Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – February 2019 Decisions

Craigmore Apples Get Consent This Time

The Minister for Land Information and the Associate Minister of Finance have granted consent to Craigmore Permanent Crop Limited Partnership (Hong Kong SAR 29.9%; Germany 29.1%; UK 28.5%; Finland 6.8%; USA 3.5%; NZ 1.7%; Ireland 0.5%; various overseas persons 1%) to acquire approximately 479 hectares at 701 Wakarara Road, Hawkes Bay, from LINZ Holdings Ltd (NZ 100%). Price withheld under s.9(2) (b((ii) of the Official Information Act.

The OIO states that Caigmore Permanent Crop is a limited partnership established as a horticulture investment vehicle, as part of the wider Craigmore Farming Group. Approximately 286 hectares is currently used for cropping and stock finishing, with the remaining 193 hectares in grazing. Craigmore intends to convert 130 hectares currently used for barley and maize into an apple orchard. Once mature, the benefits to New Zealand are said to include:

Creation of full-time and seasonal farm jobs equivalent to approximately 79 fulltime jobs;
Approximately $21.1 million in annual export receipts;
Additional investment to develop the apple orchard and construction accommodation for seasonal workers;
A level of oversight and control of the Investment by New Zealanders; and
Increased productivity of the land.

For more Craigmore Permanent Crop purchases, see OIO consents of August 2018, September 2017 and August 2017. See also the Craigmore application declined by the Ministers in April 2018.

Tamarind To Suck Taranaki Oil Fields Dry

Tamarind NZ Onshore Ltd (CEO Robert Ian Angell, Singapore 50.1%; Michael Norman Arnett, Australia 49.9%) has consent to acquire:

100% of shares in Cheal Petroleum Ltd from TAG Oil (NZ) Ltd;
TAG Oil (NZ) Ltd and CX Oil Ltd’s existing participating interests in petroleum exploration permits and petroleum mining permits relating to Taranaki oil and gas fields
associated facilities, production station, pipelines, contracts and other assets;

The vendors are TAG Oil (NZ) Ltd (Canada Public 95.17%; US Public 4.5%; various 0.3%) and CX Oil Ltd (Canada Public 95.2%; US Public 4.5%; various 0.3%) and the price is approximately $106 million. The OIO states that Tamarind is a fully-owned indirect subsidiary of Tamarind Resources Ltd, an Australian registered company. The individuals with control of Tamarind are experienced in the field of petroleum extraction, and in particular, late-life oil fields.

Tamarind already operates in New Zealand through the Tui oil field near Taranaki. Tamarind is acquiring Cheal Petroleum Ltd, and existing New Zealand on-shore oil and gas exploration and mining permits, along with related infrastructure assets. Tamarind intends to operate these assets in the same manner as the existing Tui oil field. Tamarind has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and Tamarind has demonstrated financial commitment to the investment.

Scoop says TAG built up a portfolio of onshore oil and gas production after recapitalising the operations of Australia Pacific a decade ago. Scoop quotes TAG’s Vice President of Corporate Development, Chris Beltgens: “There wasn’t a desire to exit, but there’s always a desire to maximise value for shareholders”. The company believed its share price had suffered from Canadian and US investor perception that NZ’s ban on new offshore oil and gas exploration permits would eventually move onshore too (Scoop, 7/11/18).

TAG will keep a small share of earnings from the New Zealand wells, and also bonus payments if targets were met. The sale will allow TAG Oil to develop exploration prospects for its Australian permits in the Surat Basin (Stuff, 9/11/18).

Experience in late life oil fields means Tamarind is particularly good at sucking out the last drops. Director and NZ Manager, Jason Peacock, said TAG’s lower risk, but smaller scale onshore assets are a good complement to Tamarind’s offshore activities. The sale is for TAG’s 100% working interests in the Cheal and Cardiff, Sidewinder, Supplejack, Puka, and Waitoriki wells and TAG’s 70% interest in Cheal East and Cheal East (see map).

Tamarind’s offshore operations comprise three oil reservoirs, Tui, Amokura, and Pateke, in the Tui oil field in the Taranaki Basin. The wells connect to a floating production storage and offloading ship, the Umuroa, which can directly export 700,000 barrels of stabilised crude oil per trip. On 18/2/19, the Environmental Protection Agency granted, subject to conditions, marine consent and marine discharge consent for Tamarind Taranaki Ltd for development drilling in the Tui Field.

These were for drilling of up to five sidetrack development wells from up to four of its existing wells, including the associated logistical and environmental monitoring activities . Tamarind expects to extract a further 6–8 million barrels of oil as a result, extending the life of the Tui Field into the mid-2020s. Tamarind says at present three sidetrack wells are planned, with a fourth possibly needed. A new rig vessel is sailing from Norway which will commence drilling in June 2019, taking about 110 days.

In November 2019 Tamarind went into voluntary receivership meaning the Government could be responsible for plugging and abandoning its wells. In September Tamarind abandoned a $300m drilling programme at Tui, once NZ’s biggest oil producing field, when the first of three planned wells failed to find any oil or gas. Tamarind reportedly owes about 80 creditors close to $190m, including the Crown. Climate Justice Taranaki said they tried to raise the question of whether Tamarind had sufficient resources for decommissioning at the Environmental Protection Authority hearing (Stuff, 27/11/19).

Methven Tapware Bought Up By Australian GWA

GWA Group Ltd (Australian Public 64.8%; US Public 10%; UK Public 6.3%; Norwegian Public 2.6%; various overseas 16.4%) has consent to acquire significant business assets, being 100% of the shares of Methven Ltd (NZ Public 98%; Australian Public 0.9%; UK Public 0.3%; US Public 0.2%; various overseas 0.6%) for $117,572,506.The OIO states that GWA Group is an Australian listed company supplying fixtures and fittings across Australia and New Zealand for commercial and residential use.

Methven is a New Zealand company which manufactures and supplies showers, taps and valves for kitchens and bathrooms for distribution in New Zealand, the UK, Australia and China. GWA has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character, and GWA has demonstrated financial commitment to the investment. Taps have been made in Methven as long as I can remember. For interesting background, listen to Rod Oram on RNZ, 12/2/19..

In making the offer, GWA committed to keeping the NZ design, innovation and manufacturing base, cutting duplicated logistics, freight, and listing costs. GWA already had Methven’s biggest shareholder on board, Sistema plastic containers millionaire Brendon Lindsay, giving it 19.9% with another 2.1% from Methven directors. This means GWA need only obtain 75% of shares to ensure the takeover goes ahead, in the absence of any better offer (NZ Herald 14/12/18).

GWA is in the ASX 200. The GWA Group, listed in 1993, comprised businesses previously owned by Queensland’s Anderson family. The Group has grown through acquiring and selling a variety of businesses. To focus on kitchen and bathroom fittings, it sold out of locks, garage doors and hardware businesses in the few years before the Methven acquisition.

Mexican Finaccess Capital Gobbles Up Restaurant Brands

Global Valar, SL Spain 54.3%; Mexico 41.4%; UK 2.5%; Argentina 1.8%) has consent to acquire 100% of Restaurant Brands NZ Ltd, whose existing shareholders are NZ Central Securities Depository Ltd, (New Zealand 54.3%; Australian Public 17.4%; US Public 12.2%; NZ Public 5.3%; various overseas 3.6%; FNZ Holdings NZ Ltd 3.1%; Deutsche Bank AG 1.6%; Kensington Swan Holdings Ltd, NZ 1.5%; Public Trust, NZ 1%). The price is approximately $883,300,000 (for up to 75% of the shares).

The OIO states that Restaurant Brands is a corporate franchisee, which owns and operates quick service restaurants in New Zealand, Australia, Hawaii, Guam and Spain. Its restaurant support centre and corporate office is in Penrose, Auckland. Restaurant Brands owns 261 stores in New Zealand (as of October 2018), including 149 KFC, Pizza Hutt and Carl’s Jr stores. Global Valar, SL, a special purpose vehicle established to facilitate the acquisition of the Restaurant Brands shares by Mexican company Finaccess Capital SA de CV (Finaccess).

Finaccess has experience investing in food and beverage businesses and intends to retain and grow the Restaurant Brands business. The Applicant has satisfied the OIO that the individuals who will control the investment have the relevant business experience and acumen and are of good character. The Applicant has also demonstrated financial commitment to the investment.

Restaurant Brands operates and owns the master franchising rights for the KFC, Pizza Hut and Starbucks and Carl’s Jr brands in New Zealand. Restaurant Brands operates most of the stores for the brands they own rights to, and provides management and support services to independent franchisees of the remaining stores. Restaurant Brands was formed to acquire shares in KFC and Pizza Hut from PepsiCo. It acquired KFC in 1989 and Pizza Hut in 1995.

It got NZX listing in 1997. In 2016, it purchased NSW’s largest KFC franchiser, QSR Pty Ltd, for $A82.4 million, with QSR’s vendor Copulos Group gaining a 4.9% shareholding in Restaurant Brands. In March 2017 Restaurant Brands purchased 100% of Pacific Island Restaurants Inc., the sole franchisee of Pizza Hut (45 stores) and Taco Bell (37 stores) in Hawaii, Guam and Saipan, for $US105 million (Wikipedia).

As in the GWA acquisition above, Finaccess made a separate agreement with a director with the largest shareholding, and also for the Chief Executive Officer and Deputy Financial Officer’s shares, meaning Finacccess required only 75% shareholders agreement for the deal to go ahead, in the absence of a better offer.

Despite getting OIO consent for a 100% takeover, Finaccess wrote to Restaurant Brands’ shareholders that they would not make a full takeover offer as there were benefits in Restaurant Brands maintaining its current New Zealand Stock Exchange (NZX) and Australian Securities Exchange (ASX) listings, as by remaining a public company, Restaurant Brands will have access to capital to fund future growth (6/12/18, www.restaurantbrands.co.nz/global-valar-offer-document). The offer of $NZ9.45 went unconditional and closed on 26 March with 86% of shares (NZ Herald, 14/3/19).

Finaccess Capital began in Mexico as a financial services company. It promotes investments by acquiring and participating in the equity or wealth of a diversity of companies and real estate assets, currently operating in Mexico, the US, Europe, and Asia. In 2016, it launched a public offering to acquire a larger share in the Polish company AmRest Holdings SE, the largest independent restaurant chain in Central and Eastern Europe, becoming the majority shareholder.

Japanese Oji Buys More NZ Forest

Oji Fibre Solutions (NZ) Ltd (Japan Public 90.2%; US Public 3.8%; UK Public 2.1%; Belgium Public 0.9%; various overseas 3%) has consent to acquire approximately 187.6 hectares at State Highway 30, Kopaki, Waitomo District (Stoneleigh Forest) from PF Olsen Tisa Pty Ltd as trustee of the Australasian Timberland Fund II II (Australian Public 85.8%; UK Public 13.2%; German Public 1%) for $4.3 million.

The OIO states that Oji Fibre Solutions has applied for consent under the “special test relating to forestry activities” set out in section 16A(4) of the Overseas Investment Act. Stoneleigh Forest is a mature pinus radiata forest. Oji intends to harvest the existing crop and replant with a similar crop. It is purchasing Stoneleigh Forest primarily to secure timber supply for its Kinleith and Tasman processing plants. Oji intends to hold the land indefinitely..

Aucklanders please note, that’s $22,000 a hectare including the trees. The new s.16A(4) “special test” ensures that the land is only likely to be used for forestry, that the forest will be replanted after harvest, sets rules related to any residential areas, and provides plenty of legal space for new Regulations related to forestry land.

Oji Holding Corporation is a Tokyo-listed manufacturer of paper products. Wikipedia states that in 2012 it was the third largest company in the global forest, paper and packaging industry. See consents of August 2014 for Oji buying the Carter Holt Harvey mills . In August 2007 it got consent for full ownership of Pan Pac Forest Products in Hawkes Bay, with more Hawkes Bay forests in October 2018. See also consents for forestry land under a former subsidiary name Southern Plantation Forests.

Scentre Buys Land To Expand Westfield Shopping Centre, Albany

Scentre Properties (NZ) Ltd & Newco Albany Ltd (Singapore government 50%; Australian Public 24.6%; North American Public 10.6%; European Public 4.4%; various public 3.4%; UK Public 3.2%; Asian Public 3.1%; NZ Public 0.4%; African Public 0.2%) has consent to acquire 2.9413 hectares at 55 Don McKinnon Drive, Albany, Auckland, from General Distributors Ltd (Australian Public 99.2%; various overseas 0.8%). Price withheld under s.9(2)(b)(ii) of the Official Information Act.

The OIO states that Scentre Properties already owns and operates five Westfield shopping centres in New Zealand and is in the process of redeveloping their Newmarket site. This land will enable it to expand its existing shopping centre in Albany. General Distributors will lease premises to operate a supermarket in the development. The stated benefits include creation of jobs in the construction and retail sectors, investing capital for the development, and investment by General Distributors in the fit-out of its new supermarket. The OIO also states that Scentre Properties has a proven track record of investment that has provided benefit to New Zealand

The Scentre Group was created in mid-2014 to own, manage and develop Westfield shopping centres in Australia and New Zealand, while a separate company Westfield Corporation owns, manages and develops the Westfield Group’s international shopping centre portfolio. Westfield began as a delicatessen in Sydney in the 1950s, then moved into property development with a shopping centre in 1959.

It now has 39 shopping centres in Australia, 33 in in the US and two huge new ones each side of London. In 1997 it bought St Lukes in Auckland and now owns five shopping centres in NZ. See July 2016 for consent to a property reshuffle involving Scentre. For OIO consents under the Westfield name, see July 2004, May and August 2001, August 2002, September 2000, April and August 1999 and December 1998. General Distributors is part of the Woolworths Group.

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