Read it in The Land
James Packer is set to sell off his family’s huge rural holdings built up over a quarter of a century, as the credit crunch severely dampens investors’ ability to borrow.
Reports indicate that British private equity firm Terra Firma is interested in buying the Packer family’s 16 properties, for about $425 million.
Although Packer was considering selling a stake of his Consolidated Pastoral Company to private equity early last year, he had intended to retain his family’s links to an iconic Australian business that his father, the late Kerry Packer, began 25 years ago.
But the credit crunch seems to have put paid to those hopes.
Packer will sell 90pc of Consolidated Pastoral, Australia’s second-largest cattle owner, to Terra Firma and allow Ken Warriner, a long-time family friend and boss of the cattle empire, to keep his 10pc holding.
The sale will force the billionaire, who worked as a jackeroo on one of the family stations in the Northern Territory as a teenager, to relinquish his title as one of Australia’s largest landholders.
Terra Firma is not the first overseas investor to buy great swathes of Australia’s outback cattle stations in recent years.
In 2005, the Sultan of Brunei bought five cattle stations, joining other investors from Malaysia, Indonesia, Argentina and the US.
The pending sale, expected to be finalised early in the new year, comes at a high point for the price of remote cattle properties in northern Australia, because of the expected growing demand for beef exports in China and India and weakness in the Australian dollar.
Packer is also rumoured to have quietly put the last of his media interests — a 38pc stake in Consolidated Media Holdings — on the auction block.
His gambling investments have been under pressure.
Crown has been forced to put in an extra $C20 million ($A24.8 million) to fund nine casinos in Canada through a joint venture with Macquarie Bank.
Earlier this month, Crown launched a $300 million equity placement to strengthen its balance sheet to help weather the gambling downturn in the US, Macau and Australia.
Packer’s pastoral interests are little known to those outside the pastoral industry, as part of his extensive financial empire.
Consolidated Pastoral is a part of the family’s private company, Consolidated Press Holdings, and owns 17 beef-producing properties — mostly in the Northern Territory and Queensland — covering more than 5 million hectares, or almost the size of Tasmania. It employs 139 people, nearly half of whom are station hands or jackeroos.
The properties include the 1 million-hectare Newcastle Waters station in the Northern Territory, bought in 1983 (pictured) and also home bases for Ken Warriner when he in the cattle country.
Like his love for television, James’ father showed a close interest in the family properties. “It is one thing that Kerry really liked about it, compared to television,” Warriner once said.
“He said, ‘You guys tell each other everything. You’ve got nothing to hide; it’s all open.’ He had a lot of time for the people in the north because they copped it pretty tough.”
The cattle are either exported to South-East Asia via Darwin, or to Japan, or sent to the Australian market.
They are bred on the vast outlying properties, then trucked south where they are fattened on properties in southern Queensland.
It is unclear whether the latest sale will involve just the stations or whether it will include Packer’s interests in the live-cattle export business and processing.
Packer plans to sell only 16 stations because he would be loath to even consider parting with the flagship family property, Ellerston, in the Hunter Valley, NSW.
Parts of Ellerston have been in the family since 1956 and James’ father is buried there.
Consolidated Pastoral racked up a loss of $20 million in 2007-08, according to the latest financial statement filed with the Australian Securities and Investments Commission in November. But this was an improvement on a loss of about $24 million the previous year and $36 million in 2005-06.
The latest accounts show the company’s revenue of $36 million a year.
Consolidated Pastoral has total debts of $684 million, including $459 million owing to its controlled entities and $225 million in non-current bank debt.
Its 300,000 head of cattle are valued at $145 million.