Jobs go as dairy co-op goes bust

The NZ Organic Dairy Farmers Co-operative has been placed into receivership, owing an estimated $15 million and costing about 30 jobs.

Receivers were appointed at 5pm Friday and the factory ceased operating 24 hours later.

Most milk suppliers are now believed to be selling their milk to Open Country Cheese, near Matamata.

The directors asked their major creditor, the Bank of New Zealand, to appoint receivers. The receivers are Andrew McKay and John Cregten, principals of Corporate Finance Ltd, Auckland.

Mr McKay yesterday declined to state the amount of debt, but the Taranaki Daily News estimates from company and supplier statements over the past three months that it totals at least $15 million.

This comprises the $8 million cost of building the Okato factory; payout arrears owing to its 27 suppliers, estimated at a minimum of $1.5 million; a bank overdraft of $2.1 million; convertible notes investments of $2 million secured against the company's plant, which is now of dubious value; and an unknown amount of share capital invested in the company.

Director Kevin Barrett, of Okato, is understood to have invested $800,000, but he could not be contacted for comment. Wiremu Rd farmer Andy Collins is owed $300,000 in share capital and $50,000 in payout arrears. Otorohanga farmer David Miller says his total loss will be about $1 million.

The receiver had a representative on site yesterday with the Organic Dairy operations manager Jason Tarrant, but neither would comment.

Company chairman Malcolm Campbell of Whakatane referred all inquiries to the receiver.

Mr McKay says he is still going through the company's records "to find out what we've got and where we go from here.

"I simply don't have all the answers in the first 72 hours. But it will take us less than a week to work out whether the business is saleable or can continue trading in some form."

His main task was to maximise the recovery of loans made by the bank.

The status of the convertible notes, which some investors had purchased with a cash-up option, was a completely separate matter under a different legal framework.

However, he said the plant and equipment were used as security by the bank.

The directors had scheduled a product sales meeting on site this week with executives of a Korean cheese company, Seoul Dairy, and there were suggestions of outside capital possibly coming from this source.

Mr McKay he was "still working through that. I don't know whether SDC are still a prospect for buying the business".

He said he had no idea yet whether any arrears would be paid to suppliers.

- © Fairfax NZ News