Fonterra to buy failed NZ Dairies plant
The Russian-owned dairy factory in South Canterbury had been in receivership since May.
Fonterra has agreed to buy a Russian-owned dairy factory at Studholme in South Canterbury, which has been in receivership since May.
Under the conditional agreement, Fonterra will acquire the milk processing assets of the New Zealand Dairies Group, subject to commerce commission approval.
The co-op says the deal means NZ Dairies' existing farmers suppliers will be paid in full by the receivers and will have their milk processed and paid for from the start of the new dairy season in a few weeks.
NZDL went into receivership on 17 May, with the receivers - Colin Gower, Stephen Tubbs and Brian Mayo-Smith of BDO - calling for buyers the next day.
Fonterra CEO Theo Spierings says the Studholme plant processes around 150 million litres of milk a year, and will compliment the new Darfield plant which will start taking milk in August.
As part of the agreement, Fonterra will operate the plant until the end of the 2012-13 season, with NZDL's suppliers given the chance to supply Fonterra on contracts.
"This means we are able to collect and process farmers' milk from the start of the new season, avoiding the prospect of them having to spill milk," he says.
The $100 million Studholme dairy factory had about $150 million invested into it by Russian baby-food producer Nutritek, which had acquired NZ Dairies in 2008.
However, Nutritek got into financial trouble and embarked on a major restructuring phase while seeking buyers for its NZ Dairies shares.
Late last year a potential Chinese buyer pulled out of negotiations, with an investigation into the company by insolvency and restructuring specialist McGrathNicol following soon after.
The report gave a bleak outlook of NZ Dairies' business model, saying it paid too much for its milk and without additional capital the business was not viable.
Caleb Allison
Fri, 15 Jun 2012
Fri, 15 Jun 2012
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Fonterra to buy failed NZ Dairies plant
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