The demise of Westland as a cooperative contains a lesson for all business, says Roz Henry, the new Cooperative Business NZ chief executive.
The Provincial Development Unit (PDU), which is overseeing a $3 billion spend on regional NZ to boost jobs and development, confirmed that it has “suspended negotiations to conclude financing arrangements with Westland Milk”.
This follows an announcement the cooperative has signed a conditional agreement to sell to Hongkong Jingang Trade Holding Co Ltd, a subsidiary of Chinese dairy giant Yili.
A conditional deal to sell the co-op to Yili for $588 million was signed last night.
“The proposed sale means that a loan from the Provincial Growth Fund will not go ahead at this stage. If the sale is ultimately confirmed by shareholders then the loan will no longer be required by the company,” said head of the Provincial Development Unit Robert Pigou.
“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 says the PDU’s systems, processes and documentation “reflects we are careful stewards of public money and always seek the best outcomes and to maximise investment from the PGF’.
“This investment from the PGF was to accelerate WMP’s plan to segregate milk and produce higher value products. It would also retain milk processing on the West Coast and provide new jobs in the region,” Pigou said.
The PDU is a business unit of the Ministry of Business, Innovation, and Employment, and has been operating since 2018.