Harvey Norman's distressed Coomboona Dairies hits market

Harvey Norman's disastrous foray into dairy farming is coming to an end with agency Elders appointed to sell the entire Coomboona dairies operation in Victoria.
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The Australian Financial Review first reported that Harvey Norman founder Gerry Harvey had ploughed money into the 2000-hectare Coomboona Holsteins operation north west of Shepparton in Victoria and wanted to increase the carrying capacity of cows to as much as 6000.
However, the farming business made a $793,000 loss in its first year of operation and was placed into receivership and administration in March this year, sparking an irate response from shareholders and governance experts.
Harvey Norman owns the $73.15 million debt in the dairy operation after also taking on Coomboona’s debt to NAB of $36.06 million in May.
But how much the dairy will sell for remains to be seen.
The farm’s administrators, Ferrier Hodgson’s Stewart McCallum and Ryan Eagle, have now appointed Elders’ Nick Myer and Anthony Stevens to sell the property.
Mr Stevens said «astute investors will immediately recognise key features differentiating Coomboona from any other available assets in the current market».
Currently milking in the vicinity of 2500 Holstein cows, the dairy boasts annual milk production in excess of 30 million litres. The dairy also has a portfolio of 3461-megalitre water entitlements in addition to 650-megalitre dam storage and frontage to the Goulburn River.
A statement by the Elders agents said: «Significant capital investments have been made, resulting in the dairy boasting state of the art technology combined with modern, purpose-built infrastructure. Given recent levels of investment, the dairy is ideally positioned to capitalise on further expansion and feed lotting opportunities.»
«It is very rare for an asset of this scale and quality to be offered for sale,» Mr Myer said. «The existing owners have implemented a vision which positions an incoming purchaser to fully realise the potential of this unique asset.»
Logical buyers of the asset would include billionaire Rich Lister father and son combination Tony and Michael Perich. The Perich family’s Arrovest has a controlling 54 per cent stake in the listed Freedom Foods.
Freedom Foods has just raised $200 million in capital to help expand its Shepparton dairy plant, not far from Coomboona, and has been paying farmers direct for their milk to supply its factory.
Michael Perich is also regarded as one of the best operators in the dairy feedlotting business.
Elders’ expression of interest campaign on the assets closes on August 16.
By: Larry Schlesinger
Source: Financial Review
Link: https://www.afr.com/real-estate/commercial/investment/harvey-normans-distressed-coomboona-dairies-hits-market-20180629-h1219r

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