Shanghai Pengxin rejection has flow-on impact on failed Lochinver neighbour

Tuesday 12th January 2016

The government's decision to reject Shanghai Pengxin as a buyer for Lochinver Station had a flow-on impact on its failed neighbour, which has been put back on the market after the rationale disappeared for the Chinese company to acquire the dairy farm.

Taharua Farm is a 1,235 hectare dairy farm neighbouring the 13,843 hectare central North Island sheep and beef station Lochinver. Pengxin had an agreement to buy the property that dated back to just after the time it was first looking at Lochinver. Its owner, Fleming & Co, as trustee of the Country Spirit Trust, sold its livestock, equipment and shares to Pengxin and leased the farm to the Chinese company in June last year. The lease expires at the end of May.

In September, the government scuttled Pengxin's $88 million proposed purchase of Lochinver, which would have added to a portfolio including the Crafar farms, saying the transaction failed on the test of providing a substantial benefit to New Zealand. A month later Fleming & Co was put into receivership by ASB Bank, owing about $17.8 million. Liquidators were appointed in early November.

Lochinver was sold in November to a New Zealand farming group, Rimanui Farms. No price was disclosed. Tenders for Taharua Farm close on March 10. The farm is being marketed by Bayleys Real Estate, the same realtor that handled the Lochinver sale.

"Our preference is to own clusters of farms, for logistical reasons," said Clare Bayly, a Pengxin spokeswoman in New Zealand. Taharua "was really attractive when Lochinver was an option. When that fell through, a lot of that changed."

She said the decision to withdraw from buying Taharua was a joint decision between the purchaser and the vendor, "who shared our concern about the uncertainty of the Overseas Investment Office process."

The advertisement for Taharua says it has two 80 bale rotary cowsheds and currently carries about 2,500 cows producing about 700,000 kilograms of milk solids a year.

Another Pengxin unit, Dakang New Zealand Farm Group, withdrew an application to buy seven dairy and three support farms in Northland from Pinny Farms, the region's largest milk supplier, in October, citing the OIO's slow progress on the request and the company's experience trying to buy Lochinver Station.

BusinessDesk.co.nz

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