Fay led local team ups offer for Crafar farms

A group of North Island farmers, led by Sir Michael Fay has increased its offer for the Crafar farms.

The original offer was for only nine of the 16 farms, the new offer is to pay $171.5 million for all 16 farms.

The Overseas Investment Commission is appraising an offer for the farms from a Chinese based group.

“Our group of farmers is the only other buyer for all the farms in this sales process and following satisfactory due diligence we are ready to go,” said Sir Michael. “As soon as we have a signed deal with the receivers they can hand over the keys and we’re ready to walk onto the land. Obviously that’s subject to the Overseas Investment Office rejecting the current Chinese contract.”

Sir Michael said the group was a mix of Iwi and local farmers who already own dairy farms in the Central North Island and who don’t have the complication of needing OIO approval.

“We’d like to be on the farms before Christmas to get them up to full production for the new season starting in mid 2012.”

Sir Michael said the average per hectare price was an accurate reflection of current land, asset and herd values and the opportunity to closely inspect production figures would need to confirm the value of the $171.5 million farmer group offer.

Steve Bignell, of Stretton’s Chartered Accountants in Taupo is the lead negotiator for the group of farmers and says the average $28,500 per hectare offer placed the contract price in the leading bracket for dairy farm sales in the area and across New Zealand.

Federated farmers says the bid is the best option for keeping the farms in New Zealand hands but the Overseas Investment Office should complete its investigation of the Chinese offer without bias.

“As a Kiwi would I like these farms to remain in Kiwi ownership? You bet I would,” says Robin Barkla, Federated Farmers Dairy Vice-President who farms in the Bay of Plenty. . .

“While my heart says one thing my head says that because there’s a live OIO application, we need to let it go through all the necessary hoops.

“The OIO process must be clean for if there’s any hint of favouritism or bias, then we risk becoming a South Seas Venezuela. Anything like that would spook international investors and dangerously drive up interest rates.

“That said, Sir Michael Fay is doing exactly what Federated Farmers has called for. Assembling a group of Kiwi investors to make a sizeable but credible bid for these farms.

“It certainly provides the receiver with a great option should the Pengxin Group bid fall over,” Mr Barkla concluded.

That’s a reasoned response.

The Chinese offer was first on the table is, I think, for a higher price and is part way through the OIO process.

The receivers have a responsibility to get the best price  accept the best offer for the creditors on whose behalf they are working. If the OIO accepts the Pengxin Group bid then it would be difficult for the Fay-led bid to succeed if it is offering a substantially lower price.

If however, the locals increase their offered price so it is close to that of Pengxin then the receivers might have a more difficult choice to make.

UPDATE:

RadioNZ reports the receivers say the Pengxin offer is still the best.

5 Responses to Fay led local team ups offer for Crafar farms

  1. robertguyton says:

    Close to that offered’?

    ‘The receivers have a responsibility to get the best price for the creditors on whose behalf they are working.’ (emphasis mine)

  2. homepaddock says:

    You quote me correctly but I should have said best offer (which takes in more than price).

    Buying offers usually have conditions so money isn’t the only consideration. A slightly lower price with fewer and/or simpler conditions and early settlement might be better offer than a slghtly higher price with more and/or more onerous conditions and/or delays.

  3. Colin McIntyre says:

    With Michael Fay providing a large proportion of the dosh and iwi 40% in reality the NZ taxpayer is once more the source.

  4. Neil says:

    I’m afraid there’s a lot of sinophobia in New Zealand.Surely we should sell to the best buyer. They can’t uplift the land and take it back to China.
    Scratch a New Zealander and you’ll find some nasty prejudices. How much can be blamed on Winston First ?

  5. pdm says:

    RG – never forget that the first people receivers pay are themselves.

    Son in law works for one of the farm trusts said to be part of the Fay consortium. They are watching developments with interest as the Crafer farms they would be involved with are only a few ks down the road.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: