Sharechat Logo

Landcorp board in talks with ministers over debt levels, PM Key says

Monday 17th August 2015

Text too small?

The board of state-owned farming operator Landcorp Farming is in active discussions with ministers over its levels of debt, but isn't in as big a hole as failed coal-miner Solid Energy, according to Prime Minister John Key.

The Wellington based state-owned enterprise faces growing scrutiny by the government as a slump in the global milk price creates unease over Landcorp's debt. Key told his weekly post-Cabinet press conference ministers are in talks with the SOE's board, but he wouldn't put it in the same boat as Solid Energy, which was put into voluntary administration last week after a collapse in coal prices compounded the company's over-ambitious expansion strategy and high level of debt.

"Ministers are aware of the debt that Landcorp carries and are having active conversations about that," Key said. "There's been a number of discussions between the Minister of State-Owned Enterprises Todd McClay and the board of Landcorp, along with the minister of finance."

Finance Minister Bill English told TV3's 'The Nation' programme that the government was uncomfortable with the level of Landcorp's dairy conversion on the 26,000 hectare Wairakei Estate north of Taupo, and was having a look at it. Landcorp chief executive Steve Carden rejected the suggestion the low dairy price would warrant a review, saying it was a long-term development.

Key said he didn't know what steps the ministers and Landcorp will take, and that he hasn't received a report on the review.

The economic assessment for the Wairakei Estate forecast revenue increasing to $168 million by 2021, at the end of the conversion process, from $41 million in 2014, with dairy revenues accounting for the lion's share of future revenue. At the time, the milk price assumption was $7 per kilogram of milk solids.

Fonterra Cooperative Group has since slashed its forecast payout to farmers for the 2016 season to $3.85/kgMS.

 

 

 

 

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

Second St John withdrawal of labour takes effect tomorrow with further strikes likely
Sanford Appoints Independent Director
CRP ADVISES CLOSURE OF SHARE OFFER TO EXISTING INVESTOR
Devon Funds Morning Note - 14 August 2024
OCR 5.25% - Monetary restraint tempered as inflation converges on target
Consumers still need due diligence as new deposit takers emerge.
Woolworths strike: staff asked to dress up in Disney costumes for a week on their own dollar
Turners Invests in Quashed Online Insurance Platform
PGW Reports on Challenging Year
Arvida Announces Executive Team Changes