The Chilterra Chile dairy Syndicate turns cold for the New Zealand investors
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Several New Zealand dairy farmers and investors stand to lose millions of dollars following the collapse of one of Chile’s largest dairy businesses.
Around 18 New Zealand dairy and kiwifruit farmers and investors – from New Zealand and Chile – poured over US$50 million into Chilterra since its formation in 2006. Late last year, the company went into “judicial reorganisation” owing US$60m to a consortium of banks.
Chilterra owns 7,200ha of farmland, has nine milking parlours and more than 13,000 cattle. The farms are within a 100km radius of Osorno, Southern Chile, an area known for its dairy farming and similarities to New Zealand soils and climate.
The firm collapsed due to low milk prices, poor farm management practices and soaring input costs. There was also a breakdown in the relationship between the majority Chilean investor, Ricardo Rios and the NZ investors.
While Chilterra did well in its early years, differences emerged between NZ and Chilean business partners as more money was needed to keep the company going.
“It was very poorly run, NZ investors were kept in the dark, the company borrowed to the hilt, and NZ farmers and investors had little or no say at all in the company’s running,” sources say.
NZ farmers who invested in Chilterra refuse to comment for fear of reprisal. The company’s board was chaired by Waikato ag consultant Mike McBeath and included several New Zealand farmers as directors.
However, an email to NZ shareholders in June last year, after the company’s 2021 annual general meeting, confirmed “negative working capital and negative results for the year”.
The emails show NZ investors were unhappy “with the collective performance of the board and Chilterra”.
“They are deeply concerned about the financial position of the business based on the financial statements. There has never been a review of any performance despite significant differences in actual performance against budgeted performance.”
The NZ investors also requested the directors to submit a vote of no confidence in the Chilterra board.
The email states that Chilterra’s financials “continue to show the same trends as in the past with significant growth in liabilities”.
“Granted, significant value increases offset this, so the technical equity reported remains static.”
The NZ farmers expect Chilean banks to take a haircut and sell the farms to recoup whatever they can – leaving nothing for investors.
Source: NZ Rural News Group
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Post available in: English