Westland loan on hold

“The proposed sale means that a loan from the Provincial Growth Fund will not go ahead at this stage,” Provincial Development Unit head Robert Pigou said.
“If the sale is ultimately confirmed by shareholders then the loan will no longer be required by the company.”
The Government has allocated $3 billion over three years to invest in regional economic development through the fund.
In November it said the fund would provide Westland with an interest-bearing, repayable $9.9m loan for a milk processing plant.
Today, however, the co-operative said it has signed a conditional agreement to sell to Yili for $3.41 a share in a deal worth $588m, including debt and liabilities. The debt and other assumed liabilities total $342.5m.
“The process to negotiate funding from the PGF is robust and, in this case, we have been mindful of the possibility the company would change hands,” Pigou said.
The loan sparked criticism with National MP Paul Goldsmith consistently demanding to know the terms, which were not disclosed, arguing it is not possible to assess the effectiveness of the fund’s investment without those details.
Treasury had recommended the Government defer the decision to lend the money. In a briefing to Finance Minister Grant Robertson it said it understood Westland couldn’t get a loan from its bank on acceptable terms and the Crown would be acting as a lender of last resort.
So, the decision should be deferred until more consideration was given as to whether it should act as a lender of last resort to a private company.
“Agreeing to this proposal may set a precedent,” it said.
The loan was earmarked to fund a new $22m manufacturing plant targeting higher margin products. – BusinessDesk