16 Feb 2012

Chinese bidder still confident of buying Crafar farms

6:26 am on 16 February 2012

A spokesperson for the Chinese company seeking to buy the Crafar farms say it's confident its application will hold up, after a High Court ruling that the Government will have to reconsider its approval of the sale.

In a judicial review of the decision to sell the 16 farms to the Shanghai Pengxin company, Justice Miller ruled that the Overseas Investment Office overstated the economic benefits it offered, and that the Associate Finance and Land Information Ministers made an error in accepting the recommendation on that basis.

The group of New Zealand farming and iwi interests who successfully challenged the sale by seeking the judicial review, says the ruling confirms its view that the Chinese bid would bring no additional economic benefit to New Zealand.

But Shanghai Pengxin's New Zealand spokesperson Cedric Allan says it's confident the application will still succeed, after it's put under further government scrutiny.

He says there has never been a purchase of an asset in New Zealand which has been subjected to such rigourous scrutiny as the purchase of these farms by Shanghai Pengxin.

"We've had this proposal evaluated in the finest detail by the Overseas Investment Office for nine months, we're very confident they've come to the right conclusion", he says.

New interpretation needed

Land Information Minister Maurice Williamson says the High Court judgement changes the interpretation of how economic factors in applications should be assessed.

Instead of applying a 'before and after' approach, as the Overseas Investment Office (OIO) did in its recommendation to Ministers, the Court has ruled those factors should be assessed by asking what would happen 'with and without' the overseas investment.

He says the OIO and the Government will have to apply a different test in reconsidering the Shanghai Pengxin bid and all future applications.

Mr Williamson has warned that if New Zealanders buy the land, there is no guarantee they will invest enough to improve the farms as would be required by a foreign buyer.

The OIO says it expects to make its recommendation to Ministers in a matter of days.

Meanwhile the Crafar farms receiver, KordaMentha, says it's extended the deadline for the sale to go unconditional, to Wednesday next week.