Chinese in talks to buy farms
Ratepayers should be concerned about their assetTIM HUNTER AND MATT RILKOFF
Chinese interests are believed to be in talks to buy the New Plymouth District Council out of its controversial $152 million Tasmanian dairy farms investment.
Owned through the council's Perpetual Investment Fund, administered by Taranaki Investment Management Ltd (TIML), the Tasmanian properties had a book value of $152 million at last balance date but have provided no dividends under council ownership.
Two sources told Fairfax Media the fund's managers were now working on closing a sale of the Van Diemen's Land Company (VDL) farms. One said the profits of the business had been "extremely poor".
"I know there have been Chinese interests doing due diligence on the company recently and I know there are New Zealand farm consultants travelling there to help them with their profitability issues."
New Plymouth District ratepayers should be concerned about their asset, he said.
One year ago the Taranaki Daily News reported that the Chinese Investment Corporation had held talks with Tasmanian Premier Lara Giddings about acquiring an interest in VDL.
It was reported then that VDL had engaged in preliminary consultations with Australia's Foreign Investment Review Board and TIML chief executive Mike Trousselot acknowledged they were seeking investment to help fund a A$180m (NZ$207.7m) expansion to double milk production.
Confidentiality agreements prevented him from saying which parties were keen to invest in the property.
Tasman Farms represents about two-thirds of the council's Perpetual Investment Fund (PIF), leading to concern there is too much exposure to an underperforming business.
The fund was created in 2004 when the council sold its Powerco shares to avoid having "all their eggs in one basket".
Though the farms are operated at arm's length from the council, their sale is promising to be a key election issue.
Of those candidates standing for council who have responded to questions from the Daily News, most have said the farms should be sold.
New Plymouth District Mayor Harry Duynhoven said the sale of the farms would rebalance the asset mix of the PIF.
"At the right time, with the right buyer, it would be good - as TIML has wanted to do - to reduce its big investment in one major category.
"It's a big investment and obviously you don't go into farming for the short term - farming's a long-term business.
"TIML has made it clear and it's been quite public they're in the process of finding a suitable partner, and that's happening.
"We are very pleased with the way the farms have been developed, and those who are informed know it's an investment made not for a quick duration," he said.
On its website, VDL says it owns and operates 25 dairy farms, a dairy support unit and a standalone heifer rearing operation. It says it runs about 30,000 dairy stock, including replacements.
Aside from allegations of poor performance, VDL has also had its expansion plans panned by conservationists as a disaster for the island's endangered Tasmanian devils.
Despite being defined as a perpetual fund, the PIF has depreciated from $260m to about $241m in nine years.
Since its formation, the council has received $20m in release payments a year but in a bid to rebuild the fund, it will reduce its takings to $10.4m in 2013-14, $9.4m in 2014-15 and $8.5m in 2015-16.
The budgeted cost of running TIML to June 2013 was $1,562,000, which included $650,000 in staff remuneration and $365,000 for director fees and expenses.
Tasman Farms chairman Keith Sutton could not be reached for comment yesterday.
- © Fairfax NZ News
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