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Shovel-ready Ōtorohanga site with scale hits market

With its owners now in liquidation, the land and intellectual property assets of a proposed Waikato-King Country vertically-integrated dairy processing plant have been placed on the market for sale.

Aspiring milk processor Happy Valley Nutrition Limited’s (HVNL) subsidiary Five Redland Road Limited (FRRL) is in liquidation, with its Ōtorohanga land and intellectual property assets now in the hands of liquidators Andrew Grenfell and Kare Johnston of McGrathNicol.

HVNL was initially established to develop a sophisticated nutritional-grade milk processing and packaging plant for infant milk formula (IMF) and other nutritional products with the intention of becoming a business-to-business supplier in the global export market.

To this end, it proposed a production and dry store facility across 5ha adjacent to SH31.

However, subsequent changes in the IMF market saw HVNL revise its business and property strategy to develop a system to produce milk protein concentrate to meet specific market demand for such product.

HVNL acquired a total 316ha of Rural A-zoned property across four separate holdings to satisfy production and wastewater discharge requirements on the outskirts of the rural service town of Ōtorohanga, which is 55km south of Hamilton.

The landholdings comprise a 17.8ha proposed processing plant site bounding the Waipa River, a dairy farm and a drystock farm purchased to fulfil wastewater disposal requirements with a combined area of around 297ha and long-term leases in place to a local farmer, and a vacant 1.89ha lifestyle block.

HVNL then sought and successfully obtained all regional and district council consents, permits and licences to construct and operate the facility, completed the civil works and road alignments for the project site and had initial design work done for the factory.

Further, it had been negotiating supply agreements with international partners and intended recruiting local farmers as milk supply partners.

However, having commenced work on the main site, HVNL struggled to secure sufficient capital to proceed with the proposed plant.

On liquidator McGrathNicol’s instruction, real estate agency Bayleys has been appointed to market the assets either individually or as a portfolio via a tender process, closing 11th March through Duncan Ross, Bayleys Auckland and Dave Peacocke, Bayleys Waikato.

What remains is a shovel-ready processing site that Ross said would suit another dairying entity, or could pivot to an alternative processing use – along with the associated landholdings.

“It’s important to note the opportunity here for a dairy-forward business to leverage the existing infrastructural and intellectual property investment made and to fast-track momentum given the consents and planning approvals that are in place.

“While the true benefit of having a shovel-ready project is the ability to expedite a build, between land acquisition, construction costs to date and the resource consents required, FRRL has spent in excess of $25 million to get to this point which is significant.

“By utilising the existing assets and bypassing lengthy and costly compliance processes, a new dairy-related owner would get a timely jump-start into the market with all offers to be considered by the liquidators.”

Ross urges other processing sectors like meat or any other industry that needs wastewater disposal and discharge consents to also consider the potential that this compliant site offers, “along with large logistics’ businesses for the infrastructural benefits alone.”

All geotechnical and earthquake ground works have been completed at the main project site to accommodate HVNL’s two originally-proposed dairy spray driers and the site is securely fenced and locked.

The two adjacent farms have net leases in place to the same tenant, with the 100-year leases reviewed to market regularly.

“A new owner would effectively be landbanking these property assets, but as there are residential subdivision rights on the drystock block, there is opportunity for capital growth to be compounded,” explained Ross.

The lifestyle block around 2km south of Ōtorohanga, with views to Mt Pirongia and Mt Kakepuku, has several identified elevated potential building sites, two artesian water bores, a groundwater take consent and services to the road boundary.

Ross said indicators for the dairy sector are looking brighter, with forecast farm gate milk prices on the rise as global demand lifts and new entrants to the dairy processing market in New Zealand proving that there is consumer demand and capacity for growth in the sector.

“In the South Waikato town of Tokoroa, food and beverage ingredients company Olam Food Ingredients (OFI), has opened its new dairy processing facility with the first stage being a spray-drying factory to produce high-value milk powder for export.

“It intends supplying major milk consumption markets including Asia, the Middle East, and Africa so there is opportunity being proactively pursued.

“If HVNL had got its facility off the ground, it would have been an economic shot in the arm for Ōtorohanga given the expected employment opportunities and flow-on effects.

“Now there’s an opportunity for a buyer to take advantage of the liquidation-driven sale of assets, the comprehensive intellectual property associated with the proposed plant and the weighty investment in infrastructure already completed.

“We’re encouraging all interested parties to consider ways to extract value from the site and to see the tender process as a way of getting a cost-effective entry into this market.”

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