Distressed Coomboona Dairies for sale following co-owners dispute

The farm went into administration in March after retailer Harvey Norman went public about its disagreement with Hong Kong's Eternal Sound over future plans.

A distressed Australian dairy operation has been put on the block in a sale expected to attract interest from both private and institutional investors.

Coomboona Dairies in the Goulburn Valley region of Victoria is being advertized by Elders Real Estate and is on offer as a whole or in two contiguous parcels: Coomboona Dairies at 1,356 hectares and Glen Goulburn at 460 hectares.

The farm also comes with a portfolio of 3,461 megaliters of water entitlements, in addition to 650 megaliters of dam storage and an extensive Goulburn River frontage.

The operation is part-owned by Australia-listed furniture and electrical retailer Harvey Norman after it paid A$34 million ($25.41 million; €21.57 million) for a 49.9 percent stake in September 2015. The other 50.1 percent is owned by Eternal Sound, controlled by Hong Kong-based businessman Alex Arena.

Harvey Norman’s involvement made headlines in Australia as its billionaire founder and chairman Gerry Harvey made the investment through one of its subsidiaries rather than a private company, reportedly as a hedge against the poor performance of the retail sector. The retailer announced disappointing H1 results in February 2018 owing to an impairment on Coomboona and revealed that it was in dispute with Eternal Sound over the dairy. This resulted in a share sell-off that wiped A$600 million from the retailer’s market value.

The dairies’ holding company, Coomboona Holdings, entered voluntary administration in March, with Ferrier Hodgson appointed as administrators and National Australia Bank as receivers.

Harvey Norman now owns the A$73.15 million debt in Coomboona after it took ownership of the company’s debt to NAB of $36.06 million in May this year.

The aggregated dairy currently milks approximately 2,500 Holstein cows and produces in excess of 30 million liters of milk each year. It has a supply contract in place with a large Australian milk company and has the potential to expand thanks to recent investment from the current owners.

Nick Myer, who is managing the sale process for Elders, said: “It is very rare for an asset of this scale and quality to be offered for sale. The existing owners have implemented a vision which positions an incoming purchaser to fully realise the potential of this unique asset.”

Elders said it anticipates significant interest from both private and institutional buyers for the asset. Expressions of interest close on August 16.