Landcorp misses out on Crafar farms

The tender box for the Crafar farms receivership sale - which had more than 50 different bids put in it before the process closed last week. Photo / Richard Robinson

Receivers for the Crafar dairy farm empire have announced that state-owned farmer Landcorp has been unsuccessful in its attempt to buy the properties, though cannot yet say who has won the race to buy them.

The following announcement was made this morning:

"Following a comprehensive public marketing campaign by Bayleys, tenders for the Crafar farms portfolio closed last week with multiple offers submitted.

Receivers Michael Stiassny and Brendon Gibson confirmed that over 50 offers were submitted on all or parts of the portfolio from a range of buyers and that they were pleased by the number and strength of the offers. The Receivers regrettably advise that although Landcorp was one of the parties that submitted a tender, its offer was not among the preferred tenderers.

Negotiations with the preferred tenderers will continue over coming days."

Landcorp chairman Jim Sutton said he was not surprised at the news if rumours about what other bidders were offering the receivers for the farms were true.

UBNZ has signed a conditional agreement to buy the portfolio of 16 farms from the receivers for what is understood to be $213.2 million plus stock.

The offer is subject to Overseas Investment Office approval and can be overtaken by a better offer.

Sutton would not be drawn about whether a sale to UBNZ would be good for the country, saying it was a matter for the Government to decide.

However he stressed that UBNZ had terms and conditions to satisfy before it could proceed with a sale.

Asked whether that meant Landcorp still had a shot at purchasing the farms, Sutton said "we will wait and see".

"No doubt whoever buys the farms will have a fairly challenging project on their hands. There's quite a lot of work to be done on the properties," he said.

The Crafar farms went into receivership last October owing more than $200 million to PGG Wrightson and the banks.

Allan Crafar said the announcement was news to him when contacted by nzherald.co.nz.

However it was not surprising given the offer UBNZ had made, he said.

Crafar has offered receivers $216 million to redeem his debt, which was the best offer given it was not subject to Overseas Investment Office approval, he said.

Crafar has yet to front up with the cash to buy back the farms.

"No timeline has been given but I'm hoping it (the money) will be available shortly," Crafar said.

The matter was "in the hands of the people involved", he said.

Natural Dairy chairman Graham Chin said he remained confident the UBNZ/Natural Dairy bid offered the best deal to receivers, creditors and the country as a whole, in the form of more jobs, increased export revenues and taxation.

"People need to keep a sense of proportion," Chin said.

"In the last 12 months the OIO has approved the sale of 80,000 hectares of land to foreign interest.

"Our OIO application only relates to the purchase of just 8615 hectares out of more than 2 million hectares of dairy farmland in New Zealand.

Green Party co-leader Russel Norman said the failure of the Landcorp bid now meant Prime Minister John Key had to "back up some of his statements".

Norman said that it now meant the Government "hadn't been let off the hook - it looked like there might have been an opportunity for the Government to have been let off the hook by Landcorp buying them."

"Now that's not happened, assuming the Natural Dairy bid goes ahead, then the Government really needs to make sure it gets turned down through the overseas investment process," said Norman. "Now Key has to back up some of his earlier statements."

While there were certain overseas investment processes that needed to occur, at the end of the whole process, Norman said he would "certainly be advocating that they turn the application down".

"I think there are very strong grounds to do that under the existing legislation, because it is not in New Zealand's long term interests to have our productive land brought up by foreign owners."

"Ultimately the decision is by the Minister, but there are plenty of reasons under the Overseas Investment Act to turn it down. So the ministers can do that - and they need to."

Norman said the longer term issue was to put some provisions in to protect the New Zealand ownership of land.

"Even though there are the provisions in the Act to turn it down, they aren't very strong provisions which would say up front ' New Zealand land should stay in New Zealand ownership' - which we think should happen."

A spokesman for State Owned Enterprises Minister Simon Power said the minister would not be making any comment on the matter, saying it was "an operational issue".

On July 5 Prime Minister John Key says he didn't want New Zealanders to become tenants in their own country as foreign companies seek to buy up farms, and the Government may look at law changes.

Key said he could not comment directly on the Crafar farms issue because it was before the OIO.

Asked if his preference was for the land to stay in New Zealand hands, Key again said he could not comment but added: "As a general and broader principle I think New Zealanders should be concerned if we sell huge tracts of our productive land.

"Now, that's a challenging issue given the state of the current law and quite clearly it's evidentially possible and has been achieved that individual farms can be sold. Looking four, five, ten years into the future I'd hate to see New Zealanders as tenants in their own country and that is a risk I think if we sell out our entire productive base, so that's something the Government will have to consider."

Tenders for the properties closed last week, and Landcorp put in a joint bid with Wairakei Pastoral, while Chinese investors UBNZ was the other confirmed bidder.

Landcorp chief executive Chris Kelly said earlier this month that the SOE's board supported a recommendation by management to place a bid for the farms.

"It's fair to say that the decision was unanimous, the business case made a reasonably compelling commercial argument."

The properties include 13 dairy farms and three drystock properties.

"I'm not absolutely confident ... we've had the farms valued and in my opinion we're going to offer a realistic valuation. Whether it's high enough or not, who knows," Kelly said.

Kelly today said: the receivers had made it "pretty plain to me that they had at least one, and possible more offers that were favourable to them and that they were going to enter negotiations with those parties," he said.

The possibility of a Chinese consortium buying up such a large tract of New Zealand farm land has alarmed some commentators and politicians, concerned at foreign control of productive land.