Fay is representing a group of investors. He said their purchase of the farms relied on the OIO rejecting the China bid and a formal due diligence process.
The 8000ha of farmland came up for sale after the controlling companies run by Crafar collapsed owing $240m in 2009.
The mainly central North Island farms attracted offers from Government farmer Landcorp and Hong Kong-backed Natural Dairy NZ. The estimated $150m offer from Landcorp was dismissed while Natural Dairy's application was rejected by the OIO as failing on "good character" grounds.
That failure was greeted favourably by the public, with opinion mobilising against selling to offshore interests.
Fay revealed himself as the leading figure of a group of confidential investors who put a $105.5m offer to receiver Michael Stiassny three weeks ago.
Stiassny's company KordaMentha has picked up more than $5m in fees since taking over the farms.
Fay's group has offered to buy nine of the 16 farms, totalling 3100ha.
It follows the purchase by Fay of a 550ha dairy farm near Taupo, which he added to a farming portfolio that includes holdings in Wairarapa and stock on Great Mercury Island. He and Sarah, Lady Fay, make their home on the island.
Fay said: "Crafar farms have significant potential and this offer makes it clear that there are New Zealand buyers for these properties.
"I believe that retaining dairy farm land in local ownership is a key to maintaining long-term control of New Zealand's key export earner and also key to retaining our trading advantage."
Fay said he had long held an interest in dairy farming and the opportunity to buy the Crafar farms would give the chance to invest long-term "at a time when worldwide demand for food and dairy ... is growing."
Deal negotiator Steve Bignell, from Taupo-based Stretton's Chartered Accountants, said the offer was for eight dairy farms and another farm as a run-off property.
He said if those farms checked out the offer might expand to include another three or four from the former Crafar group.
"We are also aware of other New Zealand buyers ready and willing to pick up the remaining properties in the Crafar farms package if our offer is accepted by the receivers," he said.
"It would be great to keep the farms in New Zealand ownership, but that's dependent on the OIO and its decision on the current overseas offer."
Rich and controversial knight
Sir Michael Fay is one of the 10 richest men in New Zealand.
With business partner David Richwhite, the pair dominated New Zealand's business scene through the 1980s and early 1990s.
It was Fay's services to sport that earned him the knighthood. His were the face and the wallet pushing New Zealand to the brink of America's Cup victory. Fay's commitment to the cause largely created New Zealand's legacy in the yachting contest.
Controversial business deals with Richwhite preceded the pair's departure to the Northern Hemisphere. Their involvement in the sale of the Bank of New Zealand and New Zealand Rail Ltd were most controversial.
Fay returned to live in New Zealand about four years ago, spending much of his time with Lady Sarah on Great Mercury Island, which he owns.
His daughter Annabel Fay has become known as a pop artist, although the level of her financial autonomy drew questions after she hosted record company bosses on the island. Her recording company had just picked up $70,000 of NZ On Air public funding.
