In retrospect, the OIO was correct to call Stevenson Group's bluff. It did not buy the claims Stevenson made in support of the Pengxin application for approval to buy the station.
The government agency believed Lochinver would be sold regardless of whether the Pengxin deal proceeded.
This week, Stevenson Group chief executive Mark Franklin explained the changed position by saying the deal to sell Lochinver Station to Spencer family interests -- through one of their vehicles, Rimanui Farms -- was not too far off Pengxin's $88 million figure.
Franklin is mounting the argument that the Spencers were not aware of just how much value the Chinese bidder had initially put on this prime Central North Island asset until the figure was disclosed after Cabinet Ministers Paula Bennett and Louise Upston vetoed Pengxin's application. Bayleys Real Estate managing director Mike Bayley has supported Franklin's comments by saying that since the original sales contract to Pengxin's Pure 100 Farm was signed over 14 months ago, prices for top quality sheep and beef farms had risen significantly, primarily on the back of a very strong beef sector.
Bayley also went on to say Stevenson Group had made approximately $3.5 million worth of further capital improvements to the station.
In retrospect, the OIO was correct to call Stevenson Group's bluff.
"A combination of these factors meant that we have been able to attract New Zealand interest in the property at a higher value than was the case early last year when we first marketed the station."
This is rather extraordinary given that Stevenson interests had told the OIO that the two New Zealand indicative offers received for Lochinver in the first instance were some $20 million less than Pengxin's successful tender .
This is a major turnaround from the advice the Stevenson interests said they had earlier this year, that no other New Zealand party would be prepared to pay an equivalent price for the station. And that if the Pengxin bid was rejected, any subsequent New Zealand offer was likely to represent a 30 per cent discount on the Pengxin price (in other words, $26.4 million less that Pengxin's $88 million offer).
The Spencer family did not get where it is today by paying over the odds. So, if the family did stump up a figure much nearer to Pengxin's $88 million offer, that is a very expensive Eureka! moment.
Franklin has since admitted to Radio NZ that the 8000 jobs the company publicly touted as being created by investing the sale proceeds included existing jobs which would move to a new 360ha industrial park to be developed over the next 20 years.
He went on to say the group sold the station because it got a reasonable price and it intends to focus on its core business and investments such as quarries and concrete, and property investments.
From a New Zealand perspective it is good that proceeds of the sale will now finally be recycled into developing new business opportunities and more jobs.
The Stevenson interests gave Pengxin a heads-up a couple of weeks back that they were in discussions with a New Zealand bidder and that a sale was imminent.
For Pengxin, Stevenson Group's move has been a double blow. Its lawyers will be hoping Stevenson Group's shifting stance does not impact on the arguments they will make in court when the judicial review into the OIO decision on Pengxin's application is heard. The deal also explains why the Stevensons did not entertain court action themselves.
The back story -- when it does finally filter out -- is likely to reveal differing views between the various power groups within the Stevenson camp.
Irrespective, Pengxin intends to see the judicial review through.
But any outside chance that Pengxin could bid for the asset again, should the court rule in its favour, is gone for good.
