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CEO Chris Kelly confirms Landcorp to bid for Crafar Farms and use debt to pay for it
Landcorp will bid less than UBNZ's May Wang for 16 Crafar Farms in receivership.
Landcorp Chief Executive Chris Kelly has told Interest .co.nz the state owned enterprise will bid to buy the 16 farms in the Crafar Farms group from receiver Korda Mentha.
Kelly said Landcorp planned to submit its bid by July 7, but would offer significantly less than the rumoured amount that May Wang and UBNZ had bid for Crafar Farms, which was put into receivership last year owing over NZ$200 million to its bankers Westpac, Rabobank and PGG Wrightson.
Landcorp had a relatively low level of debt (around 13% debt to debt plus equity) and planned to structure a proposal to raise debt to pay for any acquisition, Kelly said. The government had been informed and viewed any bid as an operational matter.
"We believe if we secure these funds for a current market price we can add value and make money for our shareholder," Kelly said.
"We don't expect the government to put in any equity and we won't be asking for it," he said.
UBNZ and Wang had been rumoured to have offered a price above market value and Landcorp would not pay above market rates, Kelly said.
Kelly said Landcorp had had brief discussions with the New Zealand Superannuation Fund and possibly other funding partners, but Landcorp was able to raise funds on its own.
Related Topics
Landcorp has 105 farms, including many on the Central Plateau of the North Island near farms in the Crafar Farms group. He said Allan Crafar and his family were current squatting illegally on the farms and he did not see a role for them in managing the farms.
"I know Allan and he did a lot of good, but he tried to go too far too fast," Kelly said, adding he expected any sale would be 'clean' with empty houses included.
55 Comments
And the banks will do what
And the banks will do what with the loot!...another flood of credit into the residential bubble.
hey wally...i had a dream
hey wally...i had a dream last night that southbury and crafar were all owned by the Govt.via landcorp and the govt. g/tee on SCF and merged into a giant dairy SOE?
Dream or a nightmare Rob?
Dream or a nightmare Rob?
The banks helped to get the
The banks helped to get the Crafars into this mess and I feel that they should give them a liffeline; isn't dairying on the up? After all he started it with blood sweat and tears , although has some lack of management skill. Keep it where it belongs.
U M
"After all he started it with
"After all he started it with blood sweat and tears..."
The problem was that none of it was his.
"Keep it where it belongs."
That appear to be the goal, which is why nobody wants it anywhere near Alan Crafar.
"...has some lack of
"...has some lack of management skill."....that's one way of putting it.
I'm looking forward to seeing him and his family being evicted. It's about time for some accountability.
Don't get too excited about
Don't get too excited about the prospects of natural justice. He'll coming out of it all grinning, one way or another.
Yeah and some of the tears
Yeah and some of the tears were from his ceditors .
And Landcorp has the Money?
And Landcorp has the Money? Great way to invest our taxes, no better use? Looks like communism by the National party to me.
Did you read the article?
Did you read the article?
Um isn't Landcorp in the
Um isn't Landcorp in the business of owning farms?
How is them trying to make money from something they know a lot about (farms) communism?
Better to keep the profits here than yet another thing going overseas.
This country needs an income from somewhere, and at the moment a very large part of it is from farming.
Yeah, but are we not cash
Yeah, but are we not cash strapped as a nation. We can't afford to capitalise Kiwibank but we can allow Landcorp to leverage up to stop the Chinese. No consistency, if Landcorp can leverage up it should be paid to the gov't as a dividend to reduce our tax burden, is that not the reason to not invest in Kiwibank?
Get over yourself "utu",
Get over yourself "utu", sounds like you want revenge of some sort...karma got Crafar.. and Crafars got Crafars into the mess. And oh what a mess. Left to Landcorp to sort it out probably from issuance of above. Shame, the banks should be left holding the baby. Yes they arent without blame, but give Crafar a lifeline.....please..
Kelly has entered into long
Kelly has entered into long term leases in the central north Island that look worse and worse by the day. This would be even more marginal dairy land owned by a state entity. Their debts and ROI are worse than they appear and the long term leases a potential time bomb.Why should Landcorp be competing with NZ farmers to buy land? I thought that would be contrary to Nation party philosophy.
Anon, usually private farmers
Anon, usually private farmers are the best at making money for the country. Landcorp in the past has quite a shoddy history of actually making much of a return on all the farmland they have. Also because they have so much quantity to market, they get better pricing than the likes of us 'little people'. In effect we subsidise them. Very annoying.
One major flaw with the whole
One major flaw with the whole "break them up and hand them out like free cookies to private farmers" is that the first thing the private farmers will do is sell their new farm to a big corporate farmer for a stonking big profit.
That's how private farmers make so much money.
Yep-you are dead right.
Yep-you are dead right. Landcorp is a parasite on the normal NZ farmer always demanding premiums at the price of private business. Again, as you say their return is low and this is despite a low debt level. If you looked at freehold farms in private hands the ROI would be a lot better than Landcorp achevies.
Yes, it's outrageous. The
Yes, it's outrageous. The only people who should be permitted to demand premiums from the rest of the population are farmers.
Mate, you'd have to look
Mate, you'd have to look pretty bloody hard to even find those "freehold farms in private hands", because most small farms were sold by to corporate farmers for huge profits.
Are you still travelling
Are you still travelling Andrew?
Hi Farmer Will, Im in
Hi Farmer Will, Im in California, bit hot. Been looking at a few big Dairy farms in the Central Valley. Surprised to see Rabo bank Offices about the place. The little guy's are getting squeezed but some big corporates are expanding. Lots of stories similar to home, costs increasing,competition from Corporates and effluent and Irrigation problems.
I guess we will have to accept that Landcorp are going to be setting the price of land in NZ, and will become the major player in the industry. I wonder how accountants would feel if the tax department, knowing alot about accounting entered the accounting business? Where is this going to end 'socialist republic of NZ' 30years ago there would have been an uproar, now we are all steers.
NZ dairy's long-term future
NZ dairy's long-term future is looking bleak, as the enormous new dairy industries in place like Argentina will clobber them.
I cant believe it actually
I cant believe it actually Andrew, seems a bit like a bad dream. But perhaps the higher authorities know the banks arent going to support New Zealand farmers to buy in, and it is the only out. I mean National do have plans to sell Landcorp, so I will keep the faith, and hope that it all sorts itself out. Hows the animal welfare over there? Hopefully better than here. I am shamed at the standards here, just goddamn shamed.
Yeah this sounds like
Yeah this sounds like Communism! I would prefer kiwi farmers to buy these farms, Land Corp's mess should be privatised as well.
You put 10,000 cows in a
You put 10,000 cows in a shed,cart in all the feed, pay min wages,push production, you get problems....
If south American Dairy farms
If south American Dairy farms are going to clobber our farmers then we better sell our Landcorp shares.
No, buy Fonterra shares.
No, buy Fonterra shares.
I was with the Accountant a
I was with the Accountant a week or two ago, his summation was the banks were told to pull out of NZ, there was better money to be made in Asia at the moment. Now with Hubbard in trouble, funding for NZ farmers is pretty suspect.
It seems the animals cop the
It seems the animals cop the brunt of our greed everywhere. Not viewed a Landcorp Dairy Hunter Gatherer, I had hoped they might be better...damn.
That's why we refer to them
That's why we refer to them as "stock", not "animals".
It makes it much easier to keep a clear conscience while mistreating them.
Indeed. I believe every
Indeed.
I believe every stream and river within a 5-mile radius of a Crafar farm bore the brunt of his family's greed as well.
Andrew, are the Americans
Andrew, are the Americans ramping up production?
As a thought Hunter Gatherer
As a thought Hunter Gatherer get some photos and youtube them. Shame them into fixing the problems.
Who is the main strategic
Who is the main strategic planner in this government?
It appears that the government are not only stepping in to control a major player in the finance company industry (they guarantee it anyway) but are now also becoming the countries biggest farmers. What next - will they buy back the lines from Telecom just like the Australian government have done across the ditch.
On top of this they are investing billions in the construction industry via leaky home bailouts.
Is this the most socialist government we have had for decades?
Nope, just the most
Nope, just the most populist.
Remember, JK had no friends at school...
The country is to big for me
The country is to big for me to tell, some huge new units coming into production, I think id bet on stable or small increase. The economy is pretty tight over here and plenty of gloom to go around. I think the bite will come if interest rates rise and the share market falls
Watch out though: Fonterra's
Watch out though: Fonterra's vast new dairy developments in South America and Asia will be firing up in a big way fairly soon. How much impact they'll have on the USA I don't know, but NZ can kiss it's dairy markets goodbye.
It'll be hard to compete with the volumes, as well as their proximity to primary markets, *and* the fact that they don't have to comply with environmental and labour laws, or have any animal health concerns or requirements to contend with.
I am just a simple country
I am just a simple country boy but my understanding is that NZ farmers do not have the cash to purchase the crafar farms even in a depreciated market. Therefore keeping the farms NZ owned via Landcorp is this countries better option.
NZ governments have quite some reputation for selling State Owned assets back to the private sector so it seems very possible that at some future time our private farmers will be able to purchase them. Who knows it might even happen at no loss to we taxpapers.
Why pay cash when you have
Why pay cash when you have unlimited credit?
This entire Dairy Farming
This entire Dairy Farming saga has no economic sustainability in correlation with the current and future world situation.
Can't wait to see dairy farms
Can't wait to see dairy farms converted back to sheep farms.
Yes, free trade with the rest
Yes, free trade with the rest of the world - 100m away - U$$ 150.- a barrel - HA !!!
WK
If only the banks would cut
If only the banks would cut Crafars a break, it is clearly obvious that these properties are in demand,if they accept a higher risk than they might usually, things cant be all that bad when they can almost gaurantee there will be willing purchasers if it doesnt work out, I just hope Frank and Allen are able to find a way to raise the required money themselves, 40 years of hard work and passion taken from you in one foul swoop. If they were bad people they would have had them all in different companies and entities, not put all thier eggs in one basket so that the bank could get there hands on all of them if things like this happened. Just my thoughts anyway.I also agree keep eyes on Fonterras expanding horizon very large intersts in South America at the moment and if Europe crumbles under economic pressure the future is anyones guess.
What a load of shite.
What a load of shite.
Interesting comment Farmer
Interesting comment Farmer will. I was visiting family in Singapore. One of my siblings runs operations in that part of the world for a large Aus investment institution. They have been told the Aus banks would rather invest there funds up there than down here.We definitely are going to face increased funding costs snd I predict >9.5% by the end of next year
It is called the
It is called the socialisation of losses, deflate the bubble slowly, very slowly or the whole ponzi scheme will collapse.
Expect to see more of this.
John Walley
Exactly and at the moment it
Exactly and at the moment it is being managed very well
Let 'em burn.
Let 'em burn.
John - "socialisation of
John - "socialisation of losses", perhaps in more ways than one:
http://www.interest.co.nz/comment/reply/49792/550553
Reiterating another comment of mine in that thread, "I disagree with Conor English most of all on this:
"We argued that speed on implementation was not the solution New Zealand needed."
The sooner we get back to more prudential lending and borrowing behaviour, the sooner New Zealand's prospects will improve. It has been the opposite that has been a major root cause of our problems. At one end of the spectrum the sad case of Crafar Farms, at the other, many engaged in the wider real economy unable to make the kind of contribution we desperately need, while in the middle the future prospects of Gen X&Y eroded because of home affordability issues and a growing public debt burden as the losses and excesses of a few are socialised into their future tax bills. The situation needs to be reversed as soon as possible and RBNZ should not be disuaded from doing the right thing, for the whole economy."
If appropriate capital adequacy regs had been in force years ago we'd probably not be having this kind of discussion:
http://www.interest.co.nz/news/rbnz-delays-introducing-tougher-capital-r...
Les Rudd
www.mea.org.nz
It's a good option, farming
It's a good option, farming is by far and away our best income earner, if we don't own the farms anymore, we don't get the income.
Keep the farms NZ owned.
AS it is we spend way more than we earn, why make it even worse?
While I agree that we should
While I agree that we should be retaining ownership of the land, the only reason "farming is by far and away our best income earner" is due to the fact that we refuse to invest in anything else besides houses.
It's a self-fulfilling prophesy, one which the agricultural cartels don't want altered in any way, and they possess the lobbying power required to see that it never does.
We are Kiwis and so we can't
We are Kiwis and so we can't do any betTER.
Just ask the people all around you, they will say the same thing. Anyone who attempts to make a go of anything else is obviously a dick and stuPID.
Farming is the only thing we are good at and if we try those scary different things we will fail and the world will laugh at us and it will be, like, so embarrassing, you knOOOW?
Fush un chups un moolk un swutshUTS.
(Please add a rising inflection to end of all Kiwi-spoken sentenCES.)
Ok why don't you go and start
Ok why don't you go and start an export business up right now? what's stopping you?
But what's the bet you'll be like virtually all other NZ business and won't make anything like the return farming or other agriculture does in terms of your investment.
Behaviour adjusted through
Behaviour adjusted through meaningful tax reform.
Um so your saying farming has
Um so your saying farming has some kind of tax advantage over our other export earners? (of which there is very few).
That's the first I've heard of that, probably because it doesn't exist.