Questions as Far North kingfish farm folds

A kingfish farm set up by Maori in the Far North two years ago is folding with debts of $7.6million.
Parengarenga Fishfarm Ltd is shutting down the farm it established by the Parengarenga Harbour, citing financial troubles and constant problems with its land-based aquaculture plant.
The closure has caught many of the 2500 shareholders by surprise. Until recently the fish farm, a Parengarenga Incorporation subsidiary, had been hailed as a prime example of Maori economic development in the North.
Shareholder John Yates, of Auckland, yesterday promised "hard questions" when trustees discussed the closure with shareholders at a special meeting at Potahi Marae at Te Kao on Friday.
Incorporation chairman Winiata Brown, of Te Kao, said in a notice sent to shareholders the fishfarm venture attracted insufficient investors and the plant built by IAA of Denmark had design faults, much of its "substandard" equipment constantly needed repairs, and its ongoing costs were exorbitant. "We could seek legal remedy from IAA and others. But any legal action against IAA must be taken in Denmark under Danish legal jurisdiction and we simply do not have the resources to initiate or maintain such action," he said.
A funding shortfall due to a major investor withdrawing when Parengarenga Fishfarm Ltd was established had caused concern.
In late 2004 the Bank of New Zealand, which had loaned the company $7million to get the venture started, had introduced consultants Price Waterhouse Cooper to the company to produce models showing its financial viability.
After finishing the models, PWC had spent 12 months seeking investors, but found none and last December the consultants had "exited the scene leaving us with the original problem," Mr Brown said.
Parengarenga Incorporation is understood to have assets of more than $30million, including the Te Rangi, Te Paki and Paua Stations in the Far North, forestry developments and an oyster farm. Mr Brown said those assets were put up as collateral for the $7million loan, which was being transferred from the fish farm company to the incorporation. "The loan restructure involves repayments over a 20-year term by the incorporation, which at this stage requires a monthly payment to the bank of $74,427 which comprises interest and principal," Mr Brown said.
"Over time the incorporation has also contributed $7.6million for establishment and operational costs of the fish farm."
Parengarenga Fishfarm creditors were also owed $600,000, which Mr Brown said had to be paid to avoid the company being forced into liquidation.
Fish farming got under way when about 30,000 yellowtail kingfish fingerlings obtained from the NIWA Bream Bay Aquaculture Park at Ruakaka were released at the aquaculture plant in June 2004. A year later the fish were to have reached three kilograms, ready for processing at Awanui by a joint venture with Muriwhenua Inc. IAA had claimed its aquaculture plant would produce 600 tonnes of fish annually, but now conceded it would produce only up to 400 tonnes, Mr Brown said.
Last year's fish was sold at good prices, but the combined effects of insufficient working capital, ongoing plant failures and spiralling costs had overtaken the business, he said. "Hence we have made the decision to cease operating."
Mr Yates said management of the fish farm had been abysmal. He wanted to know why things had gone wrong so quickly when late last year shareholders had been told everything was "going swimmingly". He claimed the Price Waterhouse Cooper bill had been $700,000, which he regarded as "extraordinary", and he wanted to know why the plant construction contract had gone ahead with dispute procedures that had to be settled in Demark. Mr Yates also noted the $7million loan restructure on the terms specified by Mr Brown appeared to involve repayments totalling $17.8million, and he questioned whether trustees had a mandate to commit the incorporation to such a debt.
Meanwhile, NIWA chief executive Rick Pridmore, of Hamilton, said the Parengarenga fish farm closure would not affect operations at Ruakaka, where about 200,000 kingfish bred annually would all go to Marlborough Sounds clients.
He said NIWA aimed to produce a million juvenile kingfish annually for an emerging finfish farming industry in New Zealand.