Freedom Foods Group and Australian Fresh Milk Holdings (AFMH) have entered into agreement to purchase the Coomboona Dairy operation in Northern Victoria, which was half owned by Harvey Norman and placed into administration in March owing NAB $36 million.
AFMH is a strategic partnership owned by the Moxey and Perich families and other shareholders, including Freedom Foods which has a 10 per cent stake.
Post-deal AFMH will be the largest dairy producer in Australia with current operations forecasting over 150 million litres of production into 2019.
Harvey Norman's disastrous foray into dairy farming comes to an end with the sale.
The Australian Financial Review reported earlier this year that Harvey Norman founder Gerry Harvey had ploughed money into the 2000-hectare Coomboona Holsteins operation north-west of Shepparton in Victoria and wanted to increase the carrying capacity of cows to as much as 6000.
However, the farming business made a $793,000 loss in its first year of operation and was placed into receivership and administration in March this year, sparking an irate response from shareholders and governance experts.
Harvey Norman owns the $73.15 million debt in the dairy operation after also taking on Coomboona's debt to NAB of $36.06 million in May.
The operation milks in the vicinity of 2500 Holstein cows and boasts annual milk production in excess of 30 million litres. The dairy also has a portfolio of 3461-megalitre water entitlements in addition to 650-megalitre dam storage and frontage to the Goulburn River.
Freedom Foods and the Perich family were seen by financial pundits as logical buyers of the asset.
Freedom Foods raised $200 million in capital earlier in the year to help expand its Shepparton dairy plant, not far from Coomboona, and has been paying farmers direct for their milk to supply its factory.
Michael Perich is also regarded as one of the best operators in the dairy feedlotting business.
Compiled with information courtesy of the Australian Financial Review