New Zealand: Pengxin land buy saga takes another step

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Government ministers say they are "thoroughly considering advice" on the sale of Lochinver Station (above).
Stuff | 7 Spetember 2015

Pengxin land buy saga takes another step
 
by RICHARD PARSONSON

Responses to Shanghai Pengxin's enforced notice of sale of its North Island farms and Lochinver Station purchase deal are now with the Overseas Investment Office for scrutiny, but the Chinese company is giving away no details.

Meanwhile Pengxin senior executive Gary Romano said overseas reports that the company is involved in auctions bidding for Australian beef company heavyweights Consolidated Pastoral Company and S Kidman & Co to create a cattle export sales powerhouse is "speculation from sources unknown".

Pengxin was required by the OIO to advertise for sale to New Zealanders the 16 central North Island former Crafar farms it bought in 2012, along with its conditional agreement to buy Lochinver near Taupo, because the company wants to restructure.

The fact Pengxin wants to transfer some of its New Zealand assets to Chinese agricultural company Hunan Dakang in the middle of seeking OIO and Cabinet approval to buy the iconic nearly 14,000 hectare Lochinver sheep and beef property has been labelled "bizarre" by observers.

The restructure proposal resulted in the OIO requiring Pengxin to first offer its 2012 consented farm purchases, and its Lochinver purchase agreement with New Zealand's Stevenson Group, to "non-overseas" parties.

Pengxin advertised its North Island farm interests on Trade Me for 20 days on a "price by negotiation" basis.  The ad, which carried the rider that Pengxin reserved the right to transact or not transact, and was not obliged to accept any particular proposal, attracted more than 4000 hits. NZ Farmer understands responses were independently assessed before being forwarded to the OIO, but Pengxin declined to say if there was more than one serious offer, or discuss any details about the responses.

The company has rejected the suggestion the sale offer was a Clayton's sale - the sale you have when you don't have a sale.

NZ Farmer understands that the sale was for the shares in the Pengxin subsidiary which owns the farms, not for the farms themselves.

And while Pengxin had to be seen by the OIO to be making a genuine offer to sell to New Zealanders, it is understood the Chinese company would have seriously considered an attractive offer for the former Crafar farms, bought in a generally rundown condition for $200 million from receivers and since significantly upgraded. As a requirement of government consent for the Pengxin purchase, the former Crafar farms are managed by state-owned farmer Landcorp until 2017.

Meanwhile Lochinver's owner Stevenson Group continues to wait for a sale settlement more than a year after signing a conditional sale agreement with Pengxin. 

The OIO gave its recommendation on Pengxin's Lochinver application to Lands Information Minister Louise Upston and associate finance minister Paula Bennett six months ago.

Asked why their decision was taking so long, the Ministers' in statements said they had asked for more information from the OIO, which was provided at the end of July.

"Due to the significance of the proposed investment, Ministers are taking their time to thoroughly consider advice and the recommendation. There is no statutory timeframe within which an application for consent must be decided. It would not be appropriate to comment further while this application is under active consideration," the statements said.

Stevenson's chief executive Mark Franklin: "It's been 13 months now and we are still waiting so it's a bit outside our control."

An OIO spokesman said the office had recently received a report on the responses to Pengxin's farm sale advertising. It had not yet had an opportunity to consider the responses and could not comment on the report.

The spokesman said Pengxin's application to restructure its New Zealand assets into the company Hunan Dakang was still being being assessed.

"As there are no statutory timeframes within which applications must be decided, it is not possible to indicate when a decision will be made."

Shanghai Pengxin, a real estate, infrastructure and agriculture company majority owned by Chinese rich-lister Jiang Zhaobai, wants to transfer part of his company to listed Chinese agricultural company Hunan Dakang, of which he owns 55 per cent.

As a result of any such change in New Zealand, the OIO requires a foreign owner to first offer for sale its assets to New Zealanders.

Pengxin and its subsidiaries in New Zealand currently own a total of 29 dairy farms, milking 30,000 cows and spanning 12,300 hectares (11,800ha effective).

In April this year the company applied to the OIO to buy a small cluster of Northland dairy properties known as the Pinny Farms. Pengxin owns 13 Canterbury dairy farms through a joint venture in the name of Purata Farming, previously known as Synlait Farms.
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