Tuesday 21st February 2012 5 Comments
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The Crafar Farms Independent Purchaser Group, led by former merchant banker Michael Fay, has pulled its bid to buy 16 central North Island dairy farms ‘out of thin air’ and isn’t open to the same level of scrutiny as Shanghai Pengxin, the Chinese company says.
Pengxin says no-one can hold CFIPG to account for its promises if it’s successful in derailing the existing offer for the Crafar family farms, and the $171.5 million offer is nothing more than a “phantom bid” whose benefits start and stop with improvements to the land.
“They can promise whatever they like, even though they have not done due diligence on the properties, because no-one could hold them to their promises, even if they ever succeed in having an offer for the properties accepted,” Pengxin spokesman Cedric Allen said in a statement. “Our bid has been accepted by the receiver, and the Overseas Investment Office will make sure we keep our promises if they give their approval following the current review.”
The protracted battle for the Crafar farms took an unexpected turn last week when Justice Forrest Miller sent Pengxin’s successful application back to the OIO for consideration, saying the department materially overstated its economic benefits by using an inadequate testing methodology.
The Fay-led CFIPG made a new submission to the OIO, saying it won’t budge on price, but will spend $18 million upgrading the land over three years, which will lead to an estimated 25 percent to 30 percent improvement in production. That offer has previously been knocked backed by receiver KordaMentha as being too low.
Pengxin reportedly offered $210 million for the farms and today said it will spend $18.7 million upgrading the farms, $15.5 million of which will be in the first three years.
Allen said a campaign of half-truths had been run against Pengxin, and that while it is a major property developer, it also has mining assets in the Republic of Congo, a successful cropping farm in Bolivia and sheep breeding operations in China.
If the deal is approved, Pengxin will give state-owned farmer Landcorp the opportunity of being involved in managing its Chinese sheep breeding operations in China.
The purchase of large blocks of farmland by foreigners has been in the government’s sights after the aborted bid for the Crafar farms in 2010 by Hong Kong Exchange-listed Natural Dairy (NZ). The government was pushing for looser controls on foreign investment, but ultimately did an about-face and imposed stricter processes amid rising opposition to the sale.
“Other Chinese companies interested in investing in various sectors of the New Zealand economy are closely watching our bid to become involved in the dairy industry in New Zealand and will be encouraged if approval is given,” Allen said. “But like Shanghai Pengxin, they will also be disappointed to see the level of anti-Chinese sentiment expressed in the recent months and the lengthy, expensive and uncertain approval process will be discouraging.”
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