National blasts milk firm loan
A$9.9 million Government loan will help Westland Milk Products reduce its dependency on bulk dairy commodities, chief executive Toni Brendish says.
Regional Economic Development Minister Shane Jones said the interest-bearing, repayable loan from the Provincial Growth Fund would support the development of segregation facilities at the co-operative’s Hokitika site, enabling Westland Milk Products to collect and process different types of milk products, such as A2 milk and colostrum.
The $22m plant is part of the company’s five-year strategy and Brendish said the remainder would be funded from “our normal, ongoing capex.”
“Generally, you would fund capex out of depreciation. That creates a lump sum of money that we can put into various forms of capex. The balance will come from that.”
She said the Government’s loan made it possible to bring the project forward and “therefore it brings the investment and return opportunities for Westland and the West Coast forward”. The plant will be operating in time for the 2019-2020 season.
Paul Goldsmith, National Party spokesman for economic and regional development, said the funds were “a soft loan for Westland Milk . . . at a rate no bank was willing to offer”.
He warned that the Government and taxpayers “shouldn’t be taking on the role of a bank, especially one that is directly controlled by ministers.”
In its annual report, Westland signalled the need for access to “new and increased capital” in order to create value for its farmer shareholders and said it was focused on producing high-value, segregated products throughout the season.
Currently, it can produce some segregated product but during peak seasonal milk production the existing plant capacity forces it to process lowvalue, bulk commodities just to get the milk volume through.
The co-operative is reviewing capital structure review and will update shareholders at the annual general meeting on December 5.
The fund will also provide $87.5m for West Coast tourism, $32.8m for extending the region’s ultra-fast broadband and mobile coverage, and $10m for a garnet mining project.