Property

Property: NAPCo shareholder sells Roma holding to Chinese interests for $28m

Beef Central, 21/09/2015

THE largest individual shareholder in the North Australian Pastoral Co has sold its separately-held Woodlands grazing and farming property near Roma to Chinese interests for $28 million.

UK based MP Evans Group, which holds 34.37 percent of NAPCo shares, has offloaded its 31,000ha Woodlands holding near Westmar, on Queensland’s western Darling Downs, to a subsidiary of China’s Fucheng Group.

Cattle on MP Evans' Westmar grazing property, Woodlands, sold to Chinese interests for $28 million

Cattle on MP Evans’ Westmar grazing property, Woodlands, sold to Chinese interests for $28 million

The sale is conditional on various regulatory requirements, including Foreign Investment Review Board approval, the company said in a statement to the London Stock Exchange.

The buyer’s parent company, Fucheng Group, is a supplier of automotive interior and exterior parts. Beef Central understands it has made no previous investments in Australian agriculture.

In its annual report to shareholders in April this year, publicly-listed MP Evans said Woodlands, used primarily for backgrounding cattle, had made a small profit for the previous 12 months, as cattle prices strengthened. It flagged a likely sale at that time.

Agisted cattle on Woodlands had been replaced with company-owned cattle during the past 12 months, the annual report said.

 

Sale for strategic reasons

In the statement issued to the London Exchange (see full statement at base of page) , MP Evans said the sale of Woodlands involved property only. The cattle and the plant and equipment, to be sold separately, had an estimated combined value of more than $10 million.

“The board determined some time ago, for strategic reasons, to sell Woodlands but significant interest in the property has developed only in recent months, further to the sharp strengthening of the cattle market,” the statement said.

The proceeds from the sale will be used partly to repay a portion of the group’s debt and partly applied towards the group’s expansion in the Indonesian palm-oil sector. MP Evans holds substantial palm oil plantation and processing interests across southeast Asia.

At different times MP Evans’ Woodlands holding has interacted with NAPCo’s much larger cattle and feedlot operations, but the two have historically operated independently.

MP Evans attempted to sell Woodlands in 2009, with some expectations at the time suggesting the property could make more than $30 million.

MP Evans chairman Peter Hadsley-Chaplin told media at the time that the company’s primary interest had been in its investment in NAPCo, which represented a “more appropriate investment in the Australian agricultural sector.”

“It is better having a holding in a company which has a spread of properties,” he said.

Two years ago MP Evans supported an examination of NAPCo including a potential sale offering, which was later withdrawn.

MP Evans’ 2014 annual report issued in April showed that Woodlands made a net profit in the year under review of US$200,000, against a loss the year prior of US$100,000. Income from cattle trading, at US$2 million, was markedly higher than the US$1.4m reported for 2013, though income from fattening third parties’ cattle on agistment fell slightly from US$500,000 to US$300,000.

Given the improving prospects for the beef market, the board took the view that it should stock Woodlands with its own herd, and so cattle on agistment were replaced with cattle purchased on Woodlands’ own account. By the end of the 2014-15 trading year, the 5600 cattle on the property at the beginning of the year had either been sold or returned to their third-party owners. In their place, 5500 young cattle were purchased and grazed on Woodlands. Poor weightgain had gone some way to erasing the benefit of higher cattle prices, however.

 

Sequence of Chinese investments

The Woodlands deal is the latest in a series of high-profile Chinese property purchases this year, the Financial Review reported this morning.

The list includes Hailiang Group’s $40m purchase of farmland near St George, Dashang Group’s $45m purchase of Babcock and Brown founder Phil Green’s Glenrock Station near Scone in the Hunter Valley, and Chinese billionaire Xingfa Ma’s purchase of Wollogorang and Wentworth cattle stations on the shores of the Gulf of Carpentaria in the NT for $47m.

 

 

Here is MP Evans full statement issued to the London SX:

The board is pleased to announce that, earlier today, contracts were exchanged in relation to the conditional sale of Woodlands, the Group’s wholly-owned, 31,000-hectare cattle-fattening property, located in southern Queensland, Australia, to an Australian subsidiary of the Fucheng Group, for the sum of AS$28.0 million (some US—$20.0 million). The sale is conditional upon various regulatory approvals, including that of the Australian Foreign Investment Review Board, which are all expected to be received within approximately three months. The sale is for the property alone and both the cattle and the plant and equipment on the property, which are estimated to have a combined value of over A$10 million, will be sold separately. Woodlands reported a farm profit for the year ended 31 December 2014 of US$0.2 million. The board determined some time ago, for strategic reasons, to sell Woodlands, but significant interest in the property has developed only in recent months further to the sharp strengthening of the cattle market. The proceeds from the sale will be used partly to repay a portion of the Group’s debt and partly applied towards the Group’s expansion in the Indonesian palm-oil sector.

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