Spilt milk as Harvey Norman’s failed dairy farm sold
The listed Freedom Foods Group today says it is backing the purchase of Harvey Norman’s failed dairy operation with the group to invest alongside the Perich and Moxey family venture that picked up the Coomboona Dairy business.
The Australian yesterday revealed that billionaire investor Gerry Harvey had been bailed out of his disastrous move into dairy farming by a venture led by the Perich family, which bought the rural holdings in Victoria for more than $40 million.
Freedom Foods says the Australian Fresh Milk Holdings venture, run by the families and which it backs, has entered into agreements to purchase the Coomboona Dairy operation in northern Victoria.
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The company says AFMH’s purchase of the dairy operation will expand its production platform into northern Victoria, “providing the opportunity to leverage its integrated approach to deliver sustainable production of high quality milk, supporting a range of value added product opportunities”.
AFMH already runs a dairy farming operation, Moxey Farms, in the Lachlan Valley, NSW, 340km west of Sydney.
The venture is a partnership owned by the Moxey and Perich families and other shareholders. including Freedom Foods Group, that has a 10% equity stake.
Coomboona Dairy will make AFMH into the largest dairy producer in the country with current operations forecasting over 150 million litres of production into 2019.
Freedom Foods says it will use a growing proportion of the dairy milk output from both Moxey Farm and Coomboona Dairy for its Australia’s Own Kid’s Milk and other dairy products.
Their ambitions contrast with Harvey’s own costly foray into the dairy industry.
Harvey Norman took an “impairment loss” of $28.78 million on the venture’s debts in June and says it has recognised a total of $54.01 million in losses in the last financial year.
The company put the Coomboona business on the market in July after in March it fell into the hands of administrators Ferrier Hodgson and receivers McGrathNicol, who were appointed by National Australia Bank.
Harvey Norman bought Coomboona’s debt to NAB of $36.06 million in May but then suffered more losses.
In September he struck a deal with creditors in Coomboona which meant the company did not fall into liquidation.
A report by Ferrier Hodgson says the dairy entity is “potentially insolvent from mid-March 2018” — a claim denied by Harvey.
This article originally appeared on www.theaustralian.com.au/property.
