September 2008 decisionsSouter takes over Howick and Eastern Buses Ltd Citigroup sells Hirequip Ltd to Tasman Capital … … and FleetPartners to three private equity corporations Private equity purchase of business of BJ Ball, major paper wholesaler PEP increases Tegel Foods holding to 45% to help pay for Brinks acquisition US company buys Queenstown land for Otago Polytechnic Allied Concrete leases Isaac Conservation Park land for concrete plant New Zealand Steel buys more farm land for green belt around its steel mill
Souter takes over Howick and Eastern Buses LtdSouter Holdings (No 2) Limited, owned by B Souter of the U.K., has approval to acquire Howick and Eastern Buses Limited, including 1.6 hectares at 380 Ti Rakau Drive, East Tamaki, Auckland for a suppressed amount from Dalbeth Family Trust No. 2 and WT Dalbeth Family Trust, owned in Aotearoa.
B (Brian) Souter is the former owner of Stagecoach in New Zealand, a major operator of buses in Wellington and Auckland, and the founder of Stagecoach in the U.K., one of the U.K.’s major private bus companies, heavily involved in privatisation of services and longstanding controversy (see our commentary on the August and September 1998 decisions and cafca.org.nz/publications/Miscellaneous/Stagecoach.doc). Souter is also 74% shareholder in Wellington bus company Mana Coach, the other 26% being owned by Infratil subsidiary New Zealand Bus. New Zealand Bus also owns Stagecoach New Zealand, which Infratil bought from Souter in 2005 for $250.5 million. (See “Infratil will keep its stake in Mana Coach”, by Roeland van den Bergh, Dominion Post. 10 June 2008, http://www.stuff.co.nz/business/480969, accessed 28 March 2009; and “Infratil acquires Stagecoach for $250m”, National Business Review, 22 November 2005, see http://www.nbr.co.nz/article/infratil-acquires-stagecoach-250m.)
According to the OIO,
Souter Holdings (No 2) Limited (Applicant) was formed for the purpose of acquiring 100% of the shares of Howick and Eastern Buses Limited (Target).
The Applicant entered into a sale and purchase agreement (Agreement) with the trustees of the Dalbeth Family Trust No. 2 and the WT Dalbeth Family Trust (Vendors) to acquire 100% of the shares in the Target and therefore an interest in the Land. Although Mr WR Rae, a New Zealand citizen, is the sole director and shareholder of the Applicant, Mr B Souter of Scotland will fund the acquisition and exercise control over the investment.
The Applicant intends to continue the Target’s operations in their current form with a long term view to expand within the Auckland transport market. The inclusion of the Land in the Agreement is strategically significant as the Land is located on a major arterial route which is necessary to servicing the contracts in place between the Target and the Auckland Regional Transport Authority.
The proposed investment will or is likely to benefit New Zealand (or any part of it or group of New Zealanders) having regard to the following factors: (a) Overseas Investment Act 2005: (i) s17(2)(a)(i) – Creation of job opportunities; and (ii) s17(2)(a)(v) – Additional investment for development purposes. (b) Overseas Investment Regulations 2005: (i) r28(b) – Key person in a key industry; and (ii) r28(e) – Previous investments of benefit to New Zealand.
[Decision number 200820027.] Citigroup sells Hirequip Ltd to Tasman Capital …Tasman Capital Partners Pty Limited as trustee of the Tasman Secondary Trust, owned 100% in Australia, has approval to acquire Pall Mall Hirequip Limited (PMHL) for $185,000,000 from Aus Holdings (2007) Limited, owned in the U.S.A. by Citigroup Inc.
According to the OIO,
PMHL holds 86% of the shares in Pacific Equipment Solutions Limited (Pacific Equipment). The remaining shares in Pacific Equipment are held by management of Pacific Equipment. Pacific Equipment is the parent company of Hirequip Limited, a company operating a general equipment hire business throughout New Zealand.
Tasman Capital will acquire the shares in Pall Mall Hirequip Limited as trustee of the Tasman Secondary Trust.
Pall Mall Hirequip Limited fits well with Tasman Capital’s investment criteria. Tasman Capital intends to enhance the value of Pall Mall Hirequip Limited.
Citigroup bought Hirequip (and Fleet Partners – see next decision) as part of its acquisition of the Japanese finance company Nikko Cordial Corporation earlier in the year (see our commentary for February for further details) and is now selling them. Whether that is simply to make a profit or because it is in trouble due to the financial crisis in the US can only be speculated about because although we know the price it paid for the two companies ($723 million) the price it received for Fleet Partners has been suppressed. Pall Mall Hirequip appears to be a U.K. holding company.
[Decision number 200820025.] … and FleetPartners to three private equity corporationsFleet NZ Limited, owned 43.11% in Singapore, 32.19% in Belgium, 24.05% in Australia, and 0.65% in Aotearoa, has approval to acquire Pacific Leasing Solutions (NZ) Limited for a suppressed amount from existing shareholders in Pacific Leasing Solutions (NZ) Limited, owned 92.28% in the U.S.A. by Citigroup Inc., 7.31% in Australia, and 0.41% in Aotearoa.
The OIO states:
Tasman Capital Partners Pty Limited (Tasman Capital), Ironbridge Capital Pty Limited (Ironbridge) and GIC Special Investments Private Limited (together the Investors) propose to acquire 100% of the shares in Pacific Leasing Solutions (NZ) Limited, the holding company of the FleetPartners business in New Zealand.
The Investors have incorporated a wholly-owned subsidiary (Fleet NZ Limited) for the purpose of completing the proposed transaction.
The acquisition of Pacific Leasing Solutions (NZ) Limited fits well with the Investors’ investment criteria. The Investors intend to use reasonable leverage to fund the business operations and future growth of the business.
[Decision number 200820026.] Private equity purchase of business of BJ Ball, major paper wholesalerPaper Business Limited, owned 33.23% in Australia and 66.77% in Aotearoa, has approval to acquire 3.1 hectares of leasehold at 6-10 Southpark Place, Penrose, Auckland for $10,595,596 from BJ Ball Holdings Limited, owned in Aotearoa. The land “adjoins land that is listed, or in a class listed, as a reserve, a public park, or other sensitive area” by the OIO. However this is just part of the acquisition of the business operation of BJ Ball.
According to the OIO,
The Applicant was the sole bidder in a competitive tender to acquire BJ Ball Limited’s (Vendor) paper supply business and assets, including the lease over the Land (Business). The acquisition of the leasehold interest is part of the Applicant’s acquisition of the Business. The lease is for 10 years.
The Applicant was incorporated specifically to acquire the Business. It is owned by the AMP Pencarrow Fund, a joint venture between AMP Capital Investors (New Zealand) Limited and Pencarrow Private Equity Limited as to 50% each. The AMP Pencarrow Fund seeks to create and realise value in investments by investing in companies with growth potential. The Business fits this investment strategy.
According to Pencarrow Private Equity Ltd,
BJ Ball is the New Zealand’s leading fine paper merchant. It supplies a broad range of paper and related products to the printing and publishing industry as well as office supplies companies. In October 2008, the AMP Pencarrow Fund backed a management buyout of BJ Ball from Archer Capital (an Australian private equity firm) immediately following a merger of BJ Ball with the New Zealand operations of CPI (a major ASX-listed paper merchant).
(See http://www.mbo.co.nz/pencarrow/investments/current-fund/, accessed 29 March 2009.)
[Decision number 200820030.] PEP increases Tegel Foods holding to 45% to help pay for Brinks acquisitionPacific Equity Partners Fund II/III managed by Pacific Equity Partners Pty Limited, owned 70.7% in the U.S.A., 19% in Australia, 8% by “various overseas persons”, and 2.3% in the U.K., has approval to acquire up to 45.45% of NZ Poultry Enterprises Limited from other shareholders for a suppressed amount. It previously owned 43.13%. The acquisition includes 107 hectares of freehold comprising: · 3.5 hectares at Flanagan Road and Tegal Road, Papakura, North Auckland; · 90 hectares at Wortley Road, Lepperton, 585 Manutahi Road, Waitara, 58-78 Brown Road, Waitara, and 55 Hickman Road, Onaero, Taranaki; and · 14 hectares at Hautere Cross Road, Otaki, Wellington; and · 46 hectares of leasehold at 203-207 Dunns Crossing Road, Christchurch.
The other shareholders in NZ Poultry Enterprises Limited are 29.02% in Australia, 10.85% in the U.K., 0.35% in the Netherlands and 59.78% in Aotearoa.
The OIO states:
Tegel Foods Limited (Tegel) is an indirect wholly-owned subsidiary of NZ Poultry Enterprises Limited (NZPEL). Tegel is a fully integrated poultry producer involved in the breeding, hatching, feeding, growing, processing, and marketing of chicken and turkey in New Zealand. Tegel’s products include fresh, frozen and cooked whole chickens, chicken portions, and other value added products. Pacific Equity Partners Pty Limited and its related entities (collectively referred to as PEP) currently holds 43.13% of the ordinary shares in NZPEL.
Tegel Foods Limited (Tegel) has entered into an agreement to purchase the poultry business known as Brinks. In order to partly fund the acquisition of Brinks, NZPEL proposes to undertake an equity raising, whereby the shareholders of NZPEL will be offered an opportunity to acquire ordinary shares in NZPEL on a pro rata basis. PEP has indicated that it will subscribe for new shares in NZPE to the full extent of its entitlement. As a result of this and certain shareholders not opting to take up their entitlements, PEP will increase its percentage ordinary shareholding in NZPEL from 43.13% to 45.45%. To enable flexibility PEP seeks consent to acquire up to 100% of the shares in NZPEL.
The acquisition of shares in NZPEL by PEP pursuant to the equity raising will provide funding to enable Tegel to complete the proposed acquisition of Brinks. PEP’s investment strategy is to invest in business opportunities where PEP’s management expertise, capital resources and understanding of financial structuring enables it to improve the operating performance and create value in the relevant business. PEP’s strategy for Tegel is to operate the business substantially as it has been operated to date and successfully implement growth and productivity improvement strategies. NZPEL’s intended strategy for Tegel is to operate Tegel’s business substantially as it has been operated to date and to continue to support management plans for growth and productivity improvements. The individuals associated with the proposed owners of NZPEL are highly experienced directors and will continue to provide high level strategic advice to Tegel.
It appears that PEP asked to be able to acquire 100% of Tegel. In fact the OIO approved only 45.45%.
The land appears to be sensitive. It affects “Indigenous vegetation/fauna; Trout, salmon, wildlife and game; Historic Heritage; and Walking access”, and the approval appears to include an “Offer to sell seabed/foreshore to the Crown.”
For an earlier decision relating to PEP and Tegel, see our commentary for February 2008.
[Decision number 200820038.] US company buys Queenstown land for Otago PolytechnicRedemption Song LLC of the U.S.A. has approval to acquire 49 hectares at Littles Road, Dalefield, Queenstown, Otago for $4,500,000 from Little Ridge Limited, owned 7.4902% by Lynly Wai Yen Fong of Hong Kong, 7.2699% by M W L Fong of Singapore, 7.2699% by C W L Fong of Japan, and the remainder in Aotearoa: 18.06% by David Benjamin Broomfield, 13.535% by Helen Broomfield, 6.025% by Nina Broomfield, 13.535% by Scott Conway, 6.025% by Richard Hanson, 4.66% by Karen Hindle, 4.66% by Keith Hindle, and 11.47% by others.
The OIO states:
The property will be made available as a physical classroom for educating Otago Polytechnic students, and other New Zealand organisations in the field of design, construction and environmental sustainability, in the design, installation and maintenance of an environmentally sustainable home.
Many of the shareholders in Little Ridge Ltd are investors developments at Woodlot Farm and the Closeburn and Henley Downs stations near Queenstown – see for example our commentaries in April 2005 and 2006.
[Decision number 200820028.] Allied Concrete leases Isaac Conservation Park land for concrete plantAML Limited, owned 13.3027% in Switzerland in minority shareholdings, 11.7023% in Switzerland by Thomas Schmidheiny, 10% in the U.K., 5.5011% by “various overseas persons”, 5% in the U.S.A. in minority shareholdings, 2.5005% by the Capital Group Companies of the U.S.A., 2% in Germany and 49.99% in Aotearoa, has approval to acquire 2.1 hectares of leasehold situated at 160 McLeans Island Road, Harewood, Christchurch, Canterbury for $497,227 from Diana Isaac and Robert Geoffrey McGregor Clarke, both of Aotearoa. The land “is or includes land that a district plan or proposed district plan under the Resource Management Act 1991 provides is to be used as a reserve, as a public park, for recreation purposes, or as open space”.
In fact, according to the OIO,
The Land is part of the approximately 1000 hectare Isaac Conservation Park owned by the Isaac Wildlife Trust (Trust). The Applicant wants to construct a new concrete plant on the Land to replace its existing plants in Christchurch.
The Applicant has entered an agreement to lease with the Trust. If the Overseas Investment Office grants consent to the application the Applicant and the Trust will enter a formal lease over the land for a period of 35 years less one day.
The Applicant’s two existing plants in Christchurch are almost 30 years old and are inefficient. The Applicant’s proposed plant will create operational efficiency and increase productivity, and reduce waste.
AML Ltd is a joint venture between Holcim New Zealand Ltd, the major Swiss-controlled cement manufacturer, and the Southland company HW Richardson Group Ltd. It trades as Allied Concrete (see http://www.alliedconcrete.co.nz/html/history.html, accessed 29 March 2009).
[Decision number 200820029.] New Zealand Steel buys more farm land for green belt around its steel millNew Zealand Steel Limited, owned by BlueScope Steel Limited of Australia, has approval to acquire 4.6 hectares at 152 Brookside Road, Waiuku, Auckland for $800,000 from TJ Miller of Aotearoa.
According to the OIO,
The Applicant operates as a fully integrated steel mill at Glenbrook, approximately 60 kilometres south of Auckland (Existing Property). The mill is surrounded by 500 hectares of farmland acting as a ‘greenbelt’ buffer zone around the steel mill.
The Applicant has entered a sale and purchase agreement with Mr TJ Miller to acquire the Land, which adjoins part of the farmland comprised in the Existing Property currently owned by the Applicant.
The Applicant operates a livestock farm in and around the greenbelt area. The Land will be amalgamated into the existing greenbelt area and farming operation. The Applicant’s primary purpose for acquiring the Land is to expand the farm on the Existing Property, thereby providing economy of scale to the Applicant’s farming business and enhancing the buffer zone surrounding the Applicant’s steel mill operations.
[Decision number 200820032.] Land for forestry· Ealfgifu Limited, owned 51% by John Richard Anthony Nottingham, 14% by Susan Helen Chicken, 14% by Julie Margaret Jones, 10.5% by Ian Michael Bolton, and 10.5% by Michael Tulip, all of the U.K., has approval to acquire 22 hectares at 319 Crownthorpe Settlement Road, Hawkes Bay for $330,000 from Thomas Brough Chapman and Isabel Chapman of Aotearoa. According to the OIO, “The Vendors wish to subdivide the family home from the Land and sell the balance of land and forest because the long-term nature of a forestry investment does not accord with their retirement requirements. Despite advertisement of the land there has been no interest in purchasing it other than from the Applicant. The Applicant proposes to acquire the Land because it accords with their goal of investing in steady, compounding, inflation-protected investments for long term wealth creation purposes. The acquisition of the Land will contribute towards the Applicant’s strategy of diversification away from the United Kingdom.” [Decision number 200820035.] · Craigpine Timber Limited, owned 57.33% by Graeme Lewis Sims Black, 23.71% by Nerissa Margaret Guest, 18.96% by Quentin John Sims Black, all of Australia, has approval to acquire 231.1 hectares at 565 Hillas Road, Eyre Forest, Southland for $337,500 from Matariki Forests, owned 40% in the U.S.A. by Rayonier Inc, 24.99% in Australia by SAS Trustee Corporation, 31.2073% in Australia by other shareholders, 1.8695% in Japan, 0.5135% in the U.K., 0.0755% by “various overseas persons”, and 1.3442% in Aotearoa. The OIO states: “Craigpine Timber Limited (Craigpine) is a Southland based forestry company which owns approximately 3,523 hectares of land established primarily in radiata pine forestry in the Southland region. Craigpine operates a sawmill at Winton which processes the logs from the forest estates for both the domestic and the export markets. Craigpine is currently in the process of establishing a dairy farming operation on 252 hectares of land which was previously planted in pinus radiata. The 252 hectares formed part of Craigpine’s 911 hectare Waitane Forest situated approximately 14 kilometres west of Mataura. Craigpine advise that stock have been placed on the land for the first time this current winter. The land will be used as a dairy support unit until the soil fertility of the land is increased to the levels required to support dairy farming. Craigpine anticipates a timeframe of two to five years. Craigpine’s rationale for establishing a dairy farming division is to diversify and to add value to Craigpine’s operations. Craigpine advises that while it has no present plans to convert other forestry land for dairying or other uses, Craigpine has a policy of always considering “best land use” and will continue to seek opportunities to increase its forestry and farming estates. Craigpine intends to purchase the land and forestry assets known as the Eyre Forest. Craigpine has already commenced work on the harvesting of the forest under a pay as cut timber sale agreement. Craigpine has dual purposes for acquiring the land. In relation to that part of the land which is suitable for return to pasture after completion of harvesting of the forest (110 hectares), Craigpine intends to establish a runoff block to support a dairying operation that is currently being established by Craigpine. The balance of the land used for forestry (99.5 hectares) will be re-planted for a further forest rotation.” For the previous decision regarding Craigpine, see our commentary for June 2008. [Decision number 200820039.] Land for wine· Kaituna Vineyards Limited, owned 80% in Switzerland by Andreas E Rihs, and 10% each by Rex Brooke-Taylor and Peter Stubbing of Aotearoa, has approval to acquire 2.6 hectares at Kaituna-Taumarina Road, Marlborough for $200,000 from Matthew Jonathan Brooke-Taylor and Donna Brooke-Taylor of Aotearoa. According to the OIO, “The Applicant currently owns a vineyard of 23.3104 hectares that adjoins the Land. The Applicant entered into a Sale and Purchase Agreement (Agreement) with Matthew and Donna Brooke-Taylor (Vendors) to purchase the Land. The Vendors’ existing title comprises approximately 4 hectares. The Land will be subdivided from the existing title and acquired by the Applicant. The remainder will be retained for the Vendors’ home and surrounding area. The Applicant wishes to purchase the Land, which is fully planted in a mixture of sauvignon blanc and pinot gris grape vines, as it is a means of further enhancing its current vineyard investment.” [Decision number 200820033.] · In two decisions, Gibbston Valley Station, owned 62% by Phillip Dean Griffith of the U.S.A. as trustee of the Phillip D Griffith Family Trust, 26% by other investors in the U.S.A. and 12% in Aotearoa, has approval to acquire
In both cases, the land adjoins “land held for conservation purposes under the Conservation Act 1987”. In the first case, it also “is or includes” such land, and adjoins a “scientific, scenic, historic, or nature reserve under the Reserves Act 1977 that is administered by the Department of Conservation”. The OIO states: “Gibbston Valley Station (GVS) is a wholly-owned subsidiary of High Definition Development LLC (formerly Gibbston Valley Lodge NZ LLC) which received consent to acquire 14.3472 hectares of land situated at Gibbston Valley, Central Otago. With effect from 1 January 2008, High Definition Development LLC transferred its interest in its land to GVS. This transfer was exempted by Regulation 33 of the Overseas Investment Regulations from the Overseas Investment Act requirement for consent. A luxury lodge is being constructed on a 4.3682 ha block, and the Glenlee vineyard and winery is operated on the 9.979 ha block. The current sole shareholder of High Definition Development LLC holds approximately 47% of the shares in Gibbston Valley Wines Limited (GVWL). GWVL owns approximately 60 hectares of land near the land proposed to be acquired and operates a vineyard, cheesery and a restaurant. GVS proposes to build 39 residential units, 30 golf course homes and 22 executive homes, an 18 hole golf course designed by Greg Turner (to be situated between the Kawarau River and the Gibbston Valley Highway), an equestrian riding centre, a retreat lodge and an artisans, crafts and farmers market complex on the land. Approximately 19.5 hectares of land will be developed as a vineyard, to be planted predominantly in Pinot Noir grapes. GVS intends to develop the land and the land recently transferred to it by High Definition Development LLC to meet the demand for recreational facilities and accommodation in the Queenstown district in a manner that complements the existing operations of GVWL.” The last approval regarding Gibbston Valley Lodge was in December 2006. See our commentary for that month for further details. Other rural land sales· Premier Dairies No.6 Limited of Ireland has approval to acquire 239 hectares at 469 Walker Road, Woodlands, RD1, Invercargill, Southland for $14,200,000 from Van der Werf Farms Limited, owned in the Netherlands by Sjoerd Tjitte Bonifatius van der Werf as trustee for the van der Werf Trust. The OIO states: “From 2000 to 2002, the Clinton family, through the auspices of Premier Dairies Limited and the Balreask Trust purchased several properties near Winton, Southland. These properties included a dairy farm and sheep and beef farms which have been converted to dairying. The Applicant proposes to acquire the relevant land which is operated as a dairy farm by the vendor. The relevant land provides a facility for indoor feeding of stock which will allow Premier Dairies Limited to expand its dairying operations to be able to milk and supply milk for 12 months of the year from the relevant land.” [Decision number 200820034.] We have no record of purchases by the Balreask Trust, but the last approval for Premier Dairies and the Clintons was in February 2002: see our commentary for that month for further details. · See also the decision regarding Craigpine under Land for Forestry. Craigpine is converting some of its forestry land in Southland to dairying. Summary statisticsAll investments The value of investment approved in the year to September 2008 is considerably lower than for the previous September year, both in net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) and in gross value. Net value is about a quarter of the corresponding period for 2007 and gross value about a third. By far the greatest part of the value of the approvals is for sale from one overseas investor to another.
Investment involving land Gross sales of freehold land approved by the OIO during the years to September are very similar in area, though net sales have fallen by approximately 1,000 hectares or 14%. Refusals (above) have fallen in number, but risen in area and value due to the Auckland International Airport refusal in April 2008, and are still a tiny proportion of the total. However sales of interests in land such as leases have increased substantially.
Fishing Quota As usual, there was no fishing quota approved for sale this month.
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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