Crafar farms receiver KordaMentha has rejected a conditional NZ$171.5 million offer for 16 central North Island dairy farms from a group led by controversial former merchant banker Michael Fay.
KordaMentha's Brendon Gibson said in a brief statement the receiver was sticking with an earlier offer from China's Pengxin International Group, which is "by far the best offer", and continuing to await the Overseas Investment Office's decision on Pengxin's offer.
Meanwhile, in comments in Wellington, Prime Minister John Key said he was not concerned Pengxin had had its "complex" bid in front of the OIO for five months, ahead of a visit from the Chinese Vice-Premier tomorrow.
'Fay & Co's price unacceptable'
"As we have said previously, following the comprehensive sales campaign run last year we have accepted an offer from Pengxin International Group Limited which was by far the best offer at that time and remains so today," Gibson said when rejecting the Fay-led offer.
"Whilst we received the offer from Sir Michael Fay, it was conditional, was a collaboration of several purchasers and was at a price that continues to be unacceptable."
The rejection of Fay's advances comes after he talked up the retention of productive land in New Zealand hands last week. Fay's group included iwi and farmers. Along with business partner David Richwhite, Fay played a major role in government privatisations - with overseas buyers prominent - in the 1980s and early 1990s.
Headed by its wealthy property developing chairman, Jiang Zhaobai, Pengxin has said it plans to increase milk production on the Crafar farms by 10% and wants to capture a bigger share of the Chinese market with branded, dairy-based consumer products. It says it'll spend more than NZ$200 million to buy and upgrade the farms and then invest a further NZ$100 million on marketing cheeses, ice creams and baby formula for the Chinese market.
Pengxin lodged its application for Overseas Investment Office approval in April and that's the only condition preventing its deal going through.
The Crafar farms group was put into receivership in October 2009 owing about NZ$216 million to its lenders Westpac, Rabobank and PGG Wrightson Finance after interest.co.nz revealed animal welfare issues at the farms.
Meanwhile, Key said he was not concerned that Pengxin's bid had been sitting with the OIO for five months, as the issues surrounding the bid were complex, after the government altered overseas investment rules to make it harder for foreigners to buy New Zealand land.
Pengxin's bid was made after the government tightened overseas investment rules from the start of the year, having turned down a previous Chinese bid fronted by businesswoman May Wang.
Speaking to media at his post-Cabinet press conference on Monday, Key said he was not concerned by the wait for OIO approval.
“I don’t have a view on why it’s taken that time, they’re independent, they make their call and eventually make a recommendation to Ministers, and I haven’t been involved in that process other than recognising it’s in front of the OIO,” Key said.
Key will be meeting with the Chinese Vice Premier tomorrow (Tuesday), who “might raise” the issue, he said.
“[If he does] I’ll tell him we go through a process in New Zealand, and the government has changed recently the Overseas Investment Act to try and give greater clarity to the outcome we want to see, and that we expect people to work their way through that process. It’s an open process as much as these things are possible, but they take some time,” Key said.
The situation with the bid was a “complex position,” he said.
When asked what was complex about the bid, Key replied:
“You’ll have to go and ask the Overseas Investment Office that.”
When then asked whether the OIO had told him the bid was complex, he said:
“No, they don’t brief me on what they do.”
Asked then how he knew it was complex, Key replied:
“Well, I just know everything in that area is complex.”
(Update adds video and comments from PM Key, more detail, background).