Gerry Harvey sells ill-fated dairy farm

Harvey Norman has been bailed out of its disastrous move into dairy farming by billionaire duo Tony and Michael Perich.

Gerry Harvey in more familiar territory - selling electronics. Pic:

Billionaire investor Gerry Harvey has been bailed out of his disastrous move into dairy farming by billionaire father and son combination Tony and Michael Perich, who have bought his company’s rural holdings for more than $40 million.

The pair, together with NSW-based dairy operation Moxey Farms, have picked up Harvey Norman’s Coomboona dairies operation in Victoria, which spans a 2000-hectare operation northwest of Shepparton in Victoria.

The listed Harvey Norman (HVN) told the Australian Securities Exchange the property had been sold, subject to conditions for completion, ending a tough chapter in farming for the company outside its core retailing operations.

However, the retail tycoon declined to comment to The Australian.

The full outlay of Harvey Norman’s once near $75 million exposure to agriculture was not covered by the property sale.

Harvey Norman took an “impairment loss” of $28.78m on the venture’s debts in June and said it had recognised a total of $54.01m in losses in the last financial year.

Harvey Norman put the Coomboona dairies operation in Victoria on the market in July after the company in March fell into the hands of administrators Ferrier Hodgson and receivers McGrathNicol, who were appointed by National Australia Bank.

Harvey Norman bought Coomboona’s debt to NAB of $36.06m in May but appears to have weathered more losses.

The company said in a statement that it “has received information which would indicate that upon the assumption that the administrator sale is completed, the aggregate of the respective carrying amounts of each of the NAB debt and the HNM Galaxy debt, exceeds the aggregate of the recoverable amounts of each of those respective assets, as at 31 October 2018 by an amount of approximately $5.9m”.

The farm’s administrators, Ferrier Hodgson’s Stewart McCallum and Ryan Eagle, called in Elders’ Nick Myer and Anthony Stevens to sell the property but they declined to comment.

The dairy milks about 2500 Holstein cows and produces more than 30 million litres of milk. It also sports an attractive portfolio of 3461-megalitre water entitlements and a 650-megalitre dam storage and frontage to the Goulburn River.

The Coomboona dairy operation.

The Perich family’s Arrovest, which has a controlling 54 per cent stake in the listed Freedom Foods, had been mooted as a potential buyer. Freedom Foods earlier this year raised $200m to help expand its Shepparton dairy plant, which is near Coomboona.

Mr Harvey recently struck a deal with creditors in Coomboona Holdings which meant the company did not fall into liquidation.

A report by Ferrier Hodgson said the company was “potentially insolvent from mid-March 2018” - a claim denied by Mr Harvey.