Dairy industry rumours say Russian company Nutritek Group, who owns NZ Dairies Ltd (NZDL), wants to quickly sell its Studholme plant but NZDL chief executive Aidan Johnstone was unable to comment yesterday.
Oceania's chairman, Dr Keith Turner, said his company had received "reliable information" Nutritek would be selling the plant, and Oceania was interested in buying it.
The Glenavy plant, estimated to cost about $90 million and processing milk from up to 50,000 cows, has resource consents approved and Oceania was going through a tendering process with construction companies.
In the middle of last month, Oceania had agreement in principle for the debt and equity needed to build it.
Maui Capital Ltd, an independent New Zealand-based private investment firm providing capital to mid-market New Zealand and Australian businesses, was the cornerstone investor.
At the same time, Oceania had more than enough milk supply signed up for the plant to start production in August next year.
"However, as all documentation was being finalised, we received advice the Russian owners of the Studholme plant intended to sell it," Dr Turner said.
Oceania had always been keen to integrate its proposal with the NZDL plant, but had not expected it to become available so soon.
With many NZDL farmer suppliers committing milk to the new Glenavy plant, the sale of the Studholme plant, which started production in 2007, offered Oceania an immediate operating project.
"Oceania has received strong feedback that local farmers would support, and expect it to enter an acquisition process to invest in the local (Studholme) plant," Dr Turner said.
"It would make no sense, if we are able to acquire the Studholme plant, to build Glenavy straight away, so we have put our plans on hold."
That did not mean Glenavy would not be built.
The Studholme plant's production was 5.5 tonnes an hour. Glenavy was about 8 tonnes.
Oceania also expected significant growth in milk production in the region.
If Oceania bought the Studholme site, it would see how it could be integrated with Glenavy.
"We want to take more time over the Glenavy decision - that's if we are successful.
"Once Oceania's position on the NZDL plant is clear we will review plans for the Glenavy site," Dr Turner said.
The Studholme plant was expected to be sold through a contestable process, so there was no certainty Oceania would be successful.
However, it was understood Nutritek wanted to sell without undue delay.
Dr Turner said Oceania had capital in position and a large volume of milk signed up, a significant amount from NZDL suppliers who wanted to switch because they liked Oceania.
Asked how much the delay could affect Oceania's plan to have the Glenavy plant in production for the 2011-12 season, Dr Turner said that was being studied.
