Crafar deal will add value - Key

ANDREA FOX, WILLIAM MACE AND KATE CHAPMAN
Last updated 10:50 08/08/2012

Relevant offers

Prime Minister John Key says the Court of Appeal decision to approve Shanghai Pengxin's purchase of the Crafar farms shows ministers had followed the law.

The Court of Appeal today dismissed legal challenges from a group led by Sir Michael Fay and two Maori trusts against the long-running attempt by the Chinese company to buy the Crafar farms.

"Overall we've believed... that yes, the bid by the Chinese company can add value and allow us to have good distribution into China," Key said.

It was an important investment but had to be seen in the context -- it was a very small portion of farmland, he said.

Iwi challenging the Chinese purchase of the 16 Crafar farms said they will consider appealing the court rejection of their objection.

But they are also still open to negotiating with the Chinese company to purchase two of the farms which are central to their case.

Earlier this year the Government allowed the $200 million-plus Pengxin offer to proceed on the recommendation of the Overseas Investment Office. However a group including Sir Michael and the Maori trusts asked for a judicial review into that decision in the hope that their lower $171.5m bid for the 16 farms would win out.

In its decision released this morning the Court of Appeal said Pengxin's bosses had sufficient business experience and acumen to run the farming business and surpass the OIO's requirements.

The Court said the Government's conclusion that the investment would bring substantial and identifiable benefit to New Zealand had not been challenged. Further delay would be prejudicial to the interests of third parties such as creditors of the Crafar's farming companies and detrimental to the state of the farms, the Court said.

Hardie Peni, spokesman for Tiroa E and Te Hape B Trusts, which want two farms at Benneydale which are part of the in-receivership Crafar farm estate, said the iwi were not surprised by the court's decision.

"We were already on the back foot all the way."

The trusts' position had always been that if they failed to overturn the Government's consent for Pengxin to purchase the farms in court, they wanted to deal directly with the Chinese to try to buy the two farms, he said.

Pengxin had offered to sell the trusts' the farms for $39 million, which based on the trusts' valuation was "a little bit over the top", Peni said.

The trusts' valuation was confidential.

"If they were amicable and invited us to sit across the table we would consider it, but always it would come down to the price. That is the main determination."

Ad Feedback

The trusts would scrutinise the court's ruling and make a decision on whether to appeal it, he said.

Shanghai Pengxin said was pleased with the Court of Appeal ruling in its favour and, with Landcorp, was looking forward to beginning a programme of improvements on the Crafar farms as soon as it was able to settle on the properties.

In a statement Pengxin said the farms would be purchased in the name of its subsidiary Milk New Zealand Holding and run by Milk New Zealand Farm Management, a joint venture with Landcorp, which would honour all current arrangements made by receiver KordaMentha with sharemilkers and staff.

"Our immediate priority is to begin the process of improving the farms, increasing production, and making sure we comply with all of the conditions imposed by the Overseas Investment Office."

Sir Michael said the group's actions in trying to purchase the 16 Crafar farms had raised important issues about the sale of productive New Zealand farm land to overseas investors and had made the OIO's interpretation of the Act governing sales to overseas buyers more transparent.

"We are all disappointed - especially our two Iwi members - to see this significant parcel of highly productive dairy land, pass out of New Zealand ownership," said Fay in a statement.

"The issue of overseas buyers aggregating large parcels of farm land is very important to our most productive export sector and I don't believe we have heard the end of the discussions raised by our group. Clearly the majority of New Zealanders have significant concerns about this issue.

"But that opinion was not enough to sway the Government or the Courts and so our group will now concentrate on business as usual on the farm."

- © Fairfax NZ News

Comments

Special offers

Featured Promotions

Sponsored Content