Debt hit delaying buyer’s VDL plan
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.