May 2005 decisionsSerj Tankian refused approval to set up recording studio at Bethells Beach Australians refused retrospective approval for Nelson lodge purchase ING Property Trust buys Urbus Properties Macquarie Goodman buys three properties for Gate Industry Park, Penrose The Quarto Group of the U.K. takes over Premier Books of Auckland Endace Limited gets permission to sell its shares on London AIM exchange
Serj Tankian refused approval to set up recording studio at Bethells BeachIn an unusual case which resulted in upset fans, singer, songwriter, and political activist Serj Tankian has been refused approval to purchase a 14 hectare block of land at Bethells Beach, Waitakere City, to set up a recording studio and “in the medium term”, live there.
Tankian, who lives in the U.S.A. but is of Armenian descent and was born in Beirut, applied to acquire 14 hectares at 18 Kokako Road, Bethells Beach, Waitakere City, Auckland for $890,000 from James Frederick Sutherland Wilson and Dominic George Sutherland Wilson of Aotearoa.
The OIC stated:
The Applicant is an internationally renowned singer and songwriter, most notably for the band System of a Down. The Applicant’s business interests include his record label Serjical Strike Records (SSR) which gives bands opportunities to make records, and promote, market and distribute these records in the United States of America.
The property, which is mostly bush covered, is currently utilised for residential purposes. The Applicant proposes to incorporate an acoustic recording studio in the existing house for his personal use and for recording new artists in New Zealand. In the medium term the Applicant proposes to become resident in New Zealand. The recording studio will be owned and funded by SSR. The Applicant and SSR plan to identify New Zealand musicians to record song demos in the studio and seek record deals in the United States of America for those artists, as well as recording his own projects in the studio. The Applicant also intends to rent out the studio in the early stages of the development to provide New Zealand musicians further opportunities to record their music.
The Commission is not satisfied that the proposal is in the national interest having regard of the matters listed at section 14E of the Overseas Investment Act 1973.
Section 14E lists “matters to be taken into account in determining whether overseas investment in land, other than farm land, [is] in [the] national interest”. They cover the creation of new job opportunities, the introduction of new technology or business skills, the development of new export markets, added market competition, greater efficiency or productivity, or enhanced domestic services, additional investment for development purposes, increased processing of primary products, whether the overseas person intends to reside permanently in New Zealand, “such other matters as may be prescribed”, and “such other matters as the Minister [of Finance] and the Minister of Lands, having regard to the circumstances of the particular overseas investment, think fit.” While many land purchases are approved satisfying these criteria in only the skimpiest way, the OIC gives no clues as to how Tankian failed.
However in a New Zealand Herald interview, Tankian appears to accept responsibility for the rejection: he didn’t want “a governmental body checking up on me yearly and applying scientific methods to finding good music, making records, and distributing them internationally, just so I can be able to live in that house.”
Tankian told the Herald: “I have learned an important lesson. I cannot place myself in any situation where someone else’s decisions will affect my home.” The OIC “wanted annual reports on his activities in New Zealand”, according to the Herald (now a standard practice). Tankian said: “I was cool with the first three years, but they wanted to be able to renew their ability to get reports from me and decide if I was compliant with the application.”
Tankian said he had “fallen in love with the spirit of New Zealand”, speaking of “political neutrality, cultural awareness, and environmental respect among [the attractions]”. Nonetheless he “commended New Zealand officials for protecting the country’s land and resources”. He had had a character reference from Neil Finn. (New Zealand Herald, “Singer to fight on over NZ property”, by Louisa Cleave, 12/7/05, http://www.nzherald.co.nz/category/print.cfm?c_id=100&objectid=10335366)
According to the online encyclopaedia, Wikipedia (http://en.wikipedia.org/wiki/Serj_Tankian):
Serj has spoken out against violence and injustice abroad. On September 13, 2001, shortly after the attacks of September 11, 2001, Serj penned an essay, which he posted on the official System of a Down website, titled “Understanding Oil”. Promptly removed by Sony, the essay was seen by many, still shaken by the attack, as justification for the terrorists’ actions, though this wasn’t what Serj was trying to put across.
More recently, Serj has partnered with Tom Morello of Audioslave (formerly guitarist of Rage Against The Machine) to create Axis of Justice, an activist organization aimed at motivating youth interest in politics. On January 3, 2003, Serj and Tom led a protest march in Santa Monica, California handing out bagged lunches to the homeless in violation of a city ordinance that requires charitable organizations, while handing out food in public, to follow restaurant code.
Comparisons were made between the refusal of Tankian’s application, and the acceptance (subject to conditions) of middle-of-the road singer, Shania Twain. However, it appears to be Tankian’s refusal to accept conditions that led to the rejection. [Decision number 200510068.] Australians refused retrospective approval for Nelson lodge purchasePeter Ronald Alfred Falk and Suzanne Myerson Falk of Australia have been refused retrospective approval to acquire 25 hectares at Waiwhero Road, Ngatimoti, Motueka, Nelson for $740,000 from Leon Vince McKay and Moyra Anne McKay, Charles Nelan Cabraal and Anthony Thomas Sullivan of Aotearoa.
The OIC states:
The Applicants propose to undertake improvements to the 2 bedroom cottage situated on the property to operate a tourist accommodation business. It is proposed that a nearby property will provide a cottage and a homestay as overflow accommodation. The property is located close (3 minutes walk) to the Motueka River, Ngatimoti, which is an internationally recognised fly fishing river. The Orinoco River runs through the property and contains a small trout population. In addition to the two bedroom cottage, the property contains a separate workers’ accommodation with three bedrooms. Approximately 6 hectares of the land is used for run-off grazing and this use will continue. The Applicants describe the condition of the buildings as poor and state that the property is not currently economically viable for agricultural uses.
The Commission is not satisfied that the proposal is in the national interest having regard of the matters listed at section 14E of the Overseas Investment Act 1973.
The application appears to have been dated 2004. It is not clear whether the property has already been purchased. [Decision number 200510069.] INL and Sky TV mergeRupert Murdoch’s empire, News Corporation, has approval to acquire “Merger Company 2005 Limited” for $554,713,815 from its existing shareholders, which, other than News Corporation itself are minority shareholders in Australia (17.2%), The Todd Corporation Limited of Aotearoa (19.68%), and minority shareholders in Aotearoa (63.12%).
According to the OIC, News Corporation is owned 45.5% by minority shareholders in the U.S.A., 29.5% by the Murdoch family of Australia (despite Rupert Murdoch now being a US citizen), and 25% by minority shareholders in Australia.
The merger is a result of Murdoch’s main local arm, Independent Newspapers Limited (INL), selling off its newspapers to Fairfax of Australia in 2003. Its other main investment was Sky TV, and some form of rationalisation of the two operations was inevitable. “Merger Company 2005 Limited” will eventually be renamed Sky Network Television Limited.
The OIC states: The Applicant (News), through a wholly owned subsidiary, is the owner of approximately 43.7% of the ordinary shares of Independent Newspapers Limited (INL). INL is the owner of approximately 78.4% of the ordinary shares of Sky Network Television Limited (Sky).
INL and Sky propose to merge by way of a High Court approved scheme of arrangement under Part XV of the Companies Act 1993 (the Scheme). Under the Scheme, Merger Company 2005 Limited (MergeCo) will acquire all of the shares in INL and all of the shares in Sky except those Sky shares held by INL (which will be cancelled) for a combination of cash and shares in MergeCo. MergeCo, INL, and Sky will then be amalgamated under the Scheme, with MergeCo continuing as the amalgamated entity and renamed as Sky Network Television Limited. It is anticipated that News will acquire 43.6% of the shares in MergeCo.
INL has been a shareholder in Sky since September 1997. INL agreed to sell most of its publishing assets to Fairfax New Zealand Limited in April 2003. The sale was completed on 30 June 2003, when INL ceased to have its own business operations and became an investment vehicle with its only assets being cash and its shareholding in Sky. After considering a range of alternatives INL concluded that a merger by way of a scheme of arrangement was the optimal method to rationalise INL and Sky’s ownership structures. [Decision number 200510062.] ING Property Trust buys Urbus PropertiesING Property Trust Holdings Limited has approval to acquire Urbus Properties Limited for $286,077,648. Urbus was owned 99.02% in Aotearoa, 0.98% by “various overseas persons”. Urbus owns properties including:
11.2 hectares comprising: · 0.2 hectares at 1 Elizabeth Street, Tauranga, Bay of Plenty; · 1.6 hectares at 101 Garnett Avenue, Hamilton, Waikato; · 4.3 hectares at Waitakere Plaza, 5 Vitasovich Avenue, Auckland; and · 5.2 hectares at Albany Mega Centre, 140 Don McKinnon Drive, Auckland
Although ING Property Trust is formally owned 99.75% by minority shareholders in Aotearoa and only 0.25% by “various overseas persons”, it apparently required this approval from the OIC because it is managed by an overseas company, half owned by the ING group:
The Applicant is a wholly owned subsidiary of the ING Property Trust (ING), a unit trust listed on the New Zealand Stock Exchange. The manager of ING is ING Property Management Limited which is owned 50% by Symphony Investments Limited and 50% by ING (NZ) Limited whose shares are owned by ING (Australia) Limited.
In effect it is simply an investment arm of the ING group.
The Applicant proposes to make a scrip takeover offer for all the equity securities in Urbus Properties Limited (Urbus), a company listed on the New Zealand Stock Exchange. The offer is conditional upon acceptance being received in respect of 90% of Urbus’ ordinary shares, and 50% of Urbus’ convertible notes and mandatory convertible notes, and obtaining OIC consent to the transaction.
The ING Property Trust is the fourth largest property fund listed on the New Zealand Stock Exchange by market capitalisation. The acquisition of Urbus, the fifth largest property fund listed on the New Zealand Stock Exchange by market capitalisation, meets ING’s objective of growing the asset base and income of the Trust through property and corporate acquisitions and through active management.
The success of the takeover offer was announced on 24 June 2005 (http://www.urbus.co.nz/defaultx.htm). [Decision number 200510065.] Macquarie Goodman buys three properties for Gate Industry Park, PenroseMacquarie Goodman Nominee (NZ) No 2 Limited as nominee of the Macquarie Goodman Property Trust and Macquarie Goodman Industrial Trust has approval to acquire three leased properties in Penrose, Auckland to expand The Gate Industry Park which adjoins them.
In each case, the approval is “To acquire an estate or interest in land which (together with any associated land) the land value exceeds $10 million.” In each case, the actual purchase is well under $10 million: it is the aggregate value of the various properties (including what Macquarie Goodman already owns) that brings it within the Overseas Investment Act 1973. Such transactions will not be requiring approval under the new 2005 Overseas Investment Act: the $10 million absolute threshold for land no longer exists.
The three properties (all in Penrose, Auckland) are as follows: · 0.3 hectares of leasehold at 381 & 385 – 387 Neilson Street for $995,000 from Paul Hugh Morrison and Robyn Heather Garvan of Aotearoa. [Decision number 200510071.] · 0.2 hectares of leasehold at 383 Neilson Street for $388,000 from Raelene Mary Arthur and Malcolm George Arthur of Aotearoa. [Decision number 200510072.] · 0.6 hectares of leasehold at 393-399 Neilson Street for $775,000 from Wilberforce Securities Limited of Aotearoa. [Decision number 200510073.]
Macquarie Goodman Nominee (NZ) No 2 Limited is owned 55.55% by minority shareholders in Australia, 4.25% by Macquarie Bank Limited of Australia, 5.06% by the Goodman Family of Aotearoa, 35.11% by minority shareholders in Aotearoa, and 0.03% by “Various overseas persons”.
In all three decisions, the OIC states:
The Applicant has entered into an agreement to acquire the land as a nominee. The nominated purchaser and ultimate owner of the land are the trustees of the Macquarie Goodman Property Trust (MGP) and the Macquarie Goodman Industrial Trust (MGI).
MGI is an Australian listed unit trust which invests in industrial properties in Australia and New Zealand. MGI is managed by Macquarie Goodman Funds Management Limited (MGFM), which is a subsidiary of Macquarie Goodman Management Limited (MGM). The securities in MGI and MGM have been stapled and trade as a single security referred to as the Macquarie Goodman Group (MGQ).
MGP is a New Zealand listed unit trust which has various property investments in New Zealand. MGP is managed by Macquarie Goodman NZ Limited (MGNZ), which is a subsidiary of MGM.
The Applicant advises that the acquisition provides it with an opportunity to expand The Gate Industry Park which adjoins the property by constructing commercial/industrial warehousing. The acquisition will promote the Applicant’s strategy of owning well-located, good quality commercial property for lease to its customers. The Quarto Group of the U.K. takes over Premier Books of AucklandThe Quarto Group, Inc of the U.K. has approval to acquire Premier Books Limited, including 0.5 hectares of leasehold at 36 Apollo Street, Mairangi Bay, Auckland, for $5,600,000 from its shareholders Michael Francis McDonald and Christine McDonald as trustees of The MF McDonald Family Trust (40.88%), Grant Simon Letica and Derek Vincent Letica and Colin Joseph Botica as trustees of The Grant Letica Family Trust (32.25%), and Peter Robert Cunningham and Richard Taaffe Beckett and Patricia Beckett as trustees of The Tiri Trust (26.87%), all of Aotearoa.
According to the OIC,
The Applicant (Quarto) is an international book publisher and producer which has structured its business into two separate divisions: International Co-Edition Book Publishing and the Publishing Division. Quarto is based primarily in England and has businesses in the United States of America, Australia, Hong Kong, and Singapore. Quarto currently has no operations in New Zealand.
Premier Books is “a New Zealand based importer and distributor of books, gifts, and stationery items”.
The proposed acquisition is part of Quarto’s growth strategy to increase its distribution activities throughout the world through a combination of organic growth and selective acquisitions.
Quarto is owned as follows, all of the U.K.: 26.6% – JO Hambro Capital Management 15.3% – Laurence F Orbach 7.7% – Herald Investment Trust 7.5% – Robert J Morley 6.9% – Liontrust 36% – minority shareholders [Decision number 200510061.] Endace Limited gets permission to sell its shares on London AIM exchangeThe OIC has given approval to “Unknown Overseas Persons (Endace Limited)” to acquire up to 49.7% of Endace Limited for $55,200,000 from existing shareholders in Aotearoa.
According to the OIC,
Endace Limited (Endace) is a New Zealand incorporated company that owns a group of companies that provide computer network security and related systems throughout the world. Endace intends to seek admission to, and list on, AIM in June 2005. AIM is an alternative exchange listing for small fast growing companies operated by the London Stock Exchange. To facilitate the listing, Endace will undertake a placing of new ordinary shares and existing shares which may result in Endace becoming an overseas person because 25% of its capital will be owned by overseas persons.
Endace believes that the placing of shares will give Endace access to liquidity in order to fund its growth strategy and position itself as a more effective and efficient competitor in global markets including product development and developing distribution channels.
The approval is subject to a condition that any overseas person who subscribes for 25% or more of the specified securities of Endace, or obtains the right to control 25% or more of Endace, must obtain a separate consent from the Commission. [Decision number 200510074.] Land for forestry· Juken New Zealand Limited, owned by Wood One Company Limited (85%), Yusho Nakamoto (13%), and Toshio Nakamoto (2%), all of Japan, has approval to acquire 306 hectares at Waimata Valley Road, Gisborne for $765,000 from James Robert Jones of Aotearoa. According to the OIC: “The Applicant proposes to acquire the subject property which contains approximately 243.7 plantable hectares. Approximately 48.7 hectares was planted in forestry between 9 and 14 years ago. The Applicant intends to plant a further 195 hectares in forestry in 2006. The acquisition will provide the Applicant with a further secure supply of wood which will be processed at its Gisborne processing mill. This will ensure continuity of processing and employment at the Gisborne mill and will enable future expansion of the value-added production at Gisborne.” [Decision number 200510063.] Land for wine· Allied Domecq Wines (NZ) Limited, owned by Allied Domecq Plc of the U.K., has approval to acquire 30 hectares at Lanark Lane SH 63, Renwick, Marlborough for $4,961,250 from Anthony Montgomery Beverley and Wendy Meryle Beverley of Aotearoa. The OIC states: “The Applicant’s principal operations in New Zealand are the growing of grapes, production of wine, buying wine and the wholesaling and retailing of wine and other beverages in New Zealand and overseas. The Applicant is the largest participant in the New Zealand domestic wine business and future growth opportunities are limited. The Applicant has identified the acquisition of further vineyards or land for development for the growing of grapes as a way of being able to compete more effectively in the national and international wine markets. The proposed purchase will provide the Applicant with an increased grape supply which will enable it to continue to develop its export wine markets and enhance the reputation of New Zealand wine overseas. The ongoing development is likely to result in the introduction of development capital, increase in employment, processing of grapes and export volumes. The land is currently planted by the vendor in Sauvignon Blanc and Pinot Noir. The Applicant proposes to establish the entire property in Sauvignon Blanc.” [Decision number 200510060.] · Lion Nathan Limited, which is owned 46.13% by Kirin Brewery Company Limited of Japan, 46% by minority shareholders in Australia, 0.47% by “Persons who may be ‘overseas persons’”, and 7.4% by minority shareholders in Aotearoa, has approval to acquire 25% of Waihopai River Vineyards Limited for $2,250,000 from Kiwi Vineyard Limited which is owned 34% each by Stephen Leonard Lock and Rebecca Audrey Marie Lock, and 32% by Brent John Marris, all of Aotearoa. The company has a 60% interest in 258 hectares at Guernsey Road, Blenheim, Marlborough. According to the OIC, “The Applicant is building an Australasian based premium wine company, as evidenced through the acquisition of the New Zealand based Wither Hills group, and the Australian wine businesses – Banksia and Petaluma. The Applicant proposes to acquire a 25% interest in Waihopai River Vineyard Limited (Waihopai Vineyard). Waihopai Vineyard owns a 60% share of the subject land and Waihopai River Estate Limited (Waihopai Estates) a 40% share. The land is being subdivided into two portions, with 60% (approximately 154 hectares) being set aside for a vineyard development by Waihopai Vineyard. The remaining area of land is being set aside for a rural farming/lifestyle development by Waihopai Estates. This acquisition by the Applicant is intended to complement the Applicant’s existing Marlborough vineyards.” Marris is the founder and winemaker of Wither Hills, now owned by Lion Nathan (see the April 2005 decisions). [Decision number 200510064.] · Morton Estate Wines Limited, owned by the Coney Family of Canada, has approval to acquire 45 hectares of leasehold at 367 Upton Downs Road, Awatere Valley, Marlborough for $839,756 from Ian Leslie Souness and Alison Hilda Souness of Aotearoa. The OIC states: “The Applicant is one of New Zealand’s leading wine producers with an established winery in Katikati and vineyards located in the Hawkes Bay and Marlborough regions. It has identified the acquisition of further land for viticulture development as being vital to ensure its continued viability and competitiveness in the wine industry. The Applicant proposes to lease, for a term of 34 years, the subject land which is currently utilised for sheep and cattle grazing to undertake a viticultural development containing approximately 32 planted hectares. The land adjoins 193.4565 hectares of land acquired by the Applicant in 2004 for a viticultural development.” [Decision number 200510059.] Other rural land sales· Pukeko Nature Paradise Health & Holiday Farm Limited, owned 50% each by Cornelia Katharina Meyer and Torsten Alfred Willi Meyer of Germany, has approval to acquire 25 hectares at Martin Road, Kaeo, Northland for $250,000 from Harold Bruce Kenney of Aotearoa. The OIC states: “The Applicant’s shareholders who intend to reside permanently in New Zealand propose to acquire the subject property for the purposes of establishing a tourism health retreat bed and breakfast and scaffold storage business. The Applicant’s shareholders intend to apply for New Zealand permanent residency under the Skilled Migrant category. The Applicant’s shareholders are demonstrating a commitment to New Zealand through applying for and taking up New Zealand permanent residency.” [Decision number 200510066.] · William P Allen and Rebecca Allen of the U.S.A. have retrospective approval to acquire Sunnybrook Farms Limited which owns 348 hectares at Cowin Road, Patarau, Golden Bay, Nelson, for $850,000 from Brett Evan Cowin of Aotearoa. The OIC states: “The Applicants propose to implement a farming development programme which will provide for capital investment to restore the property to a fully productive capacity and an increase in productivity. The Applicants also propose to establish a programme named the Sunnybrook Farm Outreach Partnership Programme to provide experiential educational and recreational opportunities for teenagers in collaboration with existing community minded youth programmes, such as Big Brothers Big Sisters and the youth groups of the Anglican church. The Applicants’ proposal includes the creation of a walkway in terms of the Walkways Act 1990 to provide public access to Lake Otuhie. The Applicants have also agreed to enter into a conservation covenant under section 77 of the Reserves Act 1977 to create a buffer zone to protect the margins of Lake Otuhie adjoining the property and to improve riparian cover at the lake margins. The Applicants have agreed to work in conjunction with the Department of Conservation (DOC) to implement the walkway and covenant.” [Decision number 200510070.] · Farhad Vladi of Germany and Andreas Fellmann of Luxemburg (50% each) have approval to acquire 8 hectares at Rapaura Road, Blenheim, Marlborough for $2,953,125 from Kenneth John Prain and Elisabeth Clare Gibson Fulton of Aotearoa. The OIC states: “The Applicants propose to acquire the subject property known as ‘Creekside’ which contains a three bedroom residence which is utilised by the vendors as a residence and homestay accommodation and has 6 hectares established as a vineyard and 1 hectare established in producing olive trees. The Applicants intend to jointly market the property with a luxury accommodation operation situated on the neighbouring property known as ‘The Convent’. The Applicants intend to market the wine and olive oil to European markets.” Vladi and Fellman have other investments in both commercial and rural property in Aotearoa. Vladi specialises in buying and selling islands for the rich. For example, see our commentary for February 2004. [Decision number 200510067.] · Haakman New Zealand Bulbs Limited, owned 30% by Theodorus Martinus Haakman of the Netherlands, 20% by Cornelis Johannes Kruijer of the Netherlands, 17% by Graeme Robert Dodds, 16.5% by Richard Grant Paterson, and 16.5% by Howard James Paterson Estate (the last three all of Aotearoa), has retrospective approval to acquire 6 hectares at 233 Matai Road East, Menzies Ferry, Edendale, Southland for $405,000 from Menzies Dairying Limited owned by Graeme Robert Dodds of Aotearoa. According to the OIC, “The Applicant is a joint venture between Macca Tulip Limited and Haakman New Zealand Beheer Limited. The Applicant acquired the land on 3 December 2002 for the production and storage of tulip bulbs. The Applicant advises that the New Zealand operation is complementary to the existing operations undertaken in Holland by Jn Haakman en Zn Export B.V. The purpose of expanding to grow bulbs in New Zealand is that it enables bulbs to be exported to the northern hemisphere during the northern winter, therefore allowing year round supply. Prior to the agreement being entered into the land was used for grazing stock (mainly deer) and growing agricultural feed crops. Since acquiring the land the Applicant has invested substantial capital into the venture, including the construction of storage buildings and planting tulip bulbs.” Howard James Paterson is presumably the wealthy South Island entrepreneur who died in 2003. [Decision number 200510058.] Summary statisticsAll investments Again the gross value of investment approved in the year to May 2005 is considerably lower than for the previous May year, but the net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) is considerably higher, for the first time this year. This month was big in dollar terms – almost as much as the rest of the year to date.
*In addition there were two retrospective approvals granted during the month. This involved a gross consideration of $1,255,000 and a gross land area of 354 hectares, and a net investment of $1,052,500 (a net land area of 351 hectares). † In addition there was one retrospective refusal granted during the month. This involved a gross consideration of $740,000 and a gross land area of 25 hectares.
Investment involving land Gross sales of land approved by the OIC during the years to May have decreased in area, though net sales are ahead of last year only because last year was negative as recorded by the OIC. This month has the first refusal for the year (still behind last year), and in addition there is one application refused retrospectively – a most unusual occurrence.
*In addition there were two retrospective approvals granted during the month. This involved a gross consideration of $1,255,000 and a gross land area of 354 hectares, and a net investment of $1,052,500 (a net land area of 351 hectares).
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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