Carter Holt sought cash up-front before dealing with Crafar farm buyers

Friday 26th March 2010

Carter Holt Harvey, the forest products group owned by Graeme Hart, wanted cash up front before dealing with the Chinese investors who are attempting to buy the farms in the failed Crafar family dairying empire, says Kerry Knight, a lawyer acting for the group.

"We've spoken to their representatives," Knight told BusinessWire. "We are quite interested in them, but their terms for buying were so impossible that they (the Chinese investors) didn't want to take it further."

"They wanted the whole purchase price paid up front before an application was taken to the Overseas Investment Office," Knight said.

Carter Holt didn’t immediately calls or emails. Knight, of law firm Knight Coldicutt, represents the investors, who include Hong Kong-listed Natural Dairy NZ, 20% owner of UBNZ Assets Holdings.

UBNZ is 80%-owned by May Wang, a Chinese national and New Zealand citizen who is fronting the group which aims to raise $1.5 billion to invest in New Zealand dairy and processing assets. The parcels of Crafar and Carter Holt farms have roughly similar values, at around $200 million to $230 million.

Knight challenged a view held by some industry observers that the scattered nature of the Crafar properties, compromised them as a corporate farming proposition.

"They (the Crafar farms) do make sense" for UBNZ because it is looking to a long-life milk play, which required about 20,000 cows to its market needs, roughly the size of the herds available on the various Crafar properties, he said. “There's a couple of Crafar farm clusters and a couple of farms that are down a bit further The idea was to buy a group of farms and weed out the ones they didn't want."

Carter Holt is seeking $234 million for 29 farms, all converted from land previously planted in pine forests and which have been operating for under two years. All boast state-of-the-art animal handling and milk processing equipment. Fifteen of the farms adjoin one another, and they are currently carrying around 20,000 stock.

UBNZ had made inquiries about the farms, and Carter Holt was willing to sit down with potential investors if they were prepared to make certain commitments, "but nothing like that has happened yet", said Mike Fraser-Jones, the Bayleys agent handling the Carter Holt farms.

Knight also confirmed that UBNZ was seeking an agreement in principle with Korda Mentha, the receivers for the Crafar farms, to buy the Crafar assets assuming no New Zealand buyer emerged within the 20 working days required for local open market advertising under the Overseas Investment Act.

Knight said the Crafar farms had been marketed before, but that the consortium was playing it safe by going through the local advertising process again.

UBNZ has also been eyeing land in Southland.

Businesswire.co.nz

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