FARM equipment dealership Farmpower has been brought out of administration after agricultural manufacturing giant New Holland acquired the Northam-based business under a deed of company arrangement.
FARM equipment dealership Farmpower has been brought out of administration after agricultural manufacturing giant New Holland acquired the Northam-based business under a deed of company arrangement.
Farmpower’s (then) owners, Ben Daniell and Andrew Page, placed the business into voluntary administration in October last year.
Mr Daniell and Mr Page combined their two-long standing dealership businesses to form Farmpower almost three years ago.
Administrator for Farmpower, RSM Bird Cameron’s Greg Dudley, said unsecured creditors would be paid about 4.5 cents to the dollar and that all employee entitlements and superannuation contributions would be made in full.
He attributed Farmpower’s cash flow problems to severe drought conditions and an increase in the federal government’s investment allowance.
“The principal causes were the poor seasons experienced in the Wheatbelt, the investment allowance and a level of undercapitalisation of the business,” Mr Dudley said.
He said the aim of the allowance was to provide a tax incentive for farmers to purchase new equipment during the global financial crisis, which instead resulted in equipment sales being brought forward and farmers buying outside of their normal purchase cycles.
Farmpower sells and services primarily New Holland machinery and has five dealerships across the Wheatbelt, including Quairading and Merredin.
It continued to trade as usual during the administration period after receiving funding from its major secured creditor, CNH Australia, the holding company for New Holland.
New Holland brand director Matthew King said Farmpower would be restructured, refinanced and managed locally as a New Holland owned dealership group, providing full sales, service and parts support, while still trading as Farmpower.
“We felt that it was important to support our customer base, staff and the community to ensure that there is an ongoing business presence in those regions and also, rebuild Farmpower to a profitable business that supports our New Holland brand,” he said.
Mr King said Australia was one of the most competitive agricultural markets in the world, with brands such as John Deere and Case IH having a strong market presence.
Despite this, he is confident that Farmpower will trade profitably.
“There will be challenges moving forward, but the outlook is positive. We’re confident that as the economy begins to recover a fully supported dealer group focused on its customers will reinvigorate the development of our distinctive and highly successful brand,” Mr King said.
He called New Holland’s acquisition of Farmpower a long-term solution, which included a management plan for each dealership.
“This is no short-term fix for us, New Holland is in there for the long term and it’s our endeavour to rebuild Farmpower to a profitable business that can support the customers in the region,” he said.
General manager Phil Lehmann, who is relocating to Quairading to oversee the company’s investment, will lead the Farmpower team.
“It’s great to see new investment and confidence taking off again in WA. Not only is New Holland investing for the future, they know they’ll have a strong base from which to build its support. It also means that New Holland has returned to full dealership strength in the WA market,” Mr Lehmann said.
