Chinese set September cut-off for Crafar deal.

The Chinese-backed investor trying to buy 20 New Zealand farms -- most linked to the Crafar family -- has protected its deal by pushing the terms of settlement for the purchase of 16 farms in receivership out to September 30 this year.

Natural Dairy NZ Holdings told the Hong Kong stock exchange that its advisers needed time to consider the decision by two New Zealand cabinet ministers to refuse overseas investment approval for the farm sales.

Last month ministers Maurice Williamson and Kate Wilkinson declined consent for Natural Dairy's application because they were not satisfied that all the individuals with control of Natural Dairy were of good character.

New Zealand and Hong Kong advisers to the company would not consider this refusal until the third week of January, and company chairman Wu Nengkun said it would "take some time for the board to obtain advice".

"Although the applications were declined by the ministers, the company is considering sourcing the milk and manufacturing the finished dairy products in New Zealand for export into the Asia market."

A Chinese subsidiary of the company, Jiangxi Natural Dairy, previously entered into a 12-month agreement with UBNZ Funds Management Ltd to supply and process about 37.5 million litres of UHT milk for $105 million -- which could mean sourcing 39 million litres of raw milk from Fonterra. The companies have previously said they have leased a vacant factory at Tauranga and sourced three UHT milk production lines.

The sticking points in the Natural Dairy purchases have been the involvement of a bankrupt Chinese businesswoman resident in New Zealand resident, May Wang, and the fact that the first four of the 20 farms were bought before application were processed by the Overseas Investment Office (OIO).

Natural Dairy made retrospective applications to purchase the farms, but the OIO still ruled against the transaction, and has said some individuals within the company are being investigated by the Serious Fraud Office.

Mr Nengkun said that Graham Chin -- who was made executive vice chairman of the Natural Dairy board in February last year and dropped from the board in December -- still worked for the company.

Another former director, Yan Feng, who was paid an annual allowance of $HK250,000 ($NZ42,136), had also been dropped from the board, but would have no further involvement.

The company also noted that the OIO may apply to the High Court to have the first four farms sold off, and penalties imposed, with potential for fines of up to $NZ300,000.