Rumours the bid by Hong Kong company Natural Dairy Ltd to buy 20 of the Crafar family farms may be on the rocks are greatly exaggerated, according to the Overseas Investment Office (OIO).

Media reports suggested the OIO was leaning towards rejecting or severely curtailing the plan.

The OIO issued a statement on Friday morning dismissing the claims, and saying it was still processing the Natural Dairy application

The Government will make the final call on the sale, and Natural Dairy spokesperson Bill Ralston say the company is simply waiting for the OIO recommendation.

“Natural Dairy have made the application that they’ve made, they’ve done the business case, and they’re reasonably confident that any reasonable decision process would allow them to purchase those 16 farms."

Mr Ralston welcomed the OIO's swift response.

"The [New Zealand Herald] source was obviously a wrong source."

I’m satisfied and relieved that the OIO has issued a statement to the effect that the [New Zealand Herald] story is incorrect, they’re still assessing the situation, and a decision will be coming in due course.”

A failed Natural Dairy bid would bring other contenders, such as Landcorp, back in the running.

It would also bring down the price tag for the Crafar empire. Natural Dairy bid $213m for the farms, but a fall in rural property values means the new price may be around $130m.