Tuesday, 16 January 2024 13:55

Failed milk plant not so happy in the valley

Written by  Sudesh Kissun
Happy Valley was set up in 2016 to build a greenfield milk processing site in Otorohanga but struggled to obtain capital to complete the project. Happy Valley was set up in 2016 to build a greenfield milk processing site in Otorohanga but struggled to obtain capital to complete the project.

The company behind a failed milk plant project in Otorohanga faces de-registration in New Zealand next week.

With the resignation of its last remaining director last month, Happy Valley Nutrition was removed from the official list on Australian Stock Exchange on December 28.

The Registrar of Companies in NZ says it intends to remove the company under section 318 of the Companies Act 1993 on January 25.

Happy Valley and its subsidiary Five Redland Road Ltd (FRR) were put into administration six months ago. On December 7, the failed company owed creditors around $24 million - including $12.5m to trustee MC HVN Pty Ltd and $10m to 73 convertible note holders.

Happy Valley was set up in 2016 to build a greenfield milk processing site but struggled to obtain capital to complete the project. In 2021, Five Redlands purchased a 142ha site in Otorohanga for the proposed plant. However, ground works stalled after the company ran out of cash. Five Redland, a non-listed NZ registered company, is in liquidation. Administrators will be calling agents to sell the land and pay creditors.

Administrators Andrew Grenfell and Kare Johnstone, McGrathNicol were appointed last July. On 21 September 2023, a meeting of creditors was held where it was resolved that Happy Valley execute a deed of company arrangement (DOCA) to provide sufficient time for the administrators to conduct further investigations and allow the company to explore the possibility of recapitalisation and/or entering a sale of all or part of its business and/or assets.

The DOCA, executed on 3 October 2023, included a sunset date of 30 November 2023. After the sunset date had passed without extension or any restructuring proposal being progressed, the administrators announced the resignation of the last remaining director and chair Kevin Bush. The administratos also informed ASX that the termination of the DOCA meant they were no longer deed administrators and therefore had no authority regarding Happy Valley. But they remain administrators for Five Redland.

In their final report, the administrators noted that no repayments have been made to the secured lenders at the date of these accounts.

Interest continues to accrue on the debt outstanding.

"Any recovery to the secured lenders is dependent on the outcome of the subsidiary company's asset realisation process which is not yet complete," the report says.

Happy Valley had about $86,000 in its bank account when McGrathNicol were appointed deed administrators. After payments including $23,000 for administrators trading costs, $30,000 for legal fees and $28,000 for salaries and wages, the company had $6,873 left in its bank account last month.

In an investor update earlier this month, Happy Valley hinted that it would be deregistered.

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