Chinese firm gets more time to sell stake

Medium_cubbie-station-data
Xinhua | 21 June 2016

Chinese firm gets more time to sell stake
 
Australia has granted a three-year extension for a Chinese company to reduce its 80 percent stake in Australian cotton farm Cubbie Station after it indicated it could not meet the October 2015 deadline.
 
Australia approved the sale of Cubbie Station to a consortium comprising Shandong Ruyi Scientific & Technological Group Co — 80 percent — and local company Lempriere — 20 percent — on the provision that the textile manufacturer would reduce its holdings to 51 percent within three years.
 
Though foreign ownership of Australian farmland is a sensitive political issue, heightened in the current general election, Australian Treasurer Scott Morrison granted the extension as a reflection of the “genuine undertakings” Shandong Ruyi had made to reduce its interest.
 
“It also recognizes the fact Ruyi has met the other undertakings placed on it through the FIRB approval process,” Morrison said yesterday.
 
Australian agriculture lobby groups however are concerned about the inconsistent messages coming from Australian authorities over foreign investment into farmland after a Chinese consortium was prohibited from purchasing arid cattle producer S. Kidman & Co, Australia’s largest land holding.
 
“The industry’s quite happy to have a firm ‘yes’ or ‘no,’ but they need to know before they go into the due diligence or analysis or the proposal of a purchase as to what the rules are,” Agribusiness Australia spokesman Tim Burrows told Australia’s National Broadcaster.
 
“We can’t have a situation where the rules change many months after the investor’s started looking at the project or the proposal.”
 
Australia in February changed its regulatory framework for foreign investor purchases into agriculture, slashing the threshold for Australia’s Foreign Investment Review Board approval to A$15 million (US$11.2 million).

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The Australian | 22 June 2016

by Sue Neales
 
The Turnbull government has ­allowed the Chinese owner of Australia’s biggest cotton farm to keep its previously unacceptable 80 per cent stake until late 2018.
 
Scott Morrison said last night that Shandong Ruyi had sought an extra three years before having to reduce its interest in Cubbie Station at Dirranbandi in southern Queensland to a 51 per cent holding — an undertaking made when it bought the cotton farm in 2012 for $240 million.
 
The Treasurer said he had granted the extension, consistent with advice from the Foreign ­Investment Review Board, ­because he was convinced that Ruyi had made genuine, if unsuccessful, attempts to find an ­“appropriate” buyer for the 29 per cent share.
 
The concession appeared to be at odds with Mr Morrison’s ­decision to twice block the $370m sale of the Kidman cattle empire to Chinese company Shanghai Pengxin because it was contrary to the ­national interest.
 
Labor’s agricultural spokesman, Joel Fitzgibbon, yesterday ­accused the government of a contradictory and inflammatory ­approach to foreign investment in Australia farmland. “This just shows the inconsistency in their policy; they quietly waived through the sale of (Australia’s biggest dairy farm) VDL to the Chinese, they opposed Kidman, they were against the Cubbie sale originally, and now they facilitate the investment,” he said.
 
“They are politicising and undermining public confidence in foreign investment when, for Australian agriculture to fulfil its aspirations, we all know it will need significant amounts of foreign capital.”
 
Ruyi, a Chinese textile company, bought Cubbie Station, with its 33,000ha of irrigated cotton paddocks, in conjunction with Australian wool trading company Lempriere, which took a 20 per cent stake. Lempriere has since sold its share to Roger Fletcher, a Cubbie board member and owner of Fletcher International.
 
Mr Fletcher, an Australian, owns sheep abattoirs in Dubbo and Albany, 80,000ha of cropping and sheep country in Western Australia, NSW and Queensland.
 
Mr Morrison said the Ruyi purchase of Cubbie had been ­approved by the former Labor government, the promise by the Chinese buyer to sell down its ownership to 51 per cent des­cribed as an “undertaking” only.
 
He said while Ruyi had met other undertakings, there was “no requirement” for it to sell its ­excess stake to an Australian ­investor.
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