Federal Treasurer Scott Morrison has granted the foreign owners of Cubbie Station an extra three years to comply with an original condition of the sale, to sell down its stake from 80 per cent to 51 per cent.
In a statement to the ABC, Mr Morrision’s office confirmed Chinese textile giant Shandong Ruyi requested more time to find an additional investor, indicating it was unable to meet the original October 2015 deadline.
“Consistent with Foreign Investment Review Board (FIRB) advice, the Treasurer granted a three year extension which was reflective of the genuine undertakings [Shandong] Ruyi has made to sell-down its interest.
“It also recognises the fact [Shandong] Ruyi has met the other undertakings placed on it through the FIRB approval process.”
Cubbie Station was sold to a Chinese-led consortium in 2012, with textile giant, Shandong Ruyi taking an 80 per cent stake and Melbourne-based, family company Lempriere holding the remaining 20 per cent interest.
The sale sparked a fierce national debate over foreign investment and the National Party and several independents fought to stop it.
The former Labor treasurer Wayne Swan approved the sale on the provision that Shandong Ruyi reduce its ownership stake, retain the local workers and keep a certain proportion of Australian board members.
Herbert Smith Freehills partner Matthew FitzGerald, has been dealing with the FIRB for 15 years and said Mr Morrison would have had two choices; grant an extension to find an investor, or order Shandong Ruyi to divest its stake in the consortium.
“In relation to the one-off conditions like the divestment orders, what FIRB normally likes to see is progress toward the goal,” he said.
“And if there are problems with the conditions being met, it wants to understand those issues and how they’re being addressed.”
Mr FitzGerald said the conditions on foreign investment deals were always different, but granting an extension to allow investors to comply with them was not unusual.
The revelations come after the Federal Government knocked back a bid by a different Chinese company to buy the sprawling cattle property, S. Kidman and Co.
Tim Burrows from lobby group Agribusiness Australia is concerned the Government approach to foreign investment deals is inconsistent.
“The industry’s quite happy to have a firm ‘yes’ or ‘no’, but they need to know before they go into the due diligence or analysis or the proposal of a purchase as to what the rules are.
“We can’t have a situation where the rules change many months after the investor’s started looking at the project or the proposal.”
Major ownership changes
The revelations come as the Australian side of the consortium undergoes major changes.
Australian Securities and Investments Commission (ASIC) documents show CS Agriculture has absorbed Lempriere into the business, and Dubbo businessman Roger Fletcher has taken the remaining 20 per cent stake.
Mr Fletcher is well-known businessman with interests in sheepmeat and wool exports.
In a May 31 note to its US customers, Lempriere’s CEO Michael Davis said it would be “business as usual” for the company’s clients, with no changes to management.
“This notification is to confirm that Lempriere (Australia) Pty Ltd has officially merged with CS Agriculture Pty Ltd (which owns Cubbie Station) in Australia. Shandong Ruyi is the ultimate shareholder of this new Australian group, and William Lempriere has stepped away from the wool business to focus on his other business interests.”
Mr Fletcher has been a director of CS Agriculture since January 2013. The company’s other directors include Shandong Ruyi’s chairman Yafu Qui and its vice-president Jerry Lui, Shandong Ruyi Sci and Tech Group president Weiying Sun, Lempriere Capital Partners managing director Tony McKenna and Deakin University Professor Xungai Wang, according to documents from ASIC.
Since CS Agriculture took control of Cubbie Station, the struggling cotton property has been transformed by a major reinvestment into the business, including upgrades of water-saving infrastructure and doubling the capacity of a struggling gin it purchased at Dirranbandi.
When the sale was finalised in 2012, many locals were outraged that the property had passed to foreign hands, but recently the ABC revealed local approval of the new owners’ management of the property.
Roger Fletcher, CS Agriculture, Lempriere, and the Foreign Investment Review Board would not comment on this story.