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July 1998 decisions Emerald Capital can buy remaining shares in New Zealand Experience Emerald Capital Ltd, which is 90% owned by the Gardiner Group Ltd of Canada, and 10% by Mr G.A. Cumming of Aotearoa, has approval to acquire the 51.8% of New Zealand Experience Ltd that it does not already own. New Zealand Experience owns the controversial Mount Cavendish Gondola on the Port Hills in Christchurch (including four hectares of land) and the Rainbow’s End theme park at Manukau, Auckland (including seven hectares) of land. The price is $2,100,174 for 34% which it is acquiring from Malcolm North, director and former chairman of New Zealand Experience. Despite the OIC decision being made in July, the Press reported the sale of the North shares on 31/3/98 (Press, 31/3/98, “North confirms sale”, p.27). Emerald stated that it had no immediate plans to bid for the remaining 17.8% held by minority shareholders. The sale was with the background of plummeting profitability of New Zealand Experience. Its audited preliminary financial result for the year to June 1998 showed after-tax profit dropped 94.3% to $17,000 compared to the previous year. Dividends were skipped. The directors said the poor result was due to disappointing attendances at Rainbow’s End after a fire, adverse weather and the troubled economy. The Mount Cavendish Gondola was if anything worse off, though showing small signs of improvement. It had been a controversial project from the start, meeting opposition from many in the local community. It was built on summit hills reserve land, and on a particularly sensitive part of it at that, Mount Cavendish, with rare plants on its slopes. The constant noise of the gondola annoyed neighbours in the semi-rural Heathcote Valley. As the Press reports, “attendances dropped consistently since the peak attendance of 240,000 people during the 1992/93 opening season. Budgeted on a patronage of about 300,000 each year, the gondola never reached its target. Instead, numbers continued to drop by 10 to 16% each season” until the current year. One of the many “hobby” shareholders described it as “an unmitigated disaster”. Staff numbers dropped from 72 to seven full-timers. About half the patrons are from overseas. Originally owned by an independent company, it was paired up with the successful Rainbow’s End by Malcolm North in 1995. He had been the owner of the theme park since 1993 and had traded it out of receivership. Instead of the success rubbing off on to the gondola, the gondola dragged down Rainbow’s End. North lost heavily in the sale to Emerald: he bought at between $1 and $1.40 a share, and sold at 11 cents (Press Weekend section, 5/9/98, “Tough climb to profitability on Mount Cavendish”, p.6.) Emerald assert that they will provide the development capital the company needs, though whether they are able to do anything for the company is less than clear: they have had plenty of opportunity through their controlling 48% interest since 1996 (see our commentary for June that year). In May 1998, Emerald bought venture capitalist, Direct Capital Partners. AMP, Goldman Sachs finance management buyout of McKechnie Pacific (NZ) In what is described as “a management buyout of McKechnie Pacific business operations in both New Zealand and Australia”, MCK Holdings (NZ) Ltd has approval to acquire McKechnie Pacific (NZ) Ltd for $124,540,387 from McKechnie Plc, of the U.K. MCK Holdings is owned as follows:
We assume GS Private Equity Fund is a Goldman Sachs subsidiary, and wish McKechnie’s better than Skellerup/Maine Investments’ experience. The sale also includes a total of 15 hectares of freehold land in New Plymouth, and two hectares of leasehold land in New Plymouth and Pakuranga. McKechnie Pacific deals in metal products. Richard Ellis buys out its Aotearoa subsidiary CB Richard Ellis Inc, owned by CB Richard Ellis Services Inc of the U.S.A., is “consolidating the existing business operations of Richard Ellis in New Zealand and Australia under a single management structure” as part of an international restructuring. Accordingly the company has gained approval to acquire the business assets and undertakings of Richard Ellis Agency Ltd and Richard Ellis Ltd in Aotearoa. The two companies were owned by Brian White of Australia (holding 44.96% and 44.91% respectively), Relam Amsterdam Holdings BV of the Netherlands (25.01% and 25.03%), and the McKellar Family Trust (19.98% and 20%) and the Steur Family Trust (9.99% and 10%) of Aotearoa. Brian White is Chairman of Richard Ellis Australia. Michelle McKellar is the Managing Director of the New Zealand group’s Auckland office, and Mike Steur is in charge of Professional Services in that office. (ref. http://www.richardellis.com.au/services.asp and http://www.richardellis.com.au/offices/nz/auc.asp). The New Zealand group has offices in Wellington and Christchurch as well as Auckland. In Australasia, it has 16 offices, 80 directors and 500 staff. It was established in Australia in 1965 and in Aotearoa in 1988 (http://www.richardellis.com.au/about.asp). CB Richard Ellis describes itself as “the world-market leader in real estate services. Headquartered in Los Angeles with over 9,000 employees worldwide, the company serves real estate owners, investors and occupiers through over 200 principal offices in 29 countries. The company’s core services portfolio includes property sales and leasing, property management, corporate advisory services and facilities management, mortgage banking, investment management, capital markets, appraisal/valuation and market research. “By a number of measures – revenues, transaction volume, employees and company-owned principal offices – CB Richard Ellis is the largest vertically integrated commercial real estate services firm in the world. CB Richard Ellis was created in May 1998 after CB Commercial, formed in 1906, acquired REI Limited, the holding company for all Richard Ellis operations outside of the United Kingdom. CB Commercial and REI had combined 1997 revenues of $848 million. “In 1997, CB Commercial completed 22,100 sale and lease assignments, with an aggregate consideration value of approximately $24 billion, and nearly 3,700 appraisal and consultation assignments. The company placed over $5 billion of commercial debt (including 1998 acquisitions by the company’s mortgage banking subsidiary, L.J. Melody & Company) and $9 billion of equity in 1997. The company’s property and corporate facilities management portfolio is 432 million square feet. The company’s investment management business (CB Richard Ellis Investors) manages approximately $4.5 billion of real estate assets.” (http://www.cbcommercial.com/corp/shareholder.htm) CB Hillier Parker Limited is another member of the group according to the company’s SEC filing. The original Richard Ellis company, based in the U.K., also describes itself as “one of the world’s largest real estate organisations… represented in all major financial centres”. This includes “some 56 offices in Europe, the Americas, Australia and the Far East.” In Asia it is represented in New Delhi, Bangalore, Mumbai, Tokyo, Hong Kong, Greater China, Singapore, Taipei, Jakarta and Bangkok. It was founded in the City of London in 1773 but this year merged with Insignia/ESG, combining “one of the world’s foremost commercial advisors with one of the top commercial real estate service firms in the United States” http://www.richardellis.co.uk/ and http://www.indialog.com/palmasgoa/profile.htm). Internatio-Muller buys BP Chemicals Internatio-Muller Australia/New Zealand Pty Ltd, which is owned by Internatio-Muller NV of the Netherlands, has approval to acquire BP Chemicals ANZ Ltd for $10,479,975 from BP New Zealand Holdings Ltd, in turn owned by British Petroleum Company Plc of the U.K. In the June 1996 OIC decisions, we reported that I-M Australia/New Zealand Pty Ltd, ultimately owned by Internatio Muller N.V. of the Netherlands, had approval to buy Swift New Zealand, a division of New Zealand Food Industries Ltd, owned by Burns Philp and Co. Ltd of Australia. The price (only released in February 1998) was $8,806,000. In March 1995, ICI bought Chemical Cleaning Ltd from Burns Philp. BMW takes back 49% of BMW Financial Services from Allied Finance BMW New Zealand Ltd, a subsidiary of BMW AG of Germany, has approval “to acquire up to the remaining 49%” of BMW Financial Services New Zealand Ltd from Allied Finance Ltd for a suppressed price. “In 1993, BMW and Allied Finance entered into a joint venture arrangement intended to govern the relationship between the two shareholders and the ongoing operation of BMW Financial Services. This arrangement included standard pre-emptive rights provisions and also enabled either party, at any time after 31 December 1997, to give written notice terminating the joint venture arrangement. It is advised BMW has now given notice terminating the joint venture with Allied Finance. It is proposed that BMW will acquire Allied Finance’s 49% shareholding…” Endeavour Services Corporation of the U.S.A. acquires land in Rotorua Endeavour Services Corporation Ltd has approval to acquire “approximately 0.1110 hectares” of land at 76 Pururu Street, Rotorua, Bay of Plenty, for $39,000. The land is to enable the expansion of the company’s existing factory on adjoining land, and adjoins a reserve. Endeavour is a subsidiary of Alsco Linen Service Pty Ltd, itself a subsidiary of the Steiner Corporation of the U.S.A., which is 80% owned by the George A. Steiner Trust, whose beneficiaries are the descendants of George A. Steiner. “The acquisition of the land represents the completion of the transaction initially contemplated in May of this year whereby Alsco was to acquire the Young Nick “Group” including the shares in Endeavour Services Corporation Ltd, which operates in New Zealand within the textile industry, namely: NZTS [New Zealand Towel Supplies], Deane Apparel and Endeavour Properties.” NZTS is the largest towel supply business in Aotearoa. We have no record of the OIC approving such an acquisition in May. In February 1998, Endeavour was owned by Neal Hutton Plowman and family. According to NZPA (Press, 19/5/98, “Plowman reward in Endeavour”, p.18), the Steiner Group offered around $200 million for Endeavour. Indonesian starts to subdivide Closeburn Station, Queenstown In April 1998, RMI Resources Ltd, the principal shareholder of which is David Salman, a national of Indonesia, gained approval to acquire the 935 hectare Closeburn Station on Glenorchy Road, Queenstown, Otago. Closeburn is owned through J. F. Investments Ltd, and RMI acquired 70% of it. The remaining 30% is owned by D. Bloomfield of Aotearoa. The proposal provided for a 21-27 lot residential subdivision of nine hectares. $5.5 million is expected to be raised from the subdivision which will be invested in farming on the Station. “The lots themselves will be marketed towards buyers looking to become part of the concept of a marriage of the protection of a high country farming station, conservation values and lifestyle living. The establishment and sale of the residential lots will provide capital that will enable the farming operation of ‘Closeburn Station’ to be preserved, developed and operated as an economic unit.” This month, the first three approvals are given for the sale of such blocks:
Each will also acquire “an undivided 1/27th share in 926 hectares of land being the area of Closeburn Station not set aside for residential development”. It adjoins land held for conservation purposes under the Conservation Act 1987. In each case, the sale price is $500,000 plus an annual levy of $3,000. Salman has a number of other investments in Queenstown including an interest in 17 hectares of land at Tuckers Beach Road near Queenstown, for residential subdivision; and Woodlot Farm Ltd, a Singapore/Indonesia owned company involved in a golf course and housing development near Queenstown. U.S. owner buys second Taihape farm to help his bulls mate David Dean Smith of Oregon, U.S.A. has gained approval to acquire a property near his existing 86 hectare Taihape stud in order to keep mating bulls apart and thereby enhance their mating “efficiency and productivity”. In this decision, he bought 11 hectares of land at the corner of Paengaroa and State Highway One, Taihape, for $128,000. It includes a house “which is able to be utilised in conjunction with the 86 hectare cattle farming unit” about 1.1 km away. Smith obtained consent to buy the first farm in April 1998 for $375,000. He said then that he intended to run it “as a sheep/cattle farming unit running approximately 850 stock units” and to develop it to carry at least 900 stock units. “Mr Smith has extensive knowledge and expertise of the Simmental pedigree, Arubrc Stud and Brahman Cross cattle breeds” which he intended to develop. He would employ a farm manager for the day-to-day management and operation of the property. In this decision, the OIC reports that “Mr Smith is actively proceeding with establishing two breeding cattle studs on the property he acquired in April. It is stated that due to the value of the animals, it is imperative that the breeding bulls be kept entirely separate during breeding seasons… The acquisition of the second property will enable better security because having two dwellings will ensure at all times the farming operation is properly supervised and it will also ensure that each breed is able to mate without disturbance from the other… The ability to isolate the breeding bulls is likely to enhance the efficiency and productivity of the Simmental Stud operation.” Flight Park in Queenstown sold to Australia-resident Japanese Club Flying Kiwi Ltd, owned by Mr Koichi Yasuda and Miss Miwako Muramoto, “both of whom are Japanese citizens who predominantly live in Perth, Western Australia“, has approval to acquire a “flight park” in Malaghan Road, near Queenstown, for $535,000. The land involved is 22 hectares and adjoins a municipal reserve. The flight park caters for “paragliding, hang gliding and parapenting, winch on site launching, off site launching from a number of elevated peaks in nearby areas.” It has resource consent for tandem hang gliding, paragliding and winch towing, and operates all year round, seven days a week, weather permitting.
Gregory Alan Best of the U.S.A., “whom the Commission is advised has a wealth of knowledge and expertise as a horse rider and trainer of horses” has approval to acquire six hectares of land at Rosser Road, Hastings, Hawkes Bay, for $280,000. The land, currently used for crop farming, will be developed “as a world class equestrian training facility. This will be used for two purposes. First, to train equestrian horses which will be exported to the U.S.A. Second, to train the New Zealand equestrian team for the Sydney 2000 Olympics.” |
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