OIO silent over last-minute bid to block Westland sale

The Overseas Investment Office (OIO) is not commenting on a last-minute bid by farmer-shareholders who switched to Fonterra but are owed millions of dollars by Westland Milk Products, to block the sale to Chinese-owned company Yili.

The former Westland suppliers have asked the OIO to delay or block the sale, which goes to a shareholder vote in Greymouth today.

The deal is partly conditional on OIO approval.

Six former milk suppliers, most of whom exited Westland Milk last year, told The New Zealand Herald this week they were owed between $7million and $8million in share redemption cash, from shares not yet paid out.

The OIO said it could not comment on specific matters, and referred questions about repayment obligations to Westland and Yili.

Spokesman and shareholder Pete Williams, of Waimate, said the group had been told they could wait until as late as 2023, regardless of the proposed buyout.

''This means the former shareholders become unsecured creditors of a subsidiary of Inner Mongolia Yili Industrial Group ... providing what is an interest-free loan to a Chinese State-owned multinational, while they are left to struggle financially,'' Mr Williams told the Herald.

The Westland Co-operative Dairy Company constitution allows it to postpone repaying departing shareholders for up to five years.

The farmers in the group are now Fonterra shareholders.

''This is absolutely a principle for us.

''It's morally wrong for them to still keep our money.

''We want our money in our businesses,'' Mr Williams said.

''The board is using our money to make the deal more attractive to the Chinese,'' he said.

''Our beef is that they are taking advantage of a technical legal clause in the old co-operative constitution to continue to hold our money as [an] interest-free loan.''

Westland Milk Products chairman Peter Morrison declined to comment, but released some information, noting the suppliers were not shareholders.

If the sale went through, farmers who had previously surrendered their shares in Westland would not be paid the $3.41 offered by Yili, as they would not be transferring any shares to Hongkong Jingang Trade Holding Co Ltd.

The suppliers were unsecured creditors of Westland and recorded as a liability in Westland's financial statements, Mr Morrison said.

Westland remained fully liable to make all payments in respect of surrendered shares when those payments were due, including after a sale, Mr Morrison said.

Yili, or Hongkong Jingang Trade Holding Co Ltd, is a subsidiary of Inner Mongolia Yili Industrial Group Co Ltd.

Yili is a dairy producer based in China and listed on the Shanghai Stock Exchange.

In 2013 it bought Oceania Dairy Ltd in Glenavy, South Canterbury. - Greymouth Star

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