Interest in 9 dairy farms 'positive'

The likely multimillion-dollar sale of nine Southland farms owned by debt-ridden state-owned enterprise Solid Energy appear set to be concluded.

In what was considered one of the largest multi-farm offerings in the country, tenders closed a month ago on the more than 2000ha of the combined nine farms, which covered millions of tonnes of low-grade lignite coal.

PGG Wrightson real estate general manager Peter Newbold had been confident of interest in the farms, given recent demand for dairy land had exceeded supply.

When contacted yesterday and asked about either domestic or international tenders for the properties, he said the process had been ''positive'', but was unable to comment further as an announcement on the sale process is scheduled for next week.

When coal prices were at their peak in 2011, Solid Energy invested hundreds of millions of dollars into research and development of alternate energy sources.

However, a price plunge of more than 40% bought Solid Energy to its knees, revealing massive debts of more than $220 million, a $200 million revenue slump and subsequent annual losses of $40 million and then $335 million.

Following widespread redundancies and restructuring, after the sudden departure of long-time chief executive Don Elder, ''non-core'' assets were put up for sale, including the farms and a $29 million prototype lignite conversion plant near Mataura.

The nine farms are all within a 5km radius between Mataura and Gore, relatively close to Fonterra's Edendale processing plant.

An industry source from Southland, who did not want to be identified, understood interest in the farms had been ''high''.

He said all the farms had been subject to some form of negotiation during the past month and it was possible all might have sold.

Solid Energy was once earmarked by the Government as its fourth state-owned enterprise to be floated, but that was canned after it posted the massive losses, which crippled the company and prompted a $100 million government bailout and refinancing last year.

- simon.hartley@odt.co.nz

For sale
Three dairy farms milking 2015 cows; targeting 785,000kg of milk solids this season.
Two dairy conversion properties, totalling 550ha.
Four dairy support properties totalling 580ha.
The nine farms range in size from 33ha to 399ha, and total 2031ha.-
Source: PGG Wrightson

 

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