Kauri Dairy Holdings

Start by naming what the request actually is. It is dressed as a consent — a security reshuffle inside a thirty-year relationship — but a succession restructure is two brand-new lending decisions wearing an old relationship's clothes. After the split, the bank will not have one borrower with two farms and three decades of history. It will have two first-time borrowers with one season of history each, and the diversification that two farms, shared machinery, and one experienced operator provided will have been quietly dismantled by a document. The question is not "do we consent?" The question is "would we write each of these two loans today, on its own file?"

Now the numbers, split the way the family proposes to split them. Combined, NZ$21.0 per kgMS of debt at an $8.60 payout services comfortably — that is what a cycle high is for. But breakeven for operations like these sits around $6.30–6.80, and the two successor entities do not inherit the combined position equally. The son's entity gets an operator's economics. The daughter's entity is a landlord with debt: her margin lives in the gap between a sharemilking agreement, a lease obligation to the family trust, and whatever the payout does — three numbers she controls none of. And the drawings line deserves its own sentence: up 65% in two years means the family has already started consuming the succession before documenting it. That is not a scandal. It is a signal about how much resilience will be left inside each entity when the payout turns.

The reader's favourite answer here is C — insist the patriarch come and present the plan himself. It feels like respect, and it scratches an instinct that says relationships deserve ceremony. But read the arrival honestly: families rehearse their hardest conversations through intermediaries, and the accountant-first email is information about the family, not an insult to the bank. The plan exists; the direction is decided. Demanding ceremony delays the real work and teaches the family that the bank's contribution to the biggest event in the business's life is protocol. A is worse: consenting as drafted spends the only leverage moment a lender gets in a generational hand-off. A personal guarantee release is a one-way door — it does not come back when the season does.

The senior banker's read is B. Respond inside the week — the season is real and respecting it is part of the job — but respond by converting the consent into what it already is: two standalone underwrites. Each entity stress-tested at a $6.50 payout. An on-farm meeting with each successor, because the bank is choosing which operator it will hold for the next decade, and files do not milk cows. The guarantee released in stages against two demonstrated seasons, not at signing. The NZ$2.0m seasonal sized to the son's actual calving cash curve rather than the accountant's round number. If the plan is as sound as it is tidy, none of this changes the outcome — it only changes what the bank knows. And if any leg of it cannot pass a standalone read, better every party finds out now, at a cycle high, than in the first weak season of a new generation's watch.

One more thing, because succession files invite sentiment in both directions. The staged guarantee is not distrust of the patriarch, and it is not a hedge against the children. It is a bridge — it comes off when the next generation's file can hold the weight on its own. You are not lending to thirty years of history. You are lending to the next decade of management, and the kindest thing a bank can do for a family in transition is to underwrite the future as carefully as it honoured the past.