December 1996 decisions

December 1996 decisions

This month is notable for the volume of deleted information. Twenty-eight of the 39 decisions had deletions, mostly the consideration for the acquisition. Both numbers are heavily dominated by 18 land sales for gold mining at Earnscleugh, Central Otago.

Fletchers sell Hikurangi Forests to Glenealy of Malaysia to pay for ForestCorp

Glenealy Plantations (Malaya) Berhad, a Malaysian listed company, has approval to buy Hikurangi Forests Farms Ltd from Fletcher Challenge Forests Ltd for $210 million. The “East Coast Forest Estate” owned by Hikurangi consists of “approximately 33,259 hectares“, made up of 29,974 hectares of freehold land, 2,226 hectares of forestry/cutting rights, and 1,060 hectares of leasehold land. Its wish to sell was announced by Fletcher Forests when it purchased the privatised Forestry Corporation, and the price it got for Hikurangi is not far from the equity it put into Forestry Corporation ($240 million) and its promises of new investment ($260 million), although it was significantly lower than what it had been expected to get (about $300 million). The OIC’s information shows the East Coast forests as being considerably larger than press reports which put them at 24,800 hectares or less.

The area, which is mainly pinus radiata with an average age of 14 years, is over 2% of Aotearoa’s plantation forests. It is Glenealy’s first forest purchase in Aotearoa, and the company, which has agreed to abide by the Forest Accord, says it is planning to build a processing plant on the East Coast, although it would be six to seven years before it started cutting trees and decided what to process them into. It has two plywood factories elsewhere. Glenealy is 52% owned by the Samling Group. (Refs: New Zealand Herald, 22/8/96, “BIL able to quit forestry holding in three years”; 6/11/96, “FCL Forests close to Hikurangi sale”; Press, 21/12/96, “Fletcher’s sells East Coast forest to Malaysian company”, p.21.)

So much for the approved version of Glenealy and Samling. The background is tropical timber logging in Sarawak. The following comes from “Malaysian loggers come out of the woodwork: timber boom drives Malaysian companies onto the Stock Exchange”, by Marcus Colchester, World Rainforest Movement, England, 26/9/94 (ref: http://bioc02.uthscsa.edu/natnet/archive/nl/9410/0008.html). Colchester first explains that:

“Sarawak’s foremost logging companies are going global on a massive scale. As prices for tropical timber have skyrocketed Sarawak’s privately owned timber companies are eagerly seeking to take over companies listed on the stock exchange in order to attract shareholder investment into their expanding business empires. One result is that previously low-profile family-run companies, which have shunned exposure in the press, have had to publish more information about their ownership, assets and profits. It also means that these companies are now open to direct investment from northern capital enterprises active on the Kuala Lumpur Stock Exchange.

“Most of Sarawak’s biggest logging companies gained their concessions through political connections to Sarawak’s ruling families from the Malay-Melanau elite. The typical scam was for senior politicians to grant concessions to themselves, their families and cronies, who then went into business with Malaysian-Chinese families with the capital and business know-how to actually exploit the areas. Today, however, these so-called ‘ali baba’ arrangements are going out of fashion – the reason being that all the loggable areas of Sarawak have already been given out.

“As timber prices started to rise in the late 1980s, Sarawakian companies began to look overseas to expand their operations. Timber giant Samling Timbers acquired a 1.69 million hectare concession in Guyana, in partnership with South Korea’s trading house Sung Kyong. The company, probably Sarawak’s largest, now has interest in Japan, Taiwan, South Korea, US and Canada. The Rimbunan Hijau group flooded into Papua New Guinea, where it now controls some 80% of the timber trade, and on into other parts of the South Pacific. The WTK group expanded into Indonesia, Papua New Guinea, Cambodia and Burma. China is now being looked at by a number of the companies for further business opportunities.”

Colchester first details the escapades of the “front runner in this game”, the Rimbunan Hijau group, owned by Sarawakian, Tiong Hiew King and Ahmad Rithauddeen, a Malay ex-Minister of Defense. The Tiongs are of course big investors in forestry, radio, property development and cinemas in Aotearoa.

He then goes on to Samling and Glenealy:

“The Samling Group, owned by Yaw Teck Seng, is following suit [in seeking listing on the Kuala Lumpur Stock Exchange (KLSE)]. The company which controls about 1.5 million hectares in Sarawak until 2013 is seeking listing through three companies, Mun Boong, Glenealy Plantations and Lingui Developments Bhd. By transferring its two main plywood operations – Samling Plywood (Baramas) and Samling Plywood (Lawas) – to Glenealy, Samling now has a 52% controlling stake in the listed company. Samling has also transferred its third main asset, 40%-owned Samling Plywood (Bintulu), to Lingui Developments Bhd. in which the holding company Samling Corporation already holds 32% of the shares. By also transferring to Lingui its 70%-owned logging contractor company Tamex Timber, which logs the Samling Plywood (Bintulu) concession and four other concessions, Samling has acquired a 41% stake in Lingui. In September this year, Lingui bought a 58% majority stake in Glenealy taking it into the top league of corporate giants with massive cash assets.”

According to the KLSE, Glenealy and its subsidiaries’ principal activities and products are logging, processing and marketing of logs, veneer and plywood; extracting and selling of timber; cultivation of oil palm and cocoa. It has 625 employees and its three largest shareholders are the Samling companies Lingui Developments Bhd (36.81%) and Samling Strategic Corporation Sdn Bhd (15.53%), and Perkapalan Damai Timor Sdn Bhd (9.25%) (ref: http://www.klse.com.my/plc/glenealy.html). Glenealy just makes it into the billion-ringgit league for market capitalisation on the KLSE, being number 149 (Business Times, 29/6/96, “Record number of billionaire firms”, by Yong Kwai Meng and Leela Barrok, p. 1, 19, http://www.cmsb.com.my/news/finance/100.htm).

See also our commentary on the August decision on the Forestry Corporation sale.

St Lukes buys Riccarton Mall

St Lukes Group Ltd, a listed company which is 51% owned by BT Funds Management Ltd of Australia (but predominantly owned in the U.S.A.), has approval to buy Riccarton Mall, Christchurch for a suppressed amount. However news reports put the price at $113 million (Press, 15/1/97, “Riccarton Mall sells for $113 million”, p.25). The sellers are Riccarton Mall Shopping Centre Ltd and Prudential No. 5 Fund Nominees Ltd, which are both ultimately owned by Prudential Assurance Company of the U.K. The mall will be St Lukes’ third biggest, and its first in the South Island. It is also the biggest mall in the South Island (ibid. and Press, 15/2/97, “Riccarton joins buoyant St Lukes”, p.27). For more detail on St Lukes (which has been vociferously criticised by retailers for its high rents) and its parent, Bankers Trust, see our commentary on the November 1996 decisions.

As well as the price being suppressed, details of some of the land being acquired (“certain development land”) has also been deleted from the OIC decision released.

U.S.A./Europe consortium buys Mainguard Packaging of Christchurch

RIFGAC 47 Ltd, a Rudd Watts and Stone shelf company owned by Asia Pacific Fund II, an investment fund “whose investors are primarily large U.S. and European Institutional Investors” (sic) has approval to acquire Mainguard Packaging Ltd of Christchurch for an initially suppressed sum, released only in February 1998 as $11,525,000. However, according to the Press (“Mainguard changes hands”, 1/2/97, p.28), the buyers are International Packaging Corporation of Hong Kong and Schroder Capital Partners (Asia), part of the listed British banking group, Schroders Plc. It reports that Mainguard is the fourth largest packaging company in Aotearoa and the biggest in the South Island. It had been owned by the Hawkins family for 30 years and Michael Hawkins would stay on as chief executive retaining all 150 staff. It produces flexible packaging, especially polyethylene and laminated products, including bread bags.

McCains of Canada buys Grower Foods Ltd in Hawkes Bay

McCain Foods (NZ) Ltd, which is owned by the McCain family of New Brunswick, Canada, and is a major food transnational with another vegetable processing plant near Timaru, is buying out Grower Foods Ltd. The amount paid was originally suppressed but partially released in February 1998 as “$3,039,000 for the land with other moneys paid for the other business assets“. All we know is that the total was more than $10,000,000. “Growers Foods Limited is not currently making any profits. By purchasing Grower Foods Limited’s business McCain Foods (NZ) Limited will be ensuring the survival and growth of one of only two vegetable processors in the Hawkes Bay area.” Presumably the other one is Heinz-Watties, so all vegetable processing in the area will be by transnationals.

The co-founder of McCain, Harrison McCain, came to the Hawkes Bay to celebrate the acquisition. He said the company planned to expand the Grower Foods operation. “We are a large volume operator. We cannot fool around.” Production had to be scaled up and costs brought down. McCain was particularly interested in corn production and he expected the Hastings factory to double production to 40,000 tonne annually within five years. Pea production would increase 50% and bean production triple or quadruple. Other possibilities included broccoli, peppers, spinach, broad beans and beetroot (Press, 15/1/97, “McCain plans expansion in Hastings”, p.27).

The deal includes 15 hectares of land at Omahu Road, Hastings.

Triangle Refrigeration of Australia merges with McAlpine Refrigeration

Triangle Refrigeration (Australia) Pty Ltd, a privately owned Australian company, has approval to acquire “up to 50%” of the longstanding locally and privately owned refrigeration manufacturer, Auckland-based McAlpine Refrigeration Ltd. The purchase is actually a merger: the payment is a share swap for 50% of Triangle, valued at “approximately A$6 million“.

“Triangle and McAlpine specialise in the design, manufacture, installation and maintenance of commercial refrigeration and air-conditioning. It is stated the merger is an expansion of their respective product basis in order to obtain economies of scale and to develop their brand in the Asia Pacific region.”

According to the Press (6/11/96, “McAlpine, Triangle merge”, p.27), the new company will have “a staff of 450 and revenue of more than $120 million a year.” Triangle is Australia’s largest refrigeration contracting company and has branches in China and Dubai. It had been installing McAlpine and Hussman cabinets for five years. McAlpine holds the Australian distribution rights for Hussman. Chair of McAlpine is former National cabinet minister, Barry Brill. The company has a cabinet making plant at Tauranga. Holding company, McAlpine Triangle Australasia Pty, will have equal numbers of directors from each company.

Land purchases totalling 408 ha. at Earnscleugh, Central Otago, for gold mine

Earnscleugh Joint Venture, owned 82.35% by Mintago Investments Ltd, itself a wholly owned subsidiary of Perilya Mines NL of Australia, and 17.65% by March Mining (Central) Ltd of Aotearoa, has approval to buy 18 blocks of land at Earnscleugh, Central Otago. “Mintago and March have entered into a joint venture agreement (being the Earnscleugh Project) to establish a substantial gold mining operation in Central Otago.” The blocks of land are as follows:

In February 1998, the prices were released for six of the purchases:

A further two prices were released in August 1998:

Macraes buys more land for gold mining at Macraes Flat, Otago

In a decision originally almost totally suppressed, Macraes Mining Company Ltd has approval to acquire four hectares of land at Macraes Flat, Otago “as part of the ongoing identification of gold resources at the Macraes Gold Project“. The land is being purchased for $285,000 from S. E. Neshausen and R.C. Robinson. Macraes Mining is “approximately 39%” owned by Union Gold Mining NL of Australia. The project is increasingly unpopular with the surrounding community, and Macraes appears to have a practice of asking for complete suppression of OIC decisions.

Other land for forestry

• Carter Holt Harvey, 51% owned by International Paper Products of the U.S.A., is doing two more deals involving land and forestry cutting rights. In the King Country, it is acquiring seven hectares of land for $13,140 plus ten hectares as a “land swap” in order to “create the most practicable boundary” between Carter Holt’s property and that of the vendors which adjoins it. The deal is through subsidiary Carter Holt Harvey Forests Ltd. Carter Holt is also acquiring forestry cutting rights to 117 hectares of land at South Head, Kaipara Head, Waimauku, Auckland for “$18,788.86 plus GST per annum”. The deal is with Omana Farms Ltd and “represents a formalisation of an arrangement between Carter Holt and Omana Farms which has been in existence for a number of years.” The area of the forestry right is adjacent to existing forests owned by Carter Holt.
• Trustwood Forests (Kiteroa) Ltd, which owns a 1,450 hectare pinus radiata forest in Mata Survey District, East Cape, Gisborne, is selling a half interest in 249 hectares of it to Galt Holdings Ltd for $292,500. Galt is owned by Joseph Arthur Schudt who is a resident of the U.S.A. with New Zealand permanent residency “and intends to reside permanently in New Zealand … The proposal essentially represents New Zealand interests introducing an offshore partner, who has the financial capacity to assist in the development of the afforestation project, the cost of which is beyond the financial capabilities of the New Zealand parties.” In September, we reported a similar deal: three residents of Belgium gained approval to buy a half share in 555 hectares of land in Ihungia Road, Te Puia Springs, East Cape, for $515,000. They were buying the half share from Trustwood, and the land formed part of a 870 hectare property owned by Trustwood. Approximately 500 hectares had been planted in pinus radiata and Trustwood was selling the share to reduce its indebtedness. It showed that one of the local owners of Trustwood was George Bogiatto who is named this month only as the lawyer who is contact for the application.
• Evergreen Forests Ltd, which is a listed company 62% owned by Xylem Fund I. L. P. of the U.S.A., has approval to acquire 1,144 hectares of land which is part of the Te Marunga Forest, Gisborne. The price was initially suppressed but released on appeal: $2,800,000. Xylem “operates as an investment vehicle for the Public Employees Retirement Systems of Ohio“. The land is being purchased from Te Marunga Forest Partnership, “the ownership of which is vested in Burford Nominees Limited the beneficiaries of which are Mr A. R. Burford and Mr A. P. L. Everist“. “Evergreen state that they will immediately undertake a silviculture programme to restore the property to optimum productivity. Evergreen view the acquisition as a natural extension to its existing forestry operations within the Gisborne region.”
• Yeatman Forests Ltd, owned by the Yeatman Family Trust whose beneficiaries are two residents of the U.S.A., has approval to acquire 568 hectares of land at 832 Huiarangi Road, Napier, Hawkes Bay, for $900,000. The land is currently used for sheep and cattle farming and will be converted to commercial forestry.

Other rural land sales

• Cell phones are coming to Great Barrier Island with a vengeance. Telecom New Zealand Ltd, a subsidiary of Telecom Corporation of New Zealand Ltd of the U.S.A., has approval to lease three blocks of land to expand its cell-phone network on the Island. The price is suppressed in all three cases. The first is of 1.0803 hectares at Fitzroy and is being sold by Orama Christian Fellowship and trustees of the L.A. Bouzaid and M.K. Bouzaid Family Trusts. The second is of 0.0616 hectares at Tryphena, from Mariner Cove Developments Ltd. The third is of 0.0040 hectares at Okupu, being sold by Ben and Jean Sanderson. Telecom Corporation is owned 24.82% each by Ameritech Holdings Ltd and Bell Atlantic Holdings Ltd.
• In a deal apparently brokered by the New Zealand Dairy Board to smooth trade with Venezuela, Mr Alberto Finol of Caracas, Venezuela has approval to buy 109 hectares of land near Whakatane, Bay of Plenty for $2.3 million. “Mr Finol is involved in a joint venture business with the New Zealand Dairy Board which imports substantial quantities of dairy produce from New Zealand to Venezuela and the United States. The New Zealand Dairy Board is anxious to expand the existing business arrangement and views the acquisition as assisting in achieving that goal. It is stated that the proposal is a result of recommendation by the New Zealand Dairy Board that he expand his involvement and association with the New Zealand dairy industry.”
• Corbans Wines Ltd has approval to buy 31 hectares of land in the Turanganui Survey District, Gisborne, for $2,520,000 from “Mr and Mrs Lawry“, and 14 hectares in the Cloudy Bay Survey District, Marlborough, for $980,000 from Farnham Estates Ltd, both “to secure a supply of grapes”. Corbans is a wholly owned subsidiary of DB Group Limited, which is “approximately 58.39%” owned by Asia Pacific Breweries Limited, of Singapore, which in turn is owned 80% by Heineken NV of Holland, and Fraser, Neave Limited of Singapore.
• Morton Estate Wines Ltd as trustee for the Morton Estate Wines Trust has approval to buy 73 hectares of land at No. 50 State Highway, Hastings, Hawkes Bay for $1,265,000 “with a view to it being developed as a vineyard”. “Morton Estate is one of New Zealand’s leading wine producers with an established winery in Katikati and various vineyards throughout the Hawkes Bay and Marlborough regions.” The principal beneficiaries of the Trust are John Mark Coney and members of his family of Canada.
• Two residents of Singapore have approval to buy Henley Downs Holdings Ltd which owns 707 hectares of land approximately 12 kilometres south-east of Queenstown, Otago, on State Highway 6. The land adjoins Lake Wakatipu and Crown land with reserve status. It is being purchased for $2,920,000 for “residential development”.

Siemens and GEC rearrange ownership of GPT Finance (NZ) Ltd

GPT Finance (NZ) Ltd, which is owned 60% by the General Electric Company Plc (GEC) of the U.K. and 40% by Siemens Akitiengesellschaft of Germany, is being sold to Siemens GEC Communications Systems Ltd which is owned 50.01% by Siemens and 49.99% by GEC. The price is suppressed. The “primary business activity” is described as telecommunications.