Rich lister Sir Michael Fay is vowing not to give up on his quest to buy the Crafar dairy farms.
Sir Michael heads a group of central North Island farmers which has offered $171.5 million for the 16 dairy farms, which were put into receivership in October 2009.
Receivers KordaMentha today rejected the group's offer, saying it was "unacceptable''.
"As we have said previously, following the comprehensive sales campaign run last year, we have accepted an offer from Pengxin International Group Ltd which was by far the best offer at that time and remains so today,'' KordaMentha spokesman Brendon Gibson said.
The Shanghai-based Pengxin group's offer of $200m is being considered by the Overseas Investment Office (OIO).
"Whilst we received the offer from Sir Michael Fay, it was conditional, was a collaboration of several purchasers and was at a price that continues to be unacceptable.''
Sir Michael said the decision was "disappointing but not surprising'' and the offer remained on the table.
"We were always the back-up position but the current decision by the receivers doesn't mean we are going away,'' he said.
"Our group of buyers remains ready if the OIO rejects the current Chinese contract.
"I can understand why the receivers would not want to send the wrong signal to the current prospective buyers by signing a back-up offer but that decision makes no difference to us at all in the long-term.''
The issue remained whether large chunks of productive farmland should be sold to overseas owners or kept in New Zealand ownership, Sir Michael said.
The group's negotiator, Steve Bignell, said KordaMentha was gambling on the OIO approving the Chinese offer to get a better price.
However, the farmers' group firmly believed its offer was at the right price.
"Over a certain price level, these farms don't work,'' Mr Bignell said.
Meanwhile, Prime Minister John Key expects Chinese investment - including Pengxin's offer - may be discussed when he meets Chinese Vice Premier Hui Liangyu tomorrow afternoon.
Mr Key is to meet Mr Hui against a backdrop of lingering anxiety about Chinese investment in New Zealand, and he told reporters this afternoon that Shanghai Pengxin's bid may come up.
The bid has now been under consideration by the OIO for more than five months, while the OIO says it aims to reach decisions on the most complex category of applications within 70 working days or about four months.
Should the matter come up, Mr Key said he would tell Mr Hui that there was a process through which the application had to pass, "and the Government has changed recently the Overseas Investment Act to try and give greater clarity to the outcome we want to see, and that we expect people to work their way through that process''.
Asked why the OIO's decision was taking so long, Mr Key said it was "a complex position'' the office had to work through.
Shanghai Pengxin's bid came after a previous offer from Hong Kong listed Natural Dairy NZ was rejected by the Overseas Investment Office (OIO) and it is one of the first to be processed under new criteria put in place in response to public concerns about Natural Dairy's offer.
Like Natural Dairy, Shanghai Pengxin is emphasising its plans to boost production from the farms, which has fallen while they have been in receivership, and to add value to the raw milk by concentrating on products such as infant formula, icecream, cheese and yoghurt.
It claims it will invest more than $100m marketing its products across Asia in its first five years. It is also offering scholarships for young New Zealand farmers and is promising to help other New Zealand companies expand into China.
Meanwhile, Mr Hui, the second most senior of China's four vice premiers, will be accompanied by several Chinese vice ministers and he will preside over the signing of several bilateral arrangements and commercial deals during his visit.
KordaMentha has claimed more than $5m in fees since the farms went into receivership, and legal fees have topped $4m.
The farms owed $200m in 2009 but that had blown to $239m by last November.
- APNZ/The New Zealand Herald
