Chinese company has to go back to square one with Overseas Investment Office

Medium_crafar
One of the former Crafar farms in south Waikato that Shanghai Pengxin owns.
Stuff | 22 July 2015

Chinese company has to go back to square one with Overseas Investment Office
 
Shanghai Pengxin's decision to restructure its New Zealand farm assets means the company has to go back to the Overseas Investment Office (OIO) to gain new consents to run its farms.

It might also further slow the process of gaining approval to buy Lochinver Station in the central North Island.

On Sunday the company - owned by Chinese billionaire Jiang Zhaobai - offered for sale on Trade Me its total farm assets, which include 16 dairy farms in south Waikato for which it paid $200 million in 2012, and a conditional agreement to buy Lochinver.

Because the company wants to restructure, the OIO requires it to offer its assets for sale to New Zealanders.

A Shanghai Pengxin spokeswoman said that, prior to this requirement, it was not the company's intention to sell the farms and that it was farming the properties and complying with the OIO conditions as required.

"The proposed transfer of the shares to Hunan Dakang, however, in the letter of the law constitutes a transfer of an interest in New Zealand farmland and the shares must first be offered for sale to New Zealanders," the spokeswoman said.

"We understood that and consequently the shares were listed for sale on Trade Me for a period of 20 working days. Linked to that sale and also offered is the management agreement over the shares in a company which owns some South Island farms," she said.

A spokesman for the OIO confirmed that Shanghai Pengxin would now have to re-apply for consents for the 16 dairy farms which formerly belonged to the Crafar family.

It is uncertain whether the farms can continue to operate under the existing consents.

Meanwhile Mark Franklin, chief executive of the Stevenson Group which owns Lochinver, said he was not sure what was happening with the application to buy.

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"It's not really our process, it's the other guy's process and we are just sort of waiting for them to do what they need to do by law. We'd like to get on with it," Franklin said.

Shanghai Pengxin offered to buy the 14,000 hectare property for $70m a year ago.

Associate Finance Minister Paula Bennett said ministers received the OIO's recommendation on the application to purchase Lochinver Station in April this year.

"They asked for more information from the Overseas Investment Office to assist them to make their decision. The Overseas Investment Office is in the process of supplying its further advice," Bennett said.

There was no statutory timeframe within which an application for consent must be decided, she said.

Asked if anti-Chinese sentiment might have some bearing on why the application had not been approved, Franklin said he could not comment.

"Apart from it being a privilege for overseas companies to invest here, they have to show a better outcome [for the property] than a local buyer," Franklin said.

When Stevensons announced the sale, they said they hoped to free up cash to invest in a development in Drury South, projected to employ 8000 people.

Franklin said the company had not started the development but was still in the planning stage.

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