VETERAN stockbroker Hugh Robertson of Wilson HTM has called for a public float of one of the nation’s oldest and largest dairy companies.
Nanjing Night Net

Mr Wilson is a minority shareholder in the Van Diemen’s Land Company (VDL) – established in Tasmania under an 1825 Royal Charter granted by King George.

VDL owns 25 dairy farms – including the historic Woolnorth property – which houses the Roaring 40’s wind farm. It also has a heifer rearing operation. It has about 26,000 dairy cows on 19,000 hectares, making it the nation’s single largest milk supplier.

VDL for the past several years has failed to attract a needed capital injection. Several interested parties have looked – including The Chinse Investment Corporation.

Mr Robertson, who invested in VDL 20 years ago, approached VDL recently. “I’ve approached them to do an IPO. I just hope it doesn’t get sold as a block. I hope the New Zealanders consider an IPO through us [WilsonHTM], or someone else,” he said.

VDL’s indirect majority shareholder at 98.4 per cent is the New Plymouth District Council, managed through Taranaki Investment Management. VDL is controlled by parent company Tasman Farms.

“My view has always [been] that it’s a company that needs external capital, and what’s happened historically is the majority shareholding has been whipped around,” Mr Robertson said.

“This is probably a company that should be in the public domain. It’s a gargantuan dairy farm that has lots of potential. The thing to do would [be to] list it and take advantage of capital markets, and get money to develop it properly. It would be a bloody shame if it were sold to the Chinese. It’s an interesting asset and a hidden value that is the brand VDL.”

VDL, however, is a current takeover target by the newly formed shell entity, Tasmanian Land Company: a wholly owned subsidiary of BDO Agricultural Services, set up by Melbourne accounting firm BDO Australia.

TLC has offered $2 a share, a 45 per cent premium to the VDL net tangible assets as at 31 May 2014, of $1.375 per share. The NPDC is taking scrip in TLC, while many smaller shareholders are taking cash. Parties involved said it’s purely about shaking out smaller shareholders and a restructure of the highly complex company, which has been a hurdle in securing an investor.

VDL deputy chair Miles Hampton is recommending the offer, although there has not been any independent valuation. “A number of possible investors have been turned off by the complexity of the company and wanted to have clarity,” he said. “It’s well-known VDL is looking to raise capital to fund an expansion and we are advised that re-arranging the corporate structure this way will increase the chances of raising capital. We are still looking to raise $120 million.”

VDL will still operate under the Royal Charter but its new parent company will be Australian, and Australian corporate law will apply, he added.

Mr Hampton confirmed BDO is not acting for any other bidder and the only shareholders in TLC are those shareholders who take scrip.

Taranaki Investment chief executive Michael Trousselot, who is also on the board of VDL, said the group remains in talks with possible partners.

“We will move [to] 100 per cent [ownership] eventually. We have got CA agreements now, and we are in discussions with them now.” Mr Trousselot declined to talk about takeover speculation or whether VDL would suit the public market, but later said an IPO may be a future consideration.

A source said former VSL chief executive Mike Guerin, who left last March amid disagreement with the board, has been approached by several possible VDL suitors to be CEO if they were successful in a takeover.

According to recent filings, VDL had record milk production of 6.72 million kilograms of milk solids and a bounce back in livestock valuations in 2014. The 2013 year was difficult when the value of livestock plummeted and the group borrowed $1.7 million from Fonterra Australia. VDL parent company Tasman Farms has a $64 million revolving credit facility with Rabobank. Its next review date is November 30.

This story Administrator ready to work first appeared on Nanjing Night Net.