It’s taken far longer than it ought to have, but the sale of the former Crafar farms has finally been settled.
Today, after a long and extensive process, the Receivers from KordaMentha have secured final settlement with Pengxin New Zealand Farm Group Limited for the Crafar Farms.
Pengxin New Zealand Farm Group Limited’s offer was accepted by the Receivers two years ago and has been subject to many hurdles, opposition and challenges.
Brendon Gibson of KordaMentha said “despite a long and challenging process, we are happy to have secured the sale of the Crafar farms at a very pleasing price. Following extensive local and international marketing of the farms as individual units and as a group, Pengxin’s offer was far and above the best received so we are very satisfied to secure final settlement.
“We have operated the properties for three years and the farms will be handed over as a full going concern for Pengxin and Landcorp. The farms we inherited required some hard work and investment during a volatile economic environment, the support of our appointing banks, staff and sharemilkers during these challenging three years has been exceptional. We understand the new owners and operators will continue that work and investment in the farms. . .
While I don’t think the government should be farming that is a political view about best use of public money which doesn’t reflect on Landcorp’s ability to manage farms.
The company makes a poor return on capital.
But the farms it owns and manages are generally well run and the former Crafar farms should do much betteer under Landcorp management.
Why did the receivers of the Crafar farms not offer the properties individually rather than only attempting to sell them all as a job lot?
I’ve asked this question several times and it’s been based on a misconception because the receivers did offer the farms separately or together.
A comment from JC yesterday pointed to a column by Fran O’Sullivan who explained:
“But KordaMentha receiver Brendon Gibson confirms there was no real difference between the way the Crafar farms were marketed here and overseas.
The wording used in the advertising material in New Zealand was quite explicit in what was being offered. “There is the potential to purchase a single property, a selection of properties, or the entire portfolio,” the advertisement stated.
This was patently clear in copies of the NZ advertisements which Bayleys placed.
The firm had been instructed to market the portfolio to the widest potential buyer audience possible and secure the best possible outcome by maximising the value of its clients’ property assets.
The receivers are duty-bound to get the best price.
Given there would be a much larger market for individual farms than the whole lot as a package I’d have thought that selling them separately would have raised more money than selling them all together.
Obviously not in this case where the value of the whole is greater than that of the sum of the parts.
It could be that those interested in single properties thought they’d get a bargain and didn’t offer enough. It could be that decent offers were made for the better properties but not enough was offered for the run-down ones.
There might be other explanations, but whatever the reason, the best offer was from Natural Dairy but was turned down by the Overseas Investment Office. The next best offer was from Shanghai Pengxin and both were for all the farms as a package.
Landcorp’s bid for the Crafar farms has been rejected by the receivers.
Receivers Michael Stiassny and Brendon Gibson of KordaMentha confirmed today that over 50 offers were submitted on all or parts of the portfolio from a range of buyers.
They were pleased with the strength of the offers, however Landcorp was not among the preferred tenders, they said in a brief statement.
The SOE should not be competing with private businesses and individuals in land acquisition and it should be gradually reducing its landholding, not increasing it.
As I said here and here, the $1668.7m it has invested in farms returned only $10 million by way of a dividend to the public coffers last year.
That capital would give a better return for agriculture and the country as a whole if it was spent in areas such as research and initiatives to encourage more students in agriculture and related fields.