Following an ASX-announcement this morning, Harvey Norman has revealed its jointly-owned dairy farm entered into administration on Friday.
The retail conglomerate has a 49.9% stake in Coomboona Holdings, which purchased the Goulburn Valley dairy business in 2015 for $34 million.
At the time, Harvey Norman hoped to turn the business into a titan of the dairy industry.
Ferrier Hodgson has been appointed administrators of Coomboona Holdings, and NAB the receivers.
The news follows a $20.7 million writeoff of the dairy business in Harvey Norman’s H1Y18 earnings.
Coomboona was credited for triggering $4.57 million in equity accounting losses for the retail conglomerate’s half-year results. By contrast, Harvey Norman posted a $3.26 million loss the previous corresponding year.
As previously reported, the JV partners of Coomboona Holdings are currently engaged in a dispute. Harvey Norman claims the JV should repay nearly $18.5 million in outstanding debts.
NAB receiver, Mr Peter McKenzie Anderson, has informed The Australian Harvey’s dairy business is amidst review, and further updates will be provided to shareholders:
“We are in the process of conducting a review of the financial position and operations of Coomboona with a view to stabilising the business while we run an orderly sale campaign. We will be in communication with all relevant stakeholders and will be providing updates as appropriate”.
Speaking of the dairy farm’s impact on the retail conglomerate’s results, Gerry Harvey told The Australian the write-off was marginal in comparison:
“Look, the situation was we invested in a dairy and it hasn’t been a good result, but it doesn’t even represent 1 per cent of Harvey Norman, so if you knock the share price down by $500m or $600m because of 1 per cent of half of one per cent, the logic just isn’t there”.
After releasing its half-year earning results, Harvey Norman shares were hammered by the market, resulting in its largest one-day decline in since 1994.
