Debt hit de­lay­ing buyer’s VDL plan

Tasmanian Country - - NEWS -

MIL­LIONS of dol­lars in promised in­vest­ment in a his­toric Tas­ma­nian dairy farm ap­pears to have been sti­fled by a fi­nan­cial crack­down by the Chi­nese gov­ern­ment.

The Aus­tralian Fi­nan­cial Re­view last week re­ported Chi­nese bil­lion­aire Lu Xian­feng funded the $280 mil­lion pur­chase of the Van Diemen’s Land Com­pany, Aus­tralia’s big­gest dairy farm, en­tirely through debt.

The newspaper re­port said Mr Lu im­me­di­ately moved to off­load the as­set to raise some cash.

But the move was blocked by Chi­nese reg­u­la­tors, cast­ing doubt over a pledge made by Mr Lu to the Fed­eral Gov­ern­ment to in­vest $100 mil­lion in the dairy and cre­ate 95 new jobs, the AFR re­ported.

Nei­ther the in­vest­ment nor the jobs have come through.

News of the stalled plan comes af­ter a re­port last month that VDL owner Moon Lake In­vest­ments re­vealed its plan for di­rect flights car­ry­ing fresh milk from Ho­bart to China had been de­layed be­cause of “sup­ply-chain and reg­u­la­tory is­sues”.

Moon Lake has not dis­puted re­ports of Mr Lu’s dif­fi­culty ac­cess­ing cap­i­tal.

How­ever, man­ag­ing di­rec­tor Sean Shwe said the com­pany re­mained pos­i­tive about the long-term fu­ture of VDL.

Mr Shwe said the global milk mar­ket had suf­fered a sig­nif­i­cant de­cline since Moon Lake bought the Cir­cu­lar Head dairy farm last year.

“In the face of that down- turn, the com­pany has main­tained its work­force, in­creased milk pro­duc­tion and made new in­vest­ment com­mit­ments, such as the planned tran­si­tion of three large dairies to high­qual­ity pro­duc­tion as or­ganic farms,” Mr Shwe said.

Premier Will Hodg­man said he was con­fi­dent the promised in­vest­ment on the dairy prop­er­ties would flow.

“I was on one of their prop­er­ties at Wool­north and re­ceived as­sur­ances and saw very closely the work they are do­ing to ex­pand their dairy op­er­a­tions,” he said.

In­de­pen­dent Deni­son Fed­eral MP An­drew Wilkie said the rev­e­la­tions showed Aus­tralian au­thor­i­ties had been “gullible” in al­low­ing the sale of VDL to Moon Lake.

Around the time of the sale Mr Wilkie was part of a cam­paign to have Mr Lu’s bid rejected in favour of a bid by an Aus­tralian con­sor­tium.

Univer­sity of Tas­ma­nia se­nior lec­turer in Chi­nese stud­ies Mark Har­ri­son said Mr Lu had found him­self on the wrong side of a Chi­nese gov­ern­ment crack­down on cap­i­tal out­flow in re­sponse to China’s high level of do­mes­tic debt.

“It makes any pro­posal for large in­vest­ments in Tas­ma­nia more com­plex in terms of Chi­nese gov­ern­ment reg­u­la­tory over­sight,” Dr Har­ri­son said.

“The par­ent com­pany in Ningbo is in a tight sit­u­a­tion and the ef­fects of that will be felt in Tas­ma­nia.”

Dr Har­ri­son said the is­sues with in­vest­ment at VDL ex­posed a fail­ure by state and fed­eral gov­ern­ments to do due dili­gence.

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