A political party headquartered in Northland is seeking monetary and legal support to legally block the sale of financially embattled Westland Milk Products to a Chinese dairy giant.
Social Credit has to file an urgent injunction in the High Court by Wednesday this week, before the takeover of the Hokitika-based company on August 1 by Inner Mongolian Yili which is 25 per cent owned by the Chinese government.
The buyout deal is worth $588 million, including Asia's biggest dairy producer taking on Westland's debt and liabilities.
Whangārei-based Social Credit Leader Chris Leitch said there were a number of grounds his party was considering for the injunction but it didn't have the financial and legal resources to lodge an application before the takeover date of August 1.
The takeover, he said, would leave Fonterra as the only significant New Zealand-owned processor of milk products.
"Should Fonterra get into further difficulties, no New Zealand purchaser would have the capacity to take ownership of the company, with the likely purchaser therefore being another Chinese corporate."
Leitch said that would leave virtually New Zealand's entire milk processing capacity in the hands of overseas companies, mainly Chinese, with Tatua which processed milk from only 114 farms the only other locally-owned processor.
The party needs more than $50,000 for filing an injunction, challenging rulings by the Overseas Investment Office, possible action against Westland directors, and hearings in court.
"The board presented only one option to farmer shareholders in the Westland co-operative and that was the outright sale of the company to Yili, when there were other options it could have and should have put to the shareholders for them to vote on," Leitch said.
He said Westland board did not pursue other options such as the possibility of merging with Fonterra or approaching the Government for assistance through the Provincial Growth Fund.
In an earlier interview, Westland board chairman Pete Morrison didn't say whether the
company contemplated a joint venture like the Silver Fern Farms model that could have retained the co-operative rather than opt for a buyout trade sale.
Nor did he wanted to discuss the fact that Fonterra approached the Westland board before it began the formal search for new capital.
Fonterra chairman John Monaghan confirmed an approach was made but the dairy giant was unable to participate.