CUBBIE Station, the nation's biggest irrigator, has made an 11th-hour offer to sell a quarter of its vast water entitlements to the federal government.
The move would potentially cost taxpayers $50 million, The Australian reports.
The Cubbie Group's administrator, McGrathNicol, revealed to creditors yesterday that it had submitted a tender to the government's $3.2 billion water buy-back scheme.
Cubbie Station - whose dams can store enough water to fill Sydney Harbour - has offered to relinquish 25 per cent of its irrigation rights in return for a payment of $40m to $50m.
Climate Change and Water Minister Penny Wong is due to decide on the buy-back offer within weeks, as part of a protracted price-haggling process.
Legal uncertainties had led her to reject three separate offers to buy back 50 billion to 70 billion litres of Cubbie's water - half the volume now on the table - in 2008 and last year.
A court ruling this year allowed the federal government to call tenders as part of a $100m scheme to buy back water rights to properties in the lower Balonne in western Queensland, which includes Cubbie Station.
Drought forced the Cubbie Group into administration last October but rains have since filled the dams, which can store 537,000 megalitres of water.
The group's key creditors - the National Australia and Suncorp banks, owed $320m - are continuing to negotiate with two foreign buyers who are interested in taking over the Queensland cotton giant.
The rival bidders - Bahrain-based Western Gulf Advisory and Eastern Australia Agriculture, based in the Cayman Islands - failed to finalise their offers in time for the creditors' meeting held in St George, just north of the NSW border, yesterday.
Administrator John Cronin, of McGrathNicol, said creditors had voted for a holding deed of company arrangement that would give Cubbie breathing space to "pursue restructuring opportunities".
He said final proposals from the rival foreign bidders "weren't put forward", but could be considered by creditors at short notice once finalised.
"We will continue talking to them," he said.
Mr Cronin said the outcome of the water tender could affect the takeover offers.
WGA's chief financial officer, Omer Khan, revealed yesterday that his company, which manages sovereign funds, was offering to invest $300m in Cubbie Station in return for a controlling 53 per cent stake.
"We have already negotiated with the existing shareholders and are looking at approval from the Foreign Investment Review Board," he told The Australian from Switzerland yesterday.
"We are going to pay off the banks and take over."
Mr Khan said WGA had not yet decided whether it would retain the existing management, including Cubbie Group chairman Keith De Lacy, a former Queensland treasurer.
Mr De Lacy yesterday blamed the hold-up on "technical issues".
A spokeswoman for Senator Wong refused to comment specifically on the Cubbie tender, citing commercial confidentiality.
"Water entitlements offered to the commonwealth for sale would be subject to value-for-money assessment," she said.
Read more on The Australian.
