring to know that Crown Irrigation had stepped in for the best interests of all parties involved.

Despite the receivership, the council's loan was considered safe.

"We'd like to see this cleared up as soon as possible for everyone's sake," Kircher said.

KDIC chairman Jock Webster declined to comment on the receivership.

The Companies Office website stated that KDIC had 70 shareholders.

On Friday, the company's first creditor meeting will be held in Oamaru where it will be decided whether a creditor committee should be set up and whether Gower and Logan should be replaced as administrators.

Gower declined to comment, referring the Otago Daily Times to Gibson.

The first receivership report is due in July.

Monadelphous said yesterday morning it could not comment on the matter at the moment.