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China buyer clears hurdle in NZ farm purchase

A Chinese company Wednesday looked set to complete a controversial and hard-fought purchase of 16 New Zealand dairy farms after the Court of Appeal overturned the final legal objection to the sale. Xinhua reports. August 8, 2012 -- Milk New Zealand Holdings Ltd., a Hong Kong-registered subsidiary of the Chinese mainland-based Shanghai Pengxin Group Co. , was eager to complete its purchase of the in-receivership Crafar Farms, said a company spokesman. "We are itching to get on the properties and start making the improvements that we've planned for so long," Cedric Allan told Radio New Zealand. The government had twice granted Shanghai Pengxin approval to purchase the farms following recommendations from its Overseas Investment Office (OIO), but both decisions were contested in court by the Crafar Farms Independent Purchasers Group (CFIPG), a consortium led by merchant banker Michael Fay and including an indigenous Maori trust. The court decision looks set to close a battle that was sparked when Shanghai Pengxin offered a reported 210 million NZ dollars ( 170.81 million U.S. dollars) for the farms in April last year, before the rival CFIPG offer of 171.5 million NZ dollars was put to the receivers. In February, the High Court in Wellington upheld the CFIPG argument that the OIO had failed to properly consider the benefits a foreign buyer would bring to the farms, and the court set aside the OIO's recommendation to the government. After the government approved another recommendation from the OIO, the CFIPG appealed arguing that Shanghai Pengxin lacked the relevant expertise, an argument that the High Court earlier dismissed. On Wednesday, the Court of Appeal upheld the earlier decision, saying Zhaobai Jiang, who owns 99 percent of the shares in Nantong Yingxin Investment Co. Ltd., Shanghai Pengxin's parent company, was a "successful entrepreneur" with a record of successful property developments and a "fast-growing agribusiness" with interests in China and South America. Hardie Peni, executive chairman of Tiroa Te Hape Trust, a partner in the CFIPG consortium, told Xinhua Wednesday the trust was disappointed with the Court of Appeal decision. "We believed that the arguments we put forward were legitimate, but unfortunately the judges didn't see it that way," Peni said in a phone interview. However, the trust was still interested in talking to Shanghai Pengxin over the sale of two of the Crafar farms, which it claims are on land the government misappropriated from its Maori owners in the 1800s. The trust announced last month that the talks had broken down when the government's Landcorp agency which has an agreement to manage the farms for Shanghai Pengxin demanded a "ridiculous" price of 66.5 million NZ dollars. "We weren't too happy with the price that they offered last time," Peni said Wednesday. "But it's early days now that they' re able to settle confidently, we're hoping that we can sit at the table again." The sale of the farms has sparked a national debate that has risen to the highest level of government over what constitutes a strategic national asset in a nation whose primary industry is agriculture and under what conditions those assets should be sold to overseas interests. "The issue of overseas buyers aggregating large parcels of farm land is very important to our most productive export sector and I don't believe we have heard the end of the discussions raised by our group," Fay said in a statement Wednesday. "Clearly the majority of New Zealanders have significant concerns about this issue." The main opposition Labor Party said Wednesday the country needed tougher standards for foreign investors to buy productive land. "We have the best farmers in the world and we don't want them priced out of the market by massive international companies," Labor leader David Shearer said in a statement. "Overseas investment needs to demonstrate it will bring in new ideas, create new jobs and significantly improve the local economy. We're not against overseas investment, but Shanghai Pengxin won't bring anything new to the table."