Central Plains Water seeking $3m

Central Plains Water (CPW) is sounding out shareholders for another $3 million to fund the next stage of its $200m Canterbury Plains irrigation scheme.

Chief executive Derek Crombie said yesterday the company needed about $3m within the next year, funded by either more debt or issuing shares to new or existing shareholders.

CPW initially raised $4.5m from shareholders, but was forced to borrow another $4.8m from Dairy Holdings Ltd and $2m from Fonterra to pay for a drawn-out resource consent battle.

At a CPW meeting on July 27, shareholders were told more money was needed and asked about their willingness to invest more money.

"It wasn't put to a vote or anything but there was a lot of support."

He rejected the suggestion that CPW was running out of money after spending $9m on consent hearings and said existing cashflow would see it through for another year.

The $3m would pay for a more detailed scheme design and lay the groundwork for seeking the $200m or so needed to build it, he said.

Where the $200m will come from remains the bigger lingering question, with concerns many farmer shareholders already under financial stress will struggle to raise money to invest further.

Last week, Prime Minister John Key said the Government would consider stepping in, with either a direct investment or a loan.

Crombie said it was too early to say where the money would come from but the scheme would probably be funded through a combination of debt and equity.

The collapse of South Canterbury Finance (SCF) this week could also affect farmer shareholders' ability to raise money for the scheme, particularly as the economic recovery remained tenuous, he said.

CPW's biggest lender, Dairy Holdings, is also part-owned by SCF and many of its shareholder farmers have business ties to the company, although Crombie said its loan was not directly affected.

Government assurances that there would be no fire sales of SCF's assets and the big banks signalling a move into rural lending were encouraging, he said.

"But it is a worry. We are going to be dependent on farmers to want this scheme.

"It [the collapse of SCF] must have some effect if the farmers can't raise the money to develop their farms," Crombie said.

While the irrigation scheme was granted consent in June, CPW still faces 11 Environment Court appeals, six against the decision and another five against restrictive notices of requirement placed over farmer's lands.

Crombie said he did not expect to spend another $9m on appeals and was optimistic all disputes could be resolved before going to court.

One change being considered was hiding most of the irrigation scheme underground in pipes, lessening its visual impact, but potentially adding as much as $50m to the construction costs.

But CPW shareholder Tim Deans, who now opposes the scheme, said he would not invest any more, believing the project was no long economically viable.

"I think CPW are really just scraping along," Deans said.

- © Fairfax NZ News