Natural Dairy still keen on kiwi farms

Photo / Christine Cornege.

Hong Kong-listed investment company Natural Dairy (NZ) Holdings is still keen on buying dairy assets in New Zealand, though it's still waiting on the first delivery of dairy products from one of May Wang's UBNZ companies.

In a statement to the Hong Kong stock exchange, the company all but admitted defeat in its bid for the Crafar family farms, which was blocked by the government after persons involved with the deal fell short of good character tests.

Natural Dairy said a rival bid from Shanghai-based Pengxin International Group meant Wang's UBNZ Funds Management (UBFM) probably wouldn't be able to renegotiate with receivers KordaMentha.

Natural Dairy will now hold an extraordinary general meeting to decide on its future plans, though it's keen to stay in New Zealand.

"New Zealand lawyers were of the view that the company was unlikely to succeed in any judicial review or appeal of the decision of the relevant ministers and OIO (Overseas Investment Office), especially if UBFM were to cancel its existing farm agreements with the receivers," the company said.

"The company will continue to seek and pursue dairy business opportunities in New Zealand either through the target company or other means."

The admission ends what's been a torturous wait for the company, whose plans to buy 20 farms forced the government to tighten restrictions on the sale of rural land to offshore investors, amid a wave of opposition from groups as diverse as the Green Party and Federated Farmers.

The sale stalled after Auckland businesswoman Wang, who was brokering the deal, faced bankruptcy proceedings from a previous venture.

UBNZ Asset Holdings, which Natural Dairy was to subsequently takeover, had already agreed to buy four of the farms before the OIO application was lodged.

Natural Dairy still wants to sell high-quality New Zealand-produced dairy products into China, with its Chinese subsidiary Jiangxi Natural Dairy previously entering into a 12-month agreement with Wang's UBFM.

The UBNZ unit was to supply and process 37.5 million litres of ultra-heat treated milk for some $105 million. Jiangxi is still waiting on the first delivery from UBNZ, and while it could terminate the agreement, it chose not to, saying it "would suffer from the loss of competitive advantage on the privilege purchase price offered by UBFM for the UHT milk."

It says it has received sample batches, and that UBFM's milk processing factory has received interim confirmation of its dairy risk management programme registration from the New Zealand Food Safety Authority.

Natural Dairy cut its ties with Wang and is now assessing its relationship with the UBNZ group of companies, whose ownership changed hands to NZ Dairy Trustee from UBNZ Trustee on December 23.

NZDT is owned by Malia-i-makalata Po'uhila, Linling Xie, and Murray Hunter in three equal share parcels, according to Companies Office documents.

UBNZ Trustee had been issued HK$314.2 million to buy the Crafar farms, and of that, HK$153.6 million has been transferred to a Natural Dairy subsidiary with the remainder still in a trust account of KordaMentha's lawyers.

The Hong Kong company now has to claw back the funds it has held in various escrow accounts in New Zealand relating to the Crafar bid, and will make further announcements on the recoverability of funds held by the former UBNZ shareholding company.