Dairy Holdings stays Kiwi

South Canterbury Finance's (SCF) largest remaining asset, Dairy Holdings, will stay in New Zealand ownership after existing shareholders put in the winning bid of $56.4 million.

Dairy Holdings is Fonterra's biggest supplier and owns 58 dairy farms in Canterbury, Southland and the West Coast, covering 14,200 hectares.

The stake in Dairy Holdings came on the market after SCF was tipped into receivership on August 31, 2010, prompting a $1.59 billion payout under the Government's deposit guarantee scheme.

SCF's late chairman, Allan Hubbard, had transferred a 33.6 per cent stake to SCF in 2008 in a bid to shore up the company. The stake was said to be worth $75.7 million then but Reserve Bank documents revealed the figure was thought to be inflated.

SCF receivers had been trying to sell their 33.6 per cent Dairy Holdings stake jointly with three United States investors who each had 8.33 per cent stakes, and Christchurch businessman Humphry Rolleston who owned 3.9 per cent, creating a 62.5 per cent controlling stake.

Shareholders have pre-emptive rights to buy holdings being offered for sale by another shareholder.

Yesterday, Companies Office documents showed that existing shareholder and former South Canterbury potato farmer Alan Pye had increased his shareholding from 20.8 to 25 per cent, Tauranga dairy farmers Colin and Dale Armer now own 60.74 per cent, up from 33.2 per cent, and new shareholders JD and RD Wallace now own 14.26 per cent.

Mr Armer was pleased the dairy group had stayed in New Zealand ownership. He and his wife had been able to finance their increased shareholdings through "substantial farming businesses in the North Island which had funds available".

"It will be business as usual. The new shareholders share a similar focus."

He would relish being out of the media spotlight, he said.

"I'm very reluctant to be talking [to the media]. We like to keep a low profile and get on with our business."

As chairman for the new shareholder JD and RD Wallace Ltd, Harry Snell said retaining local ownership was a bonus. The new shareholders were major North Island dairying families, the Luxtons and the Wallaces.

"We formed a group with a non-farming Wellington family and were looking for investment opportunities in farming in the South Island since August last year.

"When Dairy Holdings came on the market we were ready to go. We initially worked with the receivers but then worked with the shareholders.

"It will remain business as usual; we are impressed with the structure," he said.

Mr Pye could not be contacted for comment yesterday.

Dairy Holdings chairman Bill Baylis was happy with the company retaining its New Zealand shareholding and said operations had not been seriously affected by the sales process.

SCF receivers Kerryn Downey and William Black yesterday announced the sale.

"Receivers for SCF are pleased to announce SCF's shareholding of 33.6 per cent in Dairy Holdings has been acquired by existing shareholders.

"This has been a lengthy and robust sale process that commenced in December 2010. We have worked closely with other shareholders and our sale adviser and are delighted that the sale has been to New Zealand buyers."

The Timaru Herald