close
2 mins to read

Chinese $1.5 billion plans for dairy farms revealed

Details confirming a Hong Kong company's push to develop a $1.5 billion stake in New Zealand's dairy industry have been revealed this afternoon.Auckland lawyer Kerry Knight today confirmed that New Zealand company UBNZ Assets entered into an agreement to

Liam Baldwin
Thu, 25 Mar 2010

Details confirming a Hong Kong company’s push to develop a $1.5 billion stake in New Zealand’s dairy industry have been revealed this afternoon.

Auckland lawyer Kerry Knight today confirmed that New Zealand company UBNZ Assets entered into an agreement to buy all 29 Crafar family farms from receiver KordaMentha.

Mr Knight would not confirm the value of the deal but said he believe it was enough to cover the more than $200 million in debts owned by the Crafar enterprises.

The agreement includes stock, land and Fonterra shares.

Hong Kong listed company Natural Dairy (NZ) Holdings has a 20% stake in UBNZ Assets. The rest, on paper, belongs to Chinese-born May Wang who Mr Knight said represented a trust owned by four New Zealand business people.

Mr Knight said Natural Dairy’s goal is to build a vertically integrated dairy empire in New Zealand starting with farms at the bottom of the chain through to milk processing and exporting finished products, including infant formula, to China.

On Christmas Eve, $140 million was transferred by the company into New Zealand accounts and so far about $70 million has been spent.

The money was generated through capital raising in Hong Kong.

Mr Knight said Natural Dairy now plans further capital raising using a share issue and also convertible notes to raise more funds towards its $1.5 billion goal.

He said it might be years before the company’s plans are fully realised, if ever.

It was revealed Ms Wang facilitated the deal between her company UBNZ Assets and Natural Dairy.

Her company made an offer to the Crafars in June or July last year to buy the farms. Mr Knight said the financial deal with the receivers was the same as the initial plans.

There were rumours prior to the receivers walking on to the Crafar farms in October last year that a Chinese company was interested in the enterprises.

Dairy factories
Mr Knight confirmed that UBNZ Assets had considered the Russian-owned dairy factory in Southland.

New Zealand Dairies, owned by Russian infant formula manufacturer Nutritek, recently published its financial results for the last two years showing consistent losses despite revenue of about $100 million.

In turn, Nutritek is going through a period of financial strife.

Mr Knight said the Southland plant would require significant further investment to take it to a level to produce the quality the Chinese company was seeking.

He said four or five other companies had been considered and did not deny that discussions had be held with fledgling dairy company Synlait in Canterbury, which failed in the early stages of capital raising in recent months.

Similarly, Mr Knight did not rule out talks with Zoagn, the company behind plans to build a dairy factory in Arapuni, south Waikato.

Future
Mr Knight said, in time, Natural Dairy would look to buy out the other 80% of UBNZ Assets from the New Zealand interests over time. He said an agreement existed for the money for the 80% to be reinvested in Natural Dairy shares.

However, this move would be subject to Overseas Investment Office approval, lodged this week.

Liam Baldwin
Thu, 25 Mar 2010
© All content copyright NBR. Do not reproduce in any form without permission, even if you have a paid subscription.
Chinese $1.5 billion plans for dairy farms revealed
3689