Foreign investment in Aotearoa/New Zealand

Overseas Investment Office – December 2016 Decisions

Investors From Tax Havens Buy Forest In Marlborough

NZ Forest Products Holdings Ltd and Patrick Egan (Patrick Egan, Federation of St Kitts and Nevis 100%) have consent to acquire 1,116 hectares of land at 465 Tumbledown Bay Rd, Whangataura Bay, Port Underwood, Marlborough, from Underwood Farm Ltd (NZ 100%). Price was $9,500,000. The Applicant intends to “intensify” an existing forestry operation by planting an additional 80 hectares of radiata pine, increasing the rate at which 850 hectares of existing radiata pine is harvested and investing in technology and infrastructure.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005 and “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) added market competition/productivity, s.17(2)(a)(v) additional investment for development purposes, s.17(2)(b) protection of indigenous vegetation/fauna, s.17(2)(d) protection of historic heritage, s.17(2)(e) provision of walking access and under Regulations 28(a) Consequential benefits.

In 2000 the Federation of St Kitts and Nevis was included by the Financial Taskforce of the Organisation of Economic Cooperation and Development (OECD) in the list of countries for action against offshore financial business centres which cause a considerable loss of tax revenue for the G7 countries. NZ Forest Products Holdings Ltd is a New Zealand company formed in 2016 with 100 shares that were then transferred to companies in the Cayman Islands and whose directors were in 2017 replaced by persons in Jersey, Channel Islands. Sounds like tax haven transactions.

China Buys Mangere Health Products Company

ORA New Zealand Ltd (various overseas 32%, USA 27%, Singapore 15%; Cayman Islands 9%, Netherlands 9%, Hong Kong [SAR] 8%) has consent to acquire 80% of the shares on completion and also the remaining 20% of shares of The Better Health Company Ltd which owns approx. 0.6 hectares and significant business interests at 88 Montgomerie Road, Mangere and 0.4 hectares at 7 Pavilion Drive, Mangere.

The Better Health Company is currently 100% New Zealand owned. Price was $102,224,800. ORA is owned by CDH Fund VLP (‘Fund V’), a private equity fund. Fund V’s general partner is CDH V Holdings Company Limited (‘Fund V GP’). Fund V GP is majority-owned by China Diamond Holdings Company Ltd, a pan-Asian alternative asset fund manager.

The Better Health Company operates the Go Healthy business via two subsidiaries, Go Healthy NZ Ltd and NZ Health Manufacturing Ltd. Go Healthy is a leading New Zealand natural health products brand. The business manufactures and distributes a range of hard and soft capsules, tablets and powders containing natural extracts that provide health benefits for a range of symptoms and targeted effects, and are sold through pharmacies and health stores. Go Healthy considers that has achieved initial strategic objectives and is the market leader in its New Zealand distribution channel.

It is looking to leverage its domestic brand credibility and market leader position by expansion into export markets. A partner was sought that has the resources, capability and willingness to accelerate the growth of Go Healthy. ORA intends to act as a catalyst for expansion of the Go Healthy business and unlock value for all stakeholders by providing the needed assistance and resources to the existing management team in its efforts to capture these new opportunities.

The transaction satisfied the s.16 and s.18 criteria of the Overseas Investment Act 2005, with “benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(v) additional investment for development purposes. In April 2017 Go Healthy and NZ Health Manufacturing won the Natural Products NZ award. The natural personal care market has grown rapidly to be currently worth $82 billion globally and “multinationals are taking it very seriously”’ (Stuff, Business Day, 9/4/17).

Home Care, Australia, Buys 40% Of Healthcare Of NZ

Home Care BidCo Pty Ltd (Australia 92%, United Arab Emirates 8%) has consent to acquire up to 40% of the issued share capital in Healthcare of New Zealand Holdings Ltd from Peter John Hausmann and Suzanne Louis Hausmann as trustees of the Hausmann Family Trust, SPH Limited and Peter John Hausmann (NZ 100%) and Peter Francis Cottier, Yvonne Marie Cottier and SCW Trustees Limited as trustees of the Cottier Family Trust (NZ 100%). Price in excess of $100 million. Home Care BidCo is a wholly owned subsidiary of Home Care Holdings Pty Ltd which currently has two wholly-owned subsidiary companies which operate health care businesses in Australia.

Home Care is investing in Healthcare of NZ “to build a leading healthcare business in the evolving Australia and New Zealand markets. Healthcare of New Zealand Holdings Ltd is the parent company of a number of healthcare-related specialist organisations which deliver services (community health, disability and rehabilitation) to meet the specific needs of the people they support.

It is a large scale, diversified health services business that leverages technology, systems and scale to support the significant volume of users who require healthcare and care support in New Zealand. It is a best practice operator within the region which will be a valuable addition to the Home Care group”. The transaction satisfied the s.18 criteria of the Overseas Investment Act 2005.

Home Care Bidco (a “business and industrial development corporation” registered in June 2016) wholly owns St Ives Pty Ltd, a major West Australian retirement village operator. St Ives claims to be one of the largest providers of home care to the elderly across Australia, and has been expanding its Australian home care interests through acquisitions. HealthCare NZ is the parent company of Healthcare NZ Community Health, NZ Care Disability, Healthcare Rehabilitation, Mental Health NZ, Explore Specialist Advice NZ, Wellcare Training NZ and Duty Calls Nursing Bureau. It also has holdings in joint ventures Pharmacy 547 and Freedom Medical Alarms.

Aussie Finance Company Buys Into Hellaby

Bapcor Finance Pty Ltd (Australian Public 64%, various overseas 19%, North American Public 11%, European Public 3%; UK Public 2%, Asian Public 1%) has consent to acquire 100% of the shares of Hellaby Holdings Ltd which owns approx. 0.4 hectares at 2 Mahunga Drive, Auckland; and a contingent right to be issued Hellaby shares of up to $2.85 million in value, with the number of shares determined with reference to Hellaby’s volume-weighted average market price during a specified period and any ordinary shares of Hellaby issued pursuant to the TBS Right.

The vendors are Existing Shareholders of Hellaby Holding Ltd (NZ Public 54%, Castle Investments Ltd NZ 27%, Accident Compensation Corporation 9%, FNZ Holdings NZ Ltd, New Zealand 3.5%, Forsyth Barr Custodians, NZ 3%, Citibank Nominees [NZ] Ltd, NZ 2.5%, Australian Public 0.9%, carious overseas persons 0.2%, UK Public 0.09%). Price approx. $353 million.

Bapcor Finance is wholly owned by Bapcor Ltd which operates in the trade, retail and specialist wholesale segments of the motor vehicle after-market (spare parts, accessories, servicing). Bapcor Finance made the full takeover offer for Hellaby in order to acquire Hellaby’s automotive division. It states the offer will create new fulltime equivalent jobs, introduce efficiency-enhancing technologies, improved operational efficiencies and new capital expenditure over the next three to five years. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(iv) greater efficiency, s.17(2)(a)(v) additional investment for development purposes.

On 1 February 2017 Bapcor Finance announced it held more than 92.7% of the voting rights in Hellaby’s, becoming the dominant owner for the purposes of compulsory acquisition under the NZ Takeovers Code. It will now acquire the remaining ordinary shares from those who did not accept the Offer. As well as Australian brands, Bapcor has New Zealand footwear brands Number One Shoes, Hannahs, Pulp and Hush Puppies and the specialist international resource service brands Contract Resources and TBS Group.

Fletcher Steel Buys Its Mt Wellington ColorCote Site

Fletcher Steel Ltd (various overseas 35%, NZ Public 28%, Australian Public 19%, North American Public 18%) has consent to acquire approx. 1.3 hectares at 968 Great South Road, Mount Wellington, Auckland from Great South Rd Equities Ltd (NZ 100%). This purchase is made to secure a longer tenure to better ensure the long-term security of its steel manufacturing plant operating on the land and give confidence to make more capital expenditure into the business operations. Price withheld. The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with benefits to New Zealand under s.28(e) previous investments, s.28(g) enhance the viability of other investments, and 28(j) oversight and participation by New Zealanders.

No. 968 Great South Rd is the location of Pacific Coilcoaters, manufacturers of ColorCote coloured steel and aluminium roofing and cladding products. “We’re proudly part of Fletcher Steel, a division of Fletcher Building Limited, our country’s largest and most trusted construction and building supplies company”. The seller is a property holding company with two directors who each are directors of over 100 similar companies; no further details.

Aussie Winemaker Matua Buys Grape Supplier’s Vineyards

Treasury Wine Estates (Matua) Ltd (Australian Public 97%, various overseas 2%, NZ Public 1%) has consent to acquire from McKean Estates Marlborough Ltd (Royce Paul McKean, NZ 50%, Susan Mary McKean, NZ 50%), at a cost of:

Approx. 90 hectares at Lot 1 DP 10591 and Lot 1 DP 10842; and
Approx. 149 hectares at Sec 20 Hillersden Settlement (Wairau Valley); and
Approx. 328 hectares at Sec 23 Hillersden Settlement and Sec 3 Block VII Mt Olympus Survey District.

Price $26.87 million. Matua is buying land from which it has been sourcing grapes under a supply agreement. It intends continuing viticulture on the land and processing the grapes at its production facility in Marlborough. This will provide Matua with long-term security of grape supply for its New Zealand wine production.

The transaction satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(v) additional investment for development purposes, s.17(2)(e) walking access, and regulations 28(a) consequential benefits, 28(b) key person in a key industry of a country with which New Zealand will, or is likely to, benefit from having improved relations, 28(e) previous investments, and 28(g) enhance the viability of other investments. Matua began as the first NZ winery producing sauvignon blanc in the 1970s. For its ownership history since then, see April 2001, January, March and June 2002, September 2003, September 2007, March 2009, September 2013 and October 2014.

Germans/Chinese Lease Five Hawkes Bay Blocks For Apples

Apollo Apples (2014) Ltd, wholly owned by T&G Global Ltd (Germany 74%, China 20%, NZ 6%, various overseas 0.1%) has consent to acquire a leasehold interest in 11.07 hectares at 52 Gilligan Road, Pakowhai, Hawkes Bay from GW Harris and GE Pryor Family Trust, in order to develop an orchard. Price was $387,975. Apollo Apples also has consent to acquire a leasehold interest in 25 hectares at 144 Tuki Tuki Road, Haumoana, Hawkes Bay from FJ Moughan & Sons Ltd (NZ 100%) to develop an orchard. Price $1,680,000.

Apollo Apples also has consent for a new leasehold interest in eight hectares at 20 Parsons Road, Meeanee, Napier from Stuart Nagel and Jenelle Nagel as the Nagel Family Trust (NZ 100%) to continue to develop an orchard. Price $820,000. Apollo Apples also has consent to acquire a new leasehold interest in 12 hectares at 42 Richmond Road, Clive, Hastings from Whyte & Co (2004) Ltd (NZ 100%), which it has leased since approximately 2012 to continue to develop an orchard. The price for this was $600,000.

Apollo Apples also has consent to acquire a leasehold interest in 56 hectares at 266 Moteo Pa Road, Puketapu, Hawkes Bay from Matthew William Ebbett, Hamish Scott Gibbs and Dan William Druzianic as trustees of the Matthew Ebbett Family Trust NZ 100%) to develop an orchard. Price was $3,703,159.

All these investments were stated to be likely to create job opportunities, and increase export receipts and royalties for Plant & Food Research (a Crown Research Institute). The transactions satisfied the s.16 criteria of the Overseas Investment Act 2005, with “substantial and identifiable benefit to New Zealand” under s.17(2)(a)(i) jobs, s.17(2)(a)(iii) increased export receipts, s.17(2)(a)(iv) added market competition/productivity, and under Regulations 28(a) consequential benefits, 28(e) previous investments, 28(g) enhance the viability of other investments. The Tuki Tuki Road lease will also benefit New Zealand under s.17(2)(1)(v) additional investment for development purposes.

T&G Global was once Turners & Growers, New Zealand fruit growers, importers and auctioneers since the late 1890s. They started a similar company in Australia in the mid-1930s. Turners & Growers listed on the NZ Stock Exchange in 2004 and German company BayWa acquired 72.5% of its shares in 2012.

It then acquired Delicia produce exporters in 2013 and in 2014 acquired Apollo Apples and opened an office in China to support rapid growth there. In 2015, it rebranded itself as T&G and its Delicia subsidiary as T&G Global, exporting fruit, vegetables, flowers and juice. See also our commentaries of December 1994, March 1997, March and August 2002, March 2012, June 2014, November 2014, October 2015 and February 2016.

US/Canada Financiers Buy 2Degrees And Owner

Alignvest Acquisition Corporation, Trilogy International Partners LLC & Subsidiaries (US Public 40%, Canada Public 21%, Netherlands Public 18%, Cayman Islands Public 9%, NZ Public 7%, various overseas 2%, UK Public 2%) has consent to acquire significant business assets in the following implementation steps, each of which may occur in one or more steps:

up to 100% of securities of TIP (including by way of an increased percentage of its holding of securities of TIP as a result of a redemption of remaining redeemable securities of TIP);
up to 100% of rights and interests in all securities of TINZ; and
up to 100% of rights and interests in all securities of Two Degrees Mobile Ltd.

The vendor is Trilogy International Partners (TIP) LLC (John W Stanton and Terry E Gillespie, USA 40%, US Public 27%, various overseas 6%, First Alaskan Capital Partners-Trilogy LLC, USA 7%, Coastline International Ltd, Cayman Islands 7.12%, Providence Trilogy Cayman Ltd, Cayman Islands 7%, New Island Cellular LLC, USA 5%). Price up to $US266,820,000.

Trilogy International Partners is a US privately-held wireless telecommunications company based in Bellevue, Washington State. It operates in Latin America, the Caribbean and New Zealand. In October 2008 Trilogy got consent to acquire 100% of NZ Communications (originally Econet), the company building the 2Degree network. In 2009 Tesbrit BV (Austria) got consent to acquire 75% of 2Degrees, two months after 2Degrees launched its service. In 2010 Trilogy received consent to acquire 100% of 2Degrees (see our commentaries of November 2009 and January 2010).

AQC is a special purpose acquisition corporation listed on the Toronto Stock Exchange. Using funds raised through its initial public offering, AQC seeks to obtain a controlling interest in 2Degrees. The Proposed Transaction will be effected through a number of implementation steps and will involve (among other steps) the acquisition of 2Degrees securities by entities in the wider TIP corporate group and the acquisition by AQC of securities in the TIP Group. The Proposed Transaction has satisfied the s.18 criteria of the Overseas Investment Act 2005.

AQC is part of Alignvest Capital Management, a Toronto-based investment management firm “with expertise in North American long/short strategies” (i.e. share market gambling). “Its aim is to deliver strong absolute returns in all market environments, with relatively low volatility and low correlation with overall equity market”. Alignvest was set up by Toronto entrepreneur Reza Satchu (whose online marketplace SupplierMarket.com sold for $US925 million) and Tim Hodgson (former head of Goldman Sachs Canada and former special advisor to the Bank of Canada), who are co-founders of Next 36, an entrepreneurial leadership programme.

“By identifying the most promising financial niches – such as Asian funds, private equity, distress lending – and raiding established firms for the top talent to build those portfolios as full equity partners, Alignvest aims to prove that pay-for-performance and entrepreneurial innovation can both win big’ (Rick Spence, Financial Post, 13/2/14). Out of Kiwi phone bills.

Westpac Buying $498 Million Of NZ Steel’s Receivables

Westpac Banking Corporation (Australian Public 77%, US Public 10%, various overseas 7%, UK Public 3%, Hong Kong Public 2%) has consent to acquire significant business assets, being the entire right, title and interest to all debts and other choses* in action relating to those debts arising under, or derived from, contracts in connection with the sale and/or supply of goods and services by New Zealand Steel Ltd (“receivables”); and in respect of a receivable, any encumbrance which is given, or is to be given, as security for that receivable.

The vendor is New Zealand Steel Ltd (Australian Public 55%, various overseas 20%, US Public 16%, UK Public 9%). The price for the transaction may exceed $498** million. *For explanation of “choses”, see https://en.wikipedia.org/wiki/Chose. ** $498 million is the threshold below which Australian non-Government applicants do not require OIO approval. Ed.

Westpac provides a broad range of banking and financial services in Australia and New Zealand, including consumer, business and institutional banking and wealth management services. NZ Steel is the sole producer of steel in New Zealand, producing slab, hot rolled coil and value-added coated and painted products for both domestic and export markets across the Pacific region. Westpac and NZ Steel are parties to a Receivables Acquisition and Servicing Agreement.

Since 24 December 2015, Westpac has been purchasing receivables and related security from NZ Steel, which is a financing transaction for NZ Steel. Under this agreement NZ Steel cannot sell receivables to Westpac if the total value paid or payable exceeds the $NZ498 million threshold for consent under the Overseas Investment Act, unless Westpac has evidence that the purchase has consent – which is the purpose of this application. The transaction satisfied the s.18 criteria of the Overseas Investment Act 2005.

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