Joint effort to sell stake in Dairy Holdings

Photo / David White.

The receivers of South Canterbury Finance have decided to band together with two other major shareholders to sell its stake in South Island dairy farm company Dairy Holdings.

McGrathNicol's Kerryn Downey said SCF's 33.6 per cent stake would be marketed in conjunction with a 24.99 per cent stake owned by three American investors and a 3.9 per cent owned by Humphry Rolleston.

Investment bank Murray & Company has already spent two months working on selling the US investor and Humphry Rolleston stakes.

Downey said it had kept in contact with the company over the process and there were signs that pointed towards it being the right time to combine the stakes for sake.

"It is in their best interests to combine with us."

Downey said a controlling position in the company would be more attractive to a buyer and would make it an easier process to wrap in the remaining shareholders should they also wish to sell.

"There is the opportunity for them to join the sale process we are undertaking at any stage."

First NZ Capital would run the sales process in conjunction with Murray & Company. First NZ owns part of Murray & Company. Downey said First NZ would bring its experience in handling overseas investment office transactions and farm sales to the table.

He would not speculate on who the potential buyer might be but said any overseas buyers would face gaining approval from the OIO as this is "very clearly a sensitive land interest".

South Canterbury Finance bought its Dairy Holdings stake from Alan Hubbard's Southbury Group two years ago for $76 million.

Downey, who is essentially working to claw money back for the Government, said he hoped to at least break even.

"I would like to think we would realise that number or better. It is a high performing sector which has gained a lot of interest."

One property insider, who did not wish to be named, said he expected there to be "no problem" selling the farms.

"There is large number of wealthy overseas individuals and investment firms looking for investment in the New Zealand farming industry. I think they will sell well, particularly when put up as a package."

But he believed it would be tougher to find a buyer in New Zealand.

Dairy Holdings owns 58 dairy farms in the South Island on 14.2 hectares, milking 43,439 cows to produce about 15.1 million kilograms of milk solids.

Farms in Canterbury are expected to attract around $40,000 to $42,000 per hectare including Fonterra shares while Southland farms were worth between $24,000 and $28,000 per hectare.

That price does not include the stock which are worth about $1500 to $2000 per cow.