Little return so far for BNZ from combined NZ$46.8 mln owed by Patoka and Edenz receiverships

By Gareth Vaughan

The receiver of dairy farm group Patoka Dairies, tipped over by a BNZ owed more than NZ$40 million in March last year, continues to operate the farms and says no decision has yet been made on when, or even if, the company's farms might be sold.

In their third report receivers Maurice Noone and John Fisk of PricewaterhouseCoopers say no further money has been clawed back for the BNZ. The second report, released last November, noted the BNZ had been repaid just NZ$2.48 million of the NZ$40.238 million (excluding interest) it was owed at the date of their appointment on March 16 last year.

Controlled by Bob McVitty who was convicted in 2008 of obstructing a MAF inspector after an incident where he shot a sick cow, Patoka Dairies operates four dairy farms and two dairy support units in the Hawkes Bay. Three of the farms are recent dairy conversions.

Noone and  Fisk say that, although the farm conversions are now largely completed, "significant further progress" is still needed to reach "optimum sustainable" production.

"As a result, at this time we have not determined when, or if the company's properties will be placed on the market for sale," the receivers say.

Noone told interest.co.nz there was no timeframe on when a decision might be made on whether to sell the farms or not.

"It's very much a work in progress as the conversions mature and develop and market conditions, milk returns, all those sorts of things will have a bearing on that. At this stage it's just a watching brief," Noone said.

Further work needed to be done on the farms on pasture improvement, herd improvement, and establishing better management systems, among other things. In the meantime, BNZ was "pleased with the direction everything's heading" in, Noone said.

Fonterra payments flowing

Between September 17 last year and March 16 this year PricewaterhouseCoopers receipts totalled NZ$7.37 million. This included NZ$2.5 million in milk income, NZ$98,547 in Fonterra dividends, NZ$258,967 from livestock sales. Payments over the same period reached NZ$7.7 million including NZ$1.7 million of wages paid to farm workers, NZ$125,678 in receiver's fees, and NZ$7,557 of bank charges.

Noone and Fisk note that the values of Patoka's farms are subject to market fluctuations and hard to assess, but their value will materially affect the prices achieved from any sales.

The Real Estate Institute of New Zealand's latest monthly figures showed 152 farms were sold in April, which was the most farms sold than in any single month since July 2008. There was a significant increase in sales of dairy support blocks as farmers prepared for winter grazing. A total of 24 dairy farms changed hands last month, up from 15 in March and double the 12 sold in April 2010.

BNZ, which holds a first ranking general security agreement over all Patoka's assets and undertakings, pulled the plug on the group after delays and cost overruns in the dairy conversions meant Patoka  was unable to meet production targets. This, on top of a reduced 2008-09 dairy season payout, left the company unable to meet interest payments on its debt. A guarantor of Patoka's secured indebtedness, McVitty Properties, was also placed into receivership shortly after Noone and Fisk's appointment.

Others owed money in the receivership include Marac Finance, owed NZ$115,000 for vehicle leases, and Rabobank owed NZ$94,000 for a leased silage wagon.

Just NZ$1.82m back from NZ$6.6m exposure to apple packer

Meanwhile KordaMentha's Brendon Gibson, receiver of Hawkes Bay apple cool store and pack house operator Edenz Ltd which also had its plug pulled by BNZ, has also released a new report. In it Gibson says BNZ, owed NZ$6.6 million when KordaMentha was appointed on September 16 last year, has got back NZ$1.82 million after the NZ$3 million sale of Edenz's property and NZ$87,304 from the sale of assets. 

Gibson notes rural retail co-operative Farmlands Trading Society registered a caveat over the property, a 3.615 hectare cool store and pack house at Havelock North, which was discharged prior to the sale settling. The receiver's report also shows KordaMentha's receivers fees totalled NZ$384,834.

In their first report KordaMentha said BNZ pulled the plug after Edenz, which also leased and managed a number of orchards, defaulted on its banking arrangements.

(Updated with comments from an interview with Maurice Noone).

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