Shanghai Pengxin withdraws judicial review of Lochinver rejection

Chinese agricultural investor Shanghai Pengxin has withdrawn its application for a judicial review of the government's decision to decline its application to buy the Lochinver sheep and beef station near Taupo, despite "a great deal of confusion" about the regulatory process.

The company had wanted to test the Overseas Investment Office's use of a hypothetical alternative New Zealand buyer when assessing its offer. However, the process was a distraction as well as a significant expense and it wanted "to devote our energies to the management of our New Zealand farms, new product development and value-added exports to Asia," it said in a statement.

"There is a great deal of confusion in the market about this aspect of the OIO Act and we initially believed that a judicial review was the most effective path to provide much-needed clarity for sellers and potential purchasers of New Zealand farmland," said Terry Lee, the representative of Pengxin Group to New Zealand and Australia. "We now believe, however, that this need has been recognised by the government and the OIO and our preference is to take part in any discussions in the hope that changes take place to restore confidence to the market."

The government scuttled Pengxin's $88 million proposed purchase of Lochinver in September last year, saying the transaction failed on the test of providing a substantial benefit to New Zealand. The decision ended a long wait for the diversified investor, owned by Chinese billionaire Jiang Zhaobai, which had agreed to buy the 13,843 hectare farm near Lake Taupo from concrete, quarrying and engineering firm Stevenson Group in 2014.

Lochinver was sold in November to New Zealand farming group Rimanui Farms, and Pengxin withdrew from buying the neighbouring Taharua Farm, as well as a separate deal to buy the so-called "Pinny" farms in Northland.

Jiang Zhaobai said today the judicial review was an unnecessary distraction at a time when New Zealand and China have reopened talks to upgrade their 2008 free-trade agreement.

"Good relationships and the FTA between our two countries are more important than private business," he said.

(BusinessDesk)