Cowpats flying over the farm

The campaign for control of the New Zealand Rural Property Trust heats up.

Wednesday, September 29th 1999, 12:00AM

With a week to go until the future of the New Zealand Rural Property Trust is decided claims and counterclaims about what is best for the fund are flying.

Trust director Sir Selwyn Cushing says he is opposed to liquidating the $75 million trust because it would be "bad business" and would depress land values.

He says this view is supported by a recent independent PricewaterhouseCoopers report which said that a closed trust was "fair and reasonable".

PWC did conclude the proposal was "fair and reasonable", not because it is flawless, but "primarily because the present redemption arrangements are proving unworkable, and likely to eventually be inequitable as between unitholders."

The report though did not fully support some of the main changes proposed by the manager.

Sir Selwyn says it is "imperative" that the trust is closed "in order to safeguard significant unitholder wealth".

He says the trust has produced strong returns in the past year while it has been operating under a defacto closed structure. During that time it reported a record surplus of $3.26 million.

Sir Selwyn described as "extraordinary" claims from an adviser that a closed trust would somehow limit the freedoms of unitholders.

"Even the most cursory analysis reveals that this view is palpably incorrect and misinformed."

On the other side of the fence are Wellington-based adviser Frank Pearson, and an action group headed by retired accountant Alex Paterson.

Paterson says the two main concerns are that the manager is only offering a "take it or leave it proposal", and that the management fees are too high.

"Vote no! A vote against the proposal will oblige the development of a fairer solution for all unitholders," Paterson says.

He says the proposal "appears to benefit the manager more than benefiting unitholders."

Pearson described the proposal as "nonsense on stilts" and says the manager is being "heavy-handed" in its approach to closing the fund.

He says the management fee needs to be "at the very least halved" and that the trust should be listed on the New Zealand Stock Exchange.

Pearson also suggests the trust could be liquidated efficiently by offering farms to unitholders at book value. For instance Tainui-owned MDC Investments bought a 10.5 per cent stake in the trust, at a significant premium to secondary market prices, because it was interested in the Ngaruawahia forest, and a number of lessees have indicated they would like to buy the properties they farm.

Unitholders vote on the proposal to close the trust in Wellington on October 5.

For more details of what the proposal means see Investors have little ability to influence manager

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