Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – February 2014 Decisions
Sky City Gets Convention Centre Approval
By far the most significant approval this month was Sky City Entertainment Group Limited New Zealand (74.5%), Australia (25.3%) and various overseas persons (0.2%) receiving approval for an overseas investment in significant business assets, being the establishment of a business in New Zealand by the Applicant where the total expenditure required before commencing business exceeds $100m. Total cost of the development was stated at $402,000,000.
The OIO states: “The Applicant has entered an agreement with the Crown to design, build, own and operate the New Zealand International Conference Centre (NZICC).The construction of an international-sized convention centre is intended to boost the New Zealand economy through attracting high value international business visitors to New Zealand and enhancing New Zealand as a business events destination. In addition, the NZICC is expected to generate additional employment opportunities, with 1,000 people expected to be employed during construction and a further 800 employed directly at the convention centre once the NZICC becomes fully operational”.
Matt Nippert at Stuff.co.nz reported the latest plans around development. “Sky City Entertainment Group has acquired all the central Auckland land needed for its larger convention centre. But details about the final plans for the site are unlikely to be made public prior to September’s general election. The Government and Sky City signed an agreement to build the New Zealand International Convention Centre a year ago. The casino giant will pay $402 million to build and operate the NZICC, in return for the right to operate more gambling machines and tables and a 27-year extension of Sky City’s licence to operate as an effective monopoly in Auckland.
“The deal listed two options for the footprint of the NZICC development, with the slightly larger second proposal requiring Sky City to acquire two properties at 85 and 91 Hobson Street. The smaller proposal allowed for a fallback option if Sky City was unable to reach an agreement with landowner Television New Zealand to acquire the two further parcels of land. Last September’s (2013) property records list Sky City acquiring those properties for a combined sale price of $10.65m. The combined rateable value for the sections is $8.25m.
“Sky City General Counsel Peter Treacy said the company had always planned to run with the larger proposal, but the tight timeframe requiring contracts to be inked meant a smaller alternative needed to be considered. ‘The planning we have always done, and the numbers we’ve been quoting, have always assumed having that land. But we couldn’t really enter into an agreement assuming we’d be building something on land we didn’t yet own’. Fairfax Media understands final design plans for the NZICC are expected to be publicly unveiled later this year, likely to be after the September 20 General Election, with applications for resource consents to follow. The agreement between the Government and Sky City calls for construction of the centre to be completed by September 30, 2017. Disruption for Auckland commuters from construction could combine with more traffic chaos if the City Rail Link project starts early, as is being pushed for by the Auckland Council. The CRL would require the entire city block opposite the Britomart transport centre to be demolished and rebuilt from scratch in order to allow the digging of tunnels”.
And in a press release a few days later, the Green Party commented on why the “pokies for a convention centre” deal is so controversial (“Sky City’s Commitment To Preventing Harm Non-Existent”): “National has done a deal with a company that continues to flout New Zealand’s gambling regulations, Green Party gambling spokesperson Denise Roche said today. In a media sting earlier this year, an elderly man was allowed to play pokie machines continuously for hours with absolutely no intervention by Sky City staff. Following a Green Party complaint, the Gambling Commission found that Sky City was negligent in its Host Responsibility obligations.
“‘Sky City’s woeful commitment to preventing gambling harm has once again been exposed’, Ms Roche said. ‘National’s Faustian pact with Sky City, in which Sky City builds an international convention centre in exchange for certain gambling concessions, will see an increase in social harm from problem gambling. National’s deal with Sky City means that a company that flout’s New Zealand’s gambling regulations has the opportunity to greatly expand its gambling operations. The harm minimisation measures Sky City has currently signed up to are not working. “Allowing Sky City an additional 510 gambling machines and tables under this deal will only result in more harm to the patrons of Sky City and the people of Auckland. The Green Party has a plan to tighten up New Zealand’s loose gambling regulations and prevent the harm and misery that pokie machines cause to those addicted to them and their families who suffer’, said Ms Roche. ‘We consider that the best way to reduce harm caused by pokies in casinos and clubs throughout New Zealand is to move to a universal pre-commitment system'”.
Chinese-Owned Infant Formula Plant For Pokeno
China Mengniu Dairy Company Limited (which is listed on the Hong Kong Stock Exchange) has received approval for an overseas investment in significant business assets, being the establishment of a business in New Zealand by the Applicant where the total expenditure required before commencing business exceeds $100m. Total cost of the development is stated at $212,000,000. The OIO states: “Yashili New Zealand Dairy Co. Limited (Yashili) is currently constructing a milk processing plant in the Waikato town of Pokeno. The plant will manufacture paediatric milk powder products. Pursuant to a share offer launched in July 2013, the Applicant controls approximately 68.02% of Yashili. The Applicant, as the majority shareholder of Yashili, intends to continue to construct the milk processing plant in Pokeno, via its subsidiary Yashili”. See our March 2013 commentary for further background and details of the original approval for Yashili to construct this processing plant.
Onetai Station Sold
Ceol & Muir Inc. Italy (50%), Argentina (50%) received approval for the acquisition of a freehold interest in approximately 1,317.2 hectares of land at 1437 Manganui Road, Awakino, Northern Taranaki. The vendor was GM Bryant Limited New Zealand (100%). Consideration was “withheld under section 9(2)(b)(ii) of the Official Information Act”. The OIO states: “The Applicant intends to take over and develop the farming operation at the Onetai Station”. Sue O’Dowd in the Taranaki Daily News reports further on 1 April 2014 and unfortunately this is no Aprils Fools joke.
“The landmark Onetai Station at Awakino in North Taranaki has been sold to an overseas company. The Overseas Investment Office (OIO) has approved the sale of the station, 16km north of Awakino, to an Italian and Argentinian venture called Ceol & Muir Inc. The well-fenced 1320ha coastal property features spectacular views of the west coast to White Cliffs, Mt Taranaki and beyond. The OIO said the sale satisfied Overseas Investment Act 2005 criteria for substantial and identifiable benefit to New Zealand in terms of jobs, investment for development, indigenous vegetation and fauna, and walking access.
“The purchaser intended to develop the farming operation at the station, which receives regular rainfall and has a good supply of water from dams and creeks. Onetai Station used to be owned by Graham Bryant who died in 2012 and who was largely responsible for the development of the perendale breed of sheep. He was the first president of the Perendale Sheep Society when it was formed in 1960, was made a life member in 1987 and a Companion of the New Zealand Order of Merit in 1997 for services to agriculture…”
Matariki Sells Kohitere Forest
Forestry Fund 9 NZ Limited various overseas persons (70%), United States Public (21%) and United Kingdom Public (9%) received approval for the acquisition of a freehold interest in approximately 478 hectares of land (Kohitere Forest) located at Denton Road and Gladstone Road, Levin. The vendors were Matariki Forests United States Public (64%) and various overseas persons (36%). Consideration was again “withheld under section 9(2)(b)(ii) of the Official Information Act”, which seems to be the new “official” line from the OIO in not disclosing how much a deal is worth. The general wording of this section of the Official Information Act is “…good reason for withholding official information exists,… to protect information where the making available of the information – would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information”. In other words the OIO is simply using the standard “commercial sensitivity” excuse corporations hide behind.
In respect of this particular approval the OIO simply states: “The Applicant will continue to operate the land as a commercial forestry operation”. Matariki has been a significant purchaser of forests in New Zealand in the past. See our August 2005 commentary for details of Matariki’s original purchase of 92,000 ha, and AMP’s buy into Matariki in June 2006, as well as our February 2013 commentary of US-controlled Rayonier’s’ purchase of Matariki.
Chinese Buy Castlebrae Farm
Ling Hai Group Limited Zongren Ling and family, China, People’s Republic of (100%) received approval for the acquisition of a freehold interest in approximately 741 hectares of land located at Renners and Castles Road, Awatere Valley, Marlborough (Castlebrae Farm). The vendor was Geoffrey Arnold Marfell, David Edward Marfell and Castlebrae Vineyards Limited New Zealand (100%); consideration was again withheld. The OIO states: “The Applicant intends to acquire the land as part of its long term investment in the New Zealand wine and tourism industry. The Applicant intends to expand a vineyard located on the land, build a winery and construct new accommodation for visitors. More than half of the land will continue to be farmed for pastoral purposes”.
Cathie Bell of the Press reported details on 1 April 2014 (No April Fools joke here either): “Marlborough’s Castlebrae Farm has been sold by long-time owners the Marfell family to a Chinese-owned company. A decision, published by the Overseas Investment Office (OIO) yesterday, said the Ling Hai Group, a company owned by Zongren Ling and family from China, had been approved to buy 100% of the Castlebrae farm. The farm, about 741 hectares of land at Renners and Castles roads in the Awatere Valley, running down to the sea, was owned by brothers Geoff and David Marfell and Castlebrae Vineyards. The sale price was withheld for commercial sensitivity reasons.
“The OIO decision said Ling Hai Group intended to acquire the land as part of its long-term investment in the New Zealand wine and tourism industry. ‘The applicant intends to expand a vineyard located on the land, build a winery, and construct new accommodation for visitors. More than half of the land will continue to be farmed for pastoral purposes’. The Office said the overseas investment transaction satisfied the criteria in section 16 of the Overseas Investment Act 2005. The ‘substantial and identifiable benefit to New Zealand’ criteria were satisfied by particular reference to the creation of new jobs, increased export earnings, greater productivity and extra investment for development purposes.
“As part of the application, Ling Hai Group appear to have offered concessions around protecting indigenous vegetation/fauna, walking access and an offer to gift foreshore land to the Crown. Ling Hai Group is based at a residential address in Glenfield in Auckland. Its owner, Zongren Ling, lives in China. Ling Hai lawyer Andrew Petersen, of law firm Bell Gully, was not available for comment yesterday. Geoff and David Marfell did not return calls either. It is understood the sale has yet to go through to settlement.
“In material from Bayleys Real Estate from when the property first went on the market in 2009, the Marfells said Castlebrae was a unique sheep, beef and viticultural coastal estate at the mouth of the Awatere River where it meets the Pacific Ocean at the top of the South Island. Farmed in partnership by Geoff Marfell and his brother David, along with their wives Polly and Diane, Castlebrae had been in the Marfell family since 1955. ‘The family all have different avenues that they now want to explore . . . We hope someone else will pick up the reins and take a long-term view of how the property can work in the future’, Geoff Marfell was quoted as saying at the time. Castlebrae ran different sorts of farming, including having merino and corriedale sheep, some cropping, and about 20ha of sauvignon blanc grapes planted in 2003”.
Other February Decisions
Paul Wayne Fieldman United Kingdom (100%) received approval for the acquisition of a freehold interest in 12.9 hectares of land at 143 Showgrounds Road, Waimate North, Northland. The vendor was Geoffrey Coster Wightman and Patricia Vella Wightman New Zealand (100%); consideration was $735,000. The OIO states: “The applicant intends to migrate to New Zealand under Immigration New Zealand’s Investor 2 category and is acquiring the land as a lifestyle property to use as the principal residence and home for himself and his family”.
Latifundium Oban Forest Limited Liechtenstein (64.2%) and Germany (35.8%) received approval for the acquisition of a freehold interest in approximately 507 hectares of land located at Blairlogie – Langdale Road, Masterton (known as Oban Forest). The vendor was Oban North Forestry Partnership Custodial Company Limited New Zealand (100%); asset value stated at $1,025,000. The OIO states: “The Applicant intends to grow the existing forest to maturity, harvest and then replant Oban Forest as an intergenerational investment”.
Constellation Brands New Zealand Limited Constellation Brands Inc, United States of America (100%) received approval for the acquisition of a leasehold interest in 29 hectares of land at Ngatarawa, State Highway 50, Hastings. The vendor was Glazebrook (Arthur Derek, William Alexander, and Howard Michael) as trustees of the Michael Glazebrook Trust and Pastoral Services Limited New Zealand (100%); consideration was withheld. The OIO states: “The Applicant is acquiring the land for the purposes of expanding its vineyards and winery business”. See our January commentary for details of another Constellation purchase in Marlborough.
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