September 6, 2011


Natural Dairy eyeing New Zealand's Crafar Farms


Natural Dairy, a Chinese-owned dairy company, is set to acquire New Zealand's Crafar Farms.


The company has told the Hong Kong Stock Exchange that it is interested in New Zealand's dairy subsidiary as well as sourcing "specific dairy products" and/or striking deals with local dairy processors either directly or indirectly.


Natural Dairy appears determined to take full control of a New Zealand subsidiary which was initially fronted by bankrupt businesswoman May Wang and has indicated it may announce further plans before the end of this month.


Since its offer to buy the Crafar farms was turned down by the government last year, the company has continued to develop a chain of retail stores in China, and has also developed a bottling factory in Jiangxi. It has also organised a high-profile advertising campaign on China's main television channel.


But Natural Dairy still has a few problems to solve, such as the alleged four Crafar farms that it allegedly illegally purchased according to Overseas Investment Office.


The government's Serious Fraud Office is also continuing to investigate the company.


Natural Dairy has been suspended from the Hong Kong Stock Exchange for most of the past 18 months, while shareholders - including at least one prominent Chinese billionaire - await details of its plans.


On September 2, it revealed it had made a loss of US$23.5 million in the year to the end of May.


It lost a similar amount last year. But it remains upbeat about its future, noting that the latest result includes just one month of UHT milk sales from New Zealand. The company has a contract to buy UHT milk from a dairy factory set up in Tauranga by Wang.


Natural Dairy purchased a 20% stake in UBNZ Assets - a New Zealand company formerly fronted by Wang - in February last year for US$48.6 million.


It has told shareholders that stake is now worth US$60.3 million, and it still intends to buy the rest of the company, "including its dairy properties and dairy cattle interest''.


However, it has made no mention of the fact that the OIO claims it purchased those properties, which total nearly 9000 hectares with more than 28,000 cows, illegally.


A spokesman for the OIO said the office had still not received a submission from Natural Dairy about why it believed it did not require OIO approval to buy the four farms. However, it expected to receive it shortly.


Natural Dairy's accounts show that, over the past year, it has paid a US$66 million deposit to a UBNZ company, considered a related party. It has also declared related party transactions totalling HK$43 million.

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