All five non-executive directors of Moon Lake Investments – the Chinese owners of Tasmania’s Van Dieman’s Land (VDL) dairy company – have resigned.
The company’s chief executive Evan Rolley has also decided not to extend his contract, beyond June 30, this year.
In a statement from VDL deputy chair, David Crean, the directors and chief executive said they were concerned proper governance arrangements were not being considered, in a proposed restructure of the company.
Sole owner and Moon Lake Farms Chairman Mr Xianfeng Lu had flagged the changes to the Tasmanian business.
“The non-executive directors of the board had particular issues with the restructure arrangements relating to the running of the 24 VDL farms in NorthWest Tasmania,” Mr Crean said.
“The board, being responsible for overseeing the commercial and prudential operations of the VDL farms, could not convince the owner to adopt their recommendations on future management of the business.”
The statement was signed on behalf of all non-executive directors – Keith Sutton, Rob Poole, Bruce Donnison, Simon Lyons – and Mr Rolley.
But, following the annoucement, Mr Lu said the Foreign Investment Review Board (FIRB) has approved a corporate restructure of Moon Lake.
Moon Lake will be part of Mr Lu’s company Ningbo Xianfeng New Material Co Ltd (APlus).
APlus, which manufactures a range of sun-shading materials and products which are sold in 68 countries worldwide, is listed on the Shenzhen Stock Exchange.
Mr Lu said that as part of the overall restructure, the board of APlus have given careful consideration to the appropriate governance structure for the group.
“As part of the restructure an Australian holding company will be set up to coordinate the Australian operations and to ensure alignment with overall strategic goals,” Mr Lu said.
“Moon Lake and its sister company Van Dairy will be moved under control of the new holding company.
He said the strategic goal for the group was to become a fully vertically integrated dairy business with quality dairy products sold both internationally and domestically.
“We are of the view that the corporate governance structure of the Australian operations needed to change in order to best achieve these strategic goals in an effective and efficient manner,” Mr Lu said
We are of the view that the corporate governance structure of the Australian operations needed to change in order to best achieve these strategic goals in an effective and efficient manner.
The board of the new holding company would appoint a new chief executive for the group and a general manager for VDL Farms in due course.
“It will be business as usual on VDL Farms’ 24 dairy properties in Tasmania’s North-West, and there will be no loss of jobs,” Mr Lu said.
He said the restructure would provide greater access to capital for investment beyond the farm gates, mainly in the production of new value-added dairy products in Australia
Earlier this month Moon Lake announced that Van Dairy would commence export of organic UHT milk and yoghurt to China by mid-year.
- Read more: The Chinese billionaire who tried to sell giant Tasmanian dairy before buying it
- Read more: Moon Lake buys VDL
In August last year, concerns over investment and the ongoing viability of the Van Dieman’s Land dairy company were played down by its owners and on-the-ground local advocates.
Fairfax Media revealed that the $280 million sale of Van Dieman Land’s north-west Tasmanian dairy farm was funded through debt and further investment had been stymied by the Chinese Government.
Buyer Lu Xianfeng used his established and newly created companies to carry or act as a guarantor for the debt, created by one loan from an Australian bank and two loans from state-owned Chinese banks.
Mr Lu also shifted shares to one of his companies to be used as collateral against the big loans.
When the sale was complete in March 2016, Mr Lu immediately tried to resell the company but this was blocked by China Securities Regulatory Commission.
When Mr Lu created Moon Lake Investments specifically to buy the dairy farm, he promised $100 million of additional investment and to built the dairy’s job numbers from 140 to 235.
Mr Lu said milk from VDL would be flown directly from Tasmania to China through an arrangement with Qantas – which hasn’t yet occurred.
Moon Lake Investments managing director Sean Shwe said the company was committed to continued operations at VDL.
He said the company had maintained its workforce and increased production, amid a downturn in the market price for milk, exporting up to 10,000 litres of fresh milk a week from Tasmania.