The Last Signature
KAURI DAIRY, FROM THE PATRIARCH'S CHAIR
// THE SETUP
You are 68. You have run Kauri Dairy for thirty years, two farms and 620,000 kilograms of milk solids, and you have never given the bank a reason to ring you. The season just ended was the best in a decade. The plan the accountant sent the bank on Tuesday is the one you have been building for two years: the home farm to your son, who can run it; the second farm to your daughter, who will keep her Auckland career and put in a sharemilker; the land into the family trust. Your personal guarantee comes off. The son's entity gets a NZ$2.0m seasonal line. All of it before calving.
The bank's reply came back inside the week, through the accountant, and it says yes to the structure and no to the timing of you. It will treat the split as two new loans, not one consent. It wants to stress each entity at a $6.50 payout, meet your son and your daughter on their own farms, size the seasonal line to your son's actual calving cash curve, and release your guarantee in stages, against two demonstrated seasons, not at signing. It notes, without comment, that owner drawings have risen 65% in two years.
Your son says the bank is doing its job. Your daughter has asked what a $6.50 stress test means. The accountant wants to know what to write back.
Thirty years, and they want your name on the paper for two more seasons. What do you tell the accountant to reply?
Guarantee releases in succession restructures are commonly staged over one to two demonstrated seasons. The bank is asking for the sector's usual bridge, not a special one.