Sale of Farming Lands and Lease-back
Our client operates several mango and avocado farms in Northern Territory and Queensland and is Australia’s largest mango supplier. We were involved in the sale and lease-back of those farms and a subsequent business expansion via the purchase of more land. We are now assisting in the sale of the business.
The multi-step process first involved the acquisition of the farmland containing the avocados, which involved entering into a joint-venture agreement with the avocado growers with an option to acquire the land and the businesses along with the water rights and irrigation cooperative entitlements. Once this land was acquired, the farmland and businesses were consolidated to create a suitable scale for sale.
With that consolidation in place, the eventual transaction was for the sale of the freehold land with a lease-back which included the lease of a small portion of Crown Land comprising part of the mango farms.
The sale involved:
- Complex initial negotiations to purchase the avocado farms and agreement to proceed with the joint venture.
- Negotiations with an overseas buyer for the land with several complex regulatory requirements, including Foreign Investment Review Board (FIRB) approval and the necessity to be fully compliant with all local regulations given the warranties that the buyer was offering.
- A requirement to negotiate with and seek the approval of the client’s largest buyer of mangoes, a leading national supermarket chain, because of a historical funding arrangement that was in place containing covenants that had to be complied with prior to sale. The supermarket chain had to sign off on any sale arrangement before proceeding.
- Liaising with financiers who required repayment of loans in full upon settlement, our client desired to utilise some of the $35m sale proceeds to purchase further farms in the Northern Territory to further strengthen and protect the business operations.
Various compliance issues were considered as part of the sale, including:
- Water Licencing.
- Employment contracts and conditions.
- Food safety laws.
- Intellectual property (around brand names and the DNA of different and unique types of mangoes created by our client).
- Taxation issues including income tax, capital gains tax, goods and service tax and land tax.
After selling the farmland and completing all our client’s business goals, they are now proposing to sell the business and have engaged us for advice.