Caution urged on farm sales

Federated Farmers of New Zealand | 18 Dec 2009

Federated Farmers is urging farmers to conduct strict due diligence before entering into sale and purchase agreements. The warning comes after reports that a Maori trust, with reputed financial backing from Dubai World, has been contracted to buy 28 farms in Southland, estimated at more than $150 million.

"It goes against every commercial norm for major capital items to be sold on a ‘no-deposit' basis and farms are as big a capital item as you can get," says David Rose, Federated Farmers rural security spokesperson.

"Federated Farmers urges farmers to conduct very strict due diligence of those behind the scheme and any agreements that are being used. Members of Federated Farmers are urged to contact our legal team via 0800 327 646 to discuss this further.

"For non-members, we recommend you discuss this with your farm advisor or take independent advice.

"I must say that I am extremely nervous of reports that no-deposits are being taken. It's pretty fundamental that a deposit be exchanged as a tangible sign of good faith.

"Our second concern relates to the financial backer being reported as Dubai World - the Emirates' owned and controlled corporate lender.

"On 27 November, the Federation warned that Dubai World was close to defaulting on a substantial part of its $82 billion (US$60 billion) debt. Only on Monday, another Emirates, Abu Dhabi, injected US$10 billion in order to save Dubai World from an immediate default.

"Given these pressing business issues, we are naturally concerned that the supposed backer may not be prioritising the purchase of Southland farms. The fact that a reported deposit milestone has already been missed is further cause for alarm.

"Federated Farmers has contacted the appropriate authorities. In the meantime, it is imperative farmers obtain independent counsel as well as insisting on a deposit," Mr Rose concluded.

For further comment please contact:

David Rose, Federated Farmers rural security spokesperson, 027 414 2573, 03 235 2619

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