Landcorp in talks with Chinese bidder to run Crafar farms
If Chinese company Shanghai Pengxin gets the Government's all-clear to buy the Crafar farms, it looks increasingly likely that state-owned enterprise Landcorp will run them.
Landcorp chief executive Chris Kelly said while discussions were "incomplete", it would not be out of the question for Landcorp to end up running the 16 farms.
A Pengxin offer for the central and southern North Island farms has been accepted by the Crafar farms' receivers, KordaMentha, as long as the Overseas Investment Office accepts it.
The OIO, which has had Pengxin's application for nearly nine months, said yesterday it was still assessing it.
The office said it had asked Pengxin for more information, so was not yet able to make a report to the Government ministers who will make the final decision on the OIO's recommendation. "The OIO does not know at this time when a decision will be made."
Kelly said he could not be confident that Landcorp would end up running the farms because it depended on OIO consent, and Landcorp had "no view on that at all".
He said Landcorp had no contact with the OIO and had done no due diligence study of the farms "for some time".
Asked if Landcorp had any written agreements with Pengxin, Kelly said it had "agreements to talk". A letter of intent was "lacking in detail and contingent on all sorts of things". One is OIO consent. Another is Landcorp reaching agreement with Pengxin.
Kelly said his preference was for "a more enduring relationship" than an annual agreement.
A group of farmers headed by businessman Sir Michael Fay, which in September unsuccessfully bid $171.5 million for the Crafar farms, says the architects of the Pengxin offer are trying to "New Zealand-ise" it by contracting Landcorp.
Kelly said Landcorp was not the only party from which Pengxin had sought advice on management of the Crafar farms.
Fay has said the Government has a conflict of interest, with a state-owned enterprise talking to the Chinese company. Kelly said Fay was being "disingenuous" in saying there was a conflict.
"We have to to be as profitable, as a non-government organisation, as possible.
"If it [the sale to Pengxin] goes ahead, we are looking at a commercial agreement. We are reasonably effective as an operator of large-scale dairy units. We would be looking at the opportunity to create more revenues which would mean paying the shareholder [the Government] a better return. There is no conflict whatsoever."
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