Sale of Southland’s Jericho Station in limbo
Landcorp has accepted the offer of a New Zealand bidder for Southland’s Jericho Station, but it is only a back-up offer in case a Chinese buyer’s application to the Overseas Investment Office (OIO) falls through.
The state-owned enterprise has been under fire for accepting the Chinese bid of $8.7 million when it had been offered a price several hundred thousand dollars less from the New Zealander.
The Chinese offer is conditional upon a successful application to the OIO, whereas the New Zealander’s cash offer is unconditional.
Landcorp agreed to the $8.7m offer in June but three months later the Chinese bidder for the 1359 hectare sheep and beef farm near Manapouri has still not filed an application with the OIO.
A Landcorp spokesman said the SOE would include the details of the back-up offer in the documents it supplied to the OIO.
He understood the application by the Chinese bidder would be filed soon. There was no deadline for when the bidder had to seek OIO approval.
‘‘That process is at the purchaser’s discretion, although it has to be in a ‘reasonable time’,’’ the spokesman said.
Landcorp board director Eric Roy said he found it ‘‘intriguing’’ that Landcorp management would forward the Kiwi offer as documentation to the OIO.
Board members had not recently been informed about developments in the case.
He also said he was ‘‘fascinated’’ that the Chinese bidder had not yet applied to the OIO because it was a relatively simple process.
However, the would-be Chinese buyer may fall foul of a new government in power by the time the application is considered.
In the lead up to the 2014 election, Labour’s environment spokesman David Parker said ‘‘in all but the rarest of cases, sales of rural land to overseas buyers will be banned’’.
In order to be approved, the foreign investor would need to demonstrate that they would deliver benefits that would be ‘‘over and above’’ what a New Zealand investor would be able to produce in addition to achieving substantial improvement in job creation and exports.
NZ First leader Winston Peters said skilled farmers were welcome so long as they met all immigration requirements and committed their future to New Zealand. ’’If they are here with the intention of being absentee
The Chinese offer is conditional upon a successful application to the OIO, whereas the NewZealander's cash offer is unconditional.
landowners then the answer is no,’’ he said.
Peters has also criticised the Jericho deal on the grounds that it represents an opportunity cost for New Zealand’s largest farmer.
If the unconditional offer had been invested immediately it would have generated about $26,000 a month in interest.
Considering it took on average about eight months for an application to handled by the OIO, Landcorp would lose $208,000 in opportunity cost over that time, which equalled the difference in the two bids. ‘‘If this $200,000 difference is true, then it is obvious National’s handpicked Landcorp board is not working in the best interests of New Zealand taxpayers,’’ Peters said.
In its latest annual report, Landcorp said its focus was on paying down debt. In the last year it had sold three farms worth $16m.
NZ First Clutha-Southland candidate Mark Patterson said local people were strongly opposed to the sale to a foreigner. He did not know the identity of the buyer but believed he lived in Arrowtown and had plans to buy a number of New Zealand farms.