OIO to be questioned over Shanghai Pengxin NZ farm deal delay

"We are simply not confident enough of a favourable outcome," says Dakang chief executive Gary Romano.

"We are simply not confident enough of a favourable outcome," says Dakang chief executive Gary Romano.

A Shanghai Pengxin-controlled company is pulling out of a $42.7 million deal to buy a cluster of Bay of Islands farms, saying it will not put the sellers through the "frustration and pain" of a Lochinver Station-type experience.

Dakang New Zealand Farm Group, 55 per cent owned by Pengxin, applied to the Overseas Investment Office in April this year for consent to buy 3300 hectares of land from Northland's Pinny family.

Six months on, the company said it had yet to receive advice that the OIO had considered the sale or made a recommendation to the Government.

The Government rejected Pengxin's application to buy Lochinver 14 months after it was filed.
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The Government rejected Pengxin's application to buy Lochinver 14 months after it was filed.

Associate Finance Minister Paula Bennett, who oversees the OIO, said she would be asking the office why the Pinny farms application was taking longer than others.

She said the Government welcomed foreign investment that supported economic growth.

Dakang chief executive Gary Romano said the decision to cancel the Pinny sale and purchase agreement was "somewhat" based on the company's experience with its 2014 sale and purchase agreement to buy the Lochinver cattle and sheep station near Taupo.

This agreement had to be extended 11 times because of the time it took to get a decision, Romano said. The Government last month rejected Pengxin's bid to buy the 13,800 hectare station for $88m from the Stevenson Group, over-riding OIO's recommendation the deal be consented.

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* Overseas investors complain about OIO delays
Pengxin still mulling response to Lochinver buy rejection

Romano said each extension had caused "frustration and pain" to the Lochinver vendors, and uncertainty for everyone involved.

"We are simply not confident enough of a favourable outcome to warrant putting the Northland vendors through a similar experience," he said.

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Romano said Pengxin had believed five months would be sufficient time for a rigorous review of its plans for the Pinny farms, given the OIO's 70 working day guideline for the turnaround of applications.

Dakang signed the sale and purchase agreement with the Pinny family in January this year. The seven dairy and three support farms had been on the market since October last year. The Pinny farms milk 3900 cows and employ 50 staff. The farms range in size from 100ha to 600ha.

No further comment would be available from Dakang or the Pinny family, a statement said. 

Rejecting Pengxin's application to buy Lochinver 14 months after it was filed, the Government said the benefits to New Zealand were not "substantial and identifiable". 

Pengxin has yet to announce if it will challenge the Lochinver decision. Among its options is to seek a judicial review of the decision in the High Court, or make a new application.

The company has also yet to announce the outcome of its advertising for sale earlier this year the former Crafar dairy farms it bought in a receivership sale in 2012. Pengxin was obliged under its investment consent provisions to offer the Central North Island farms for sale to New Zealanders, after advising the OIO it was restructuring its New Zealand business.  

 - Stuff

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