Offers now pouring in for NZ Dairies

STU PIDDINGTON
Last updated 05:00 12/06/2012

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No-one wanted to buy New Zealand Dairies for $100 million, but it appears plenty may be keen for a bargain now it is in receivership.

The receivers BDO have received seven offers for the Studholme milk processing factory from a mix of overseas and New Zealand companies.

A decision is expected within a fortnight.

The Herald understands those companies interested include New Zealand dairy giant Fonterra, Westland Milk Products and Synlait, who had been in talks with New Zealand Dairies prior to its collapse.

Christchurch-based merchant banker Ocean Partners has also taken an interest in the company's assets.

BDO co-receiver Brian Mayo-Smith said they were going through the sale process, with indicative offers having closed last week.

"Obviously there are quite a few ingredients in the mix before we come to a conclusion."

Mr Mayo-Smith said they had talked to all the interested parties by phone or in person.

"The process is ongoing and we have also been talking to the farmers who supply the factory as they are a key part of the process."

Mr Mayo-Smith said they may also need to contact either the Overseas Investment Office or the Commerce Commission as well, depending on the buyer.

The Russian-owned dairy company collapsed owing suppliers an estimated $30m.

It had been on the market since November 2010, having received funding from Russian Bank VTB Capital, who called in the receivers prior to paying its 37 farmer suppliers for all milk sent to the factory in April, as well as another 15 cents for every kilogram of milk solids produced in the 2011-2012 season. Some farmers are likely to struggle to recover from the lost payments.

A number of local suppliers of services to the factory, as well as their transport operator, are likely to also be out of pocket.

In April, former director Richie Smith, who advised the Russian owners, said the factory would keep processing milk as usual.

New Zealand Dairies has had a chequered past since it was converted from a food processor in 2006, with financial over-runs meaning it cost more than $130m to complete. It does however have the potential to double its output with the infrastructure already in place for a second dryer.

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- The Timaru Herald

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