Pengxin gets nod; rivals sharpen knives

Chinese company Shanghai Pengxin is out front and sprinting for the Crafar farms purchase finish line now the Government is cheering it on – but it could still be tripped up by a High Court challenge next week, and iwi are calling for an independent inquiry.

Allan Crafar, who two years ago watched receivers move on to his life's work, 16 North Island dairy farms, summed up Pengxin's uneasy triumph yesterday saying: "There will be actions, other actions; I don't believe it's going to happen".

After nine months assessing Pengxin's application to buy the central and southern North Island farms for $210million-plus, the Overseas Investment Office yesterday announced that Government ministers had consented to Pengxin subsidiary Milk New Zealand Holding buying the Crafar estate.

Pengxin is the preferred bidder of receivers KordaMentha.

The key condition of the consent is that if Pengxin cannot reach commercial agreement with state-owned enterprise Landcorp to run the farms, it cannot buy them. With the Government's all-clear – which carries a raft of other conditions – Pengxin could have signed along the dotted line immediately. But it agreed to delay settlement until next Friday to allow a New Zealand farmer group headed by Sir Michael Fay time to progress High Court judicial review proceedings around the consent.

Proceedings would resume on Monday, Fay said.

The review will not test the merits of the Chinese purchase, but whether the OIO, a government agency, applied the Overseas Investment Act correctly in consenting.

Meanwhile, a member of Fay's group, Hardie Peni of Tiroa E and Te Hape B trusts, which wants to acquire two of the Crafar farms totalling 1600 hectares bordering its land south of Te Kuiti, said he wanted a full official inquiry into the Government's consent.

"If Landcorp wasn't involved, it is possibly very unlikely that the decision would have gone their way. What the heck is going on? Is the Government of New Zealand colluding with the Government of China?"

Chinese companies, said to be backed by the Chinese Government, are trying to buy dairy land and processing facilities on both sides of the Tasman to meet that country's burgeoning demand for safe, quality protein.

New Zealand has a free-trade agreement with China.

Members of Fay's farmer group unsuccessfully offered receivers $171.5m for the farms, which they plan to divide between them.

Pengxin spokesman Cedric Allan said the company was "delighted". "We are very relaxed about the review, about its appropriateness and fairness." The OIO had put Pengxin "through the hoops", he said. "The conditions are no obstacle."

Pengxin hoped to finalise farm management and operational agreements with Landcorp next week. The plan is for Pengxin to declare its purchase offer unconditional to meet the receiver's Tuesday deadline and settle on Friday. Landcorp chief executive Chris Kelly said legally binding agreements had still to be reached. Landcorp had done its due diligence and put its final proposals to Pengxin and was now awaiting a response, he said.

Among the Government's conditions for the deal are that Pengxin has to invest at least $14 million in developing the farms, which total 8000 hectares, and it cannot own or have a controlling interest in a milk-processing plant. It must give scholarships on an on-farm training facility and help Landcorp extend its business to China. Public walking access must be available over two farms, heritage and environmental protection regimes are imposed, and there are strict requirements for regular reporting to the OIO and if Pengxin wants to sell the farms.

- © Fairfax NZ News