Agribusiness & Food

Harvey Norman could lose $60m on dairy farm venture

Harvey Norman chairman Gerry Harvey may have lost the company as much as $60 million through a failed dairy farm joint venture, which went into receivership last week.

National Australia Bank took receivership of Coomboona Holdings, a dairy farm and cattle breeding business, on March 23.

Coomboona was 49.9% owned by Harvey Norman subsidiary HNM Galaxy, via a $34 million investment made by Harvey in 2015, which angered investors. Coomboona also owes Harvey Norman almost $29 million in loans.

Harvey Norman wrote down more than $20 million of its investment in Coomboona in February.

Now shareholders are facing the prospect of the company losing all remaining value, given the debt exposure of Coomboona to NAB, a higher-ranked creditor than Harvey Norman.

“We are in the process of conducting a review of the financial position and operations of Coomboona with a view to stabilising the business while we run an orderly sale campaign,” Peter Anderson, of receivers McGrath Nicol, was quoted as saying by Fairfax.

Further quoted by ABC, Anderson said Harvey Norman’s $20 million write-down of its Coomboona investment triggered a chain of events leading to its eventual decline into receivership.

“Subsequent to [the write-down] there was legal action between the shareholders last week and on the back of that process, the shareholders and directors agreed to appoint voluntary administrators.”

Coomboona, and its 75 staff, will continue to operate during the sale process.

“There is a lot of stock in the business and way more than are actually being milked at the moment,” Anderson was quoted as saying. “So there actually needs to be some reorganising and reshaping of the operation to match the existing infrastructure and actual milking to occur. At the moment that’s significantly out of whack.”

After closing at $4.58 on February 27, Harvey Norman’s ASX stock declined to a close of $3.64 on March 27.

Leave a Reply

Send this to a friend