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Alliant of the U.S.A. tries to consolidate control of TrustPower
Alliant International New Zealand Ltd, a subsidiary of Interstate Energy Corporation of the U.S.A., has approval to acquire up to 49.5% of TrustPower Ltd for a sum “to be advised”. The OIC states that current overseas ownership in TrustPower is 26% and the proposed acquisition would bring it to 74.1%. Alliant would buy its 48.2% additional shares from the Tauranga Energy Consumers Trust (47.1% of the additional shares), Oceania and Eastern Holdings Ltd of Aotearoa (21.57%) and minor shareholders (Aotearoa, 31.33%). However, nothing is simple where TrustPower is concerned. Alliant is, in the OIC’s usually drearily technocratic words “battling for control of Trustpower” against Australian Gas Light Company (which controls the Natural Gas Corporation in Aotearoa with a 71.6% shareholding, and has recently bought out TransAlta Canada from the controlling shareholding in TransAlta New Zealand Ltd). In August 1999, AGL was also given the OIC’s permission to acquire 49.5% of TrustPower (see our commentary on that month’s OIC decisions). At that time, AGL had 10.16% of TrustPower. Alliant has an agreement with Infratil (Infrastructure and Utilities NZ Ltd) to obtain control of TrustPower, and they work together to fight with AGL over the company. (Infratil actually has a bet both ways: it owns 6.7% of Natural Gas Corporation.) The fight for control took the protagonists to court. In the end they agreed to divide the spoils. In December 1999, AGL, the Rotorua Energy Charitable Trust, Alliant and Infratil agreed to divide the six directorships on the board giving AGL two, Infratil one, and Alliant one (Press, 3/12/99, “TrustPower deal”, p.15). However, in “change in substantial shareholding” notices to the Stock Exchange, Alliant claimed on 28/2/00 to have a “non-beneficial relevant interest” in 59.8% of Trustpower through Utility Investments Ltd, and a beneficial interest in 5.64%. Datex however puts its interest at 25.8%. By 31/3/00 the beneficial interest had risen to 10.4%, and the non-beneficial had fallen to slightly to 56.65%. In the present decision, “Alliant Energy Corporation wishes to rationalise its investment in TrustPower. Currently Alliant holds shares in TrustPower through its subsidiary Alliant International New Zealand Ltd and indirectly through the granting of loans to Utility Investments Ltd to enable it to purchase shares in Trustpower. Alliant considers that it can operate its investments more efficiently by acquiring the shares in UIL and amalgamating AINZ and UIL. This reorganisation will reduce administrative costs and statutory compliance costs for AINZ. AINZ also seeks to increase its shareholding in TrustPower together with such other parties with which it may have an association or who may be a nominee. These include shareholders with whom it has common interests and those with whom it has been battling for control of TrustPower. These parties (Infrastructure and Utilities NZ Ltd, The Australian Gas Light Company and Alliant) have reached a standstill and equalisation agreement in relation to their collective holding in TrustPower. Accordingly, this should lead to TrustPower being better operated because the company’s resources will be able to focus on the company’s performance rather than the boardroom battles that have been occurring.” TrustPower is the fourth largest retailer of electricity in Aotearoa. It owns 3,914 hectares of freehold land as follows, plus five hectares of leasehold land at Opunake power scheme, Taranaki. The freehold land consists of
Asia Pacific Breweries after 100% of DB Group
Asia Pacific Breweries Ltd, which is owned 40% by Heineken NV of the Netherlands, 40% by Fraser, Neave Ltd of Singapore, and the other 20% in Singapore, has approval to acquire up to 100% of DB Group Ltd for $117,496,822. In the event, it only raised its shareholding from 58.39% to 75%, which would have cost it only $47.2 million. DB is the second largest brewer in Aotearoa to Japanese-controlled Lion. The two share most of the market. Asia Pacific announced the offer at the end of January. It was 280 cents per share at a time when the shares were selling for 240 cents. It was “take it or leave it”, with Asia Pacific prepared to accept less than 100%. Largest minority shareholders were Citibank Nominees (4.39%) and an AMP fund (1.47%). However in February, an independent valuation from PriceWaterhouseCoopers put the fair market value in a range between 319 cents and 361 cents, and independent DB directors recommended shareholders not to sell despite PriceWaterhouseCoopers saying there was little prospect of any competing bid. Asia Pacific refused to increase its bid, saying it was 26% above the weighted average market price of the shares for the six months prior to the offer. By the time the offer closed on 27/3/00, it had increased its shareholding to 74.94%, according to a company announcement. The DB Group, under pressure from Lion, imports and supermarket sales, has been through major restructuring in recent months, selling, closing or floating most of its non-brewing functions. Its subsidiary, Corbans Wines Ltd, owns a total of 556 hectares of freehold and 97 hectares leasehold rural land in vineyards as listed below. However DB is currently considering looking for a partner to share the ownership of Corbans, which has fallen behind market leader, Montana. To catch up, Corbans has spent $37.5 million over the last two years in wineries, vineyards and land, and plans further expenditure of $59 million over the next five years. DB recently got out of liquor retailing, selling its New Zealand Liquor subsidiary (which includes the Liquorland franchise with 32 retail stores), and closing its subsidiary, Allied Liquor Merchants. It has also sold its interest in Canterbury Malting Company (as has co-owner Lion Nathan) to the International Malting Company of Milwaukee, U.S.A. (Press, “Malting facilities sold to US”, 11/7/00, p.6). Corbans’ land holdings are listed by the OIC as follows:
(Ref: Press, 2/12/99, “DB Group flattened by big restructuring costs”, p.13; 29/1/00, “Majority shareholder bids for balance of DB”, p.21; 1/2/00, “Corbans may be sold, floated with DB move”, p.14; 16/2/00, “DB outlook will be covered in report”, p.22; 23/2/00, “DB bid too low, say independent valuers”, p.17; 22/3/00, “DB offer will not rise, says bidder”, p.20; 22/4/00, “Corbans partners shortlisted”, p.22.)
Eric Watson and friends prepare for U.S. listing
Qixel Capital Group Inc, which is owned by Eric Watson (71%), Evan Christian (20%), and “other New Zealand interests including Greg Cross, Nick Gordon and Maurice Kidd” (9%), all of Aotearoa, has approval to acquire Qixel Holdings (NZ) Ltd for $1 from Watson, Christian and Gordon. Qixel Holdings apparently is the vehicle for their ownership of EFTPOS and e-commerce company, Advantage Group Ltd, computer services supplier Wang New Zealand Ltd, and computer training company Auldhouse NZ Ltd. Qixel Capital is to be listed in the U.S.A., which “will enable Messrs Watson, Christian and Gordon to maximise the benefits of e-commerce opportunities available by holding their interest in such companies in the United States market, where technology stocks are highly valued and the e-commerce market is highly developed” (not to mention, as we have seen recently, highly volatile). That means Qixel will gradually become overseas owned. News media have reported that Christian, Cross and Watson were pooling their 46.5% shareholding in Advantage in a new company, ePac Holdings, which they “might” list on the U.S. Nasdaq. It would also invest in other e-commerce businesses and “seek international partners”. All very trendy. Christian is chairman of Advantage, and has been a partner with Watson in a number of his adventures, including the purchase and rapid and profitable resale of Dunedin’s United Electricity (see “Power Frenzy: the takeover of the electricity industry”, in Foreign Control Watchdog no. 90, April 1999). Gordon is a founder of Advantage. The two own their shareholding in Advantage through Wiltshire Technology Holdings Ltd. Cross is chief executive of Advantage. Christian took control of Advantage in 1998, appointed Cross and began a programme of selling and acquiring businesses. They sold the RMS call centre operation and Hypercom EFTPOS equipment distribution in Australia. The purchases have included Computer Enhancements (a leading bar-code equipment distributor), PEC Retail Solutions (provides software for petrol outlets), Glazier Systems (internet developer and consultant), Dot Webmasters (web-site designer and developer), FlyingPig.co.nz (25%, a retail web site), Strathmore Group (20%, technology investment). It is also setting up an internet “portal” in partnership with Blue Star. It has a staff of 300, including 200 developers. George Soros’s Quantum Emerging Growth Fund has 1.5 million shares in Advantage, as has the Kingdon Capital Management fund (about 3% each). Watson is well-known for skating on thin regulatory ice, but has become very wealthy through a variety of lightening opportunist raids on industries ranging from printing to electricity. He sold most of his empire at one stage to U.S. Office Products, but bought some of it back when that ran into difficulties. (See for example our commentary on his purchase of appliance retailer, Pacific Retail, in February 1999.) He has 12% of Advantage, and owns many of his shares through Cullen Investments and Calibre Investments. Wang New Zealand began life as a subsidiary of the (then large) U.S. computer firm, Wang Laboratories. When the parent went bankrupt, Wang New Zealand went its own way, offering services – including facilities management and software development – rather than Wang computer systems. It also owns computer training company, Auldhouse NZ Ltd. Wang New Zealand was owned by Watson’s Blue Star when it was bought by U.S. Office Products, but Watson has taken control again. (Ref: Press, 16/11/99, “Advantage to ePac”, p.13; 30/11/99, “IT-training sector more competitive”, by David Armstrong, p. 14; 11/12/99, “Internet’s golden Web: how to take Advantage”, by Neill Birss, p.26; 15/12/99, “Wang right in NZ, wrong abroad”, p.21; 19/2/00, “Soros tops up Advantage”, p.26.)
Downer’s Works Infrastructure buys Bitumix from BP
Works Infrastructure Ltd (formerly Works Civil Construction Ltd) has approval to acquire Bitumix Ltd and bitumen port plants in Mt Maunganui, Napier, Lyttelton and Bluff from BP Oil New Zealand Ltd (subsidiary of British Petroleum Company Plc of the U.K.) for a suppressed amount. Works Infrastructure is a subsidiary of the Downer Group, which is owned 50% by Paul Y ITC Construction Ltd of Hong Kong and 50% in Australia. The sale includes 61 hectares of freehold land, made up of 1.6 hectares at Totara Street, Mt Maunganui, and 59 hectares at State Highway 6 (Luggate-Cromwell Road) Otago. There is a further eight hectares of leasehold land at Kiwi Point, Ngauranga Gorge, Wellington, and 13 hectares of profit a prendre at Hukerenui, Northland. The sale was publicly announced in December 1999, but not approved by the OIC until February 2000. Bitumix employs 300 people and has annual sales of $90 million (Press, 21/12/99, “Bitumix sold”, p.14). Downer wants to build up its operations in Aotearoa – where it was founded and foundered. The OIC says that the acquisition will give Downer “a fully integrated road construction and maintenance service throughout New Zealand with research, development and technology resources of the highest level in the industry.” As we noted when Downer purchased Works Infrastructure in September 1996:
“It is advised that Downers see the proposal as a way to extend its business activities in New Zealand which in turn will create one of the largest contracting companies in New Zealand, whilst at the same time allowing Downer to become a nation-wide New Zealand construction company.”
“Both Paul Y-ITC and Downer carry on business in the project management, civil engineering and building construction field. The Commission is advised that approximately 50% of Downer’s work is now Hong Kong based and with the increasing importance of Hong Kong sourced work Downer is more likely to flourish if merged with and becomes a subsidiary of a well recognised Asian construction company.”
ANZ Bank sets up local trust for ANZ shareholders in Aotearoa
The Australia and New Zealand Banking Group Ltd of Australia (ANZ) has approval to acquire ANZtrac Trust for an amount “to be advised”. The Trust is a copy of the manoeuvres Westpac went to in order to encourage small shareholding in that bank in Aotearoa. It gives people in Aotearoa an opportunity to take a financial interest in the bank without having any control, and helps the bank raise its own capital requirements. In the ANZ case, “Australia and New Zealand Banking Group Ltd seeks to diversify its shareholder base with New Zealand profits and assets. ANZ intends to provide opportunity for local investors to share in the development of the ANZ Group, by issuing in excess of NZ$50 million of capital in New Zealand. This will be done by establishing a unit trust in New Zealand, called the ANZtrac Trust and offering the public units in the Trust that will track the performance of ordinary shares in ANZ. The objectives of this offer are to:
At the time the units are issued, the Trustee of the Trust, as agent for the investors (Unit Holders), will enter into a forward sale and purchase agreement with ANZ (the Principal FSPA). Under the Principal FSPA, the Unit Holders will agree to sell and ANZ will agree to buy the Units for an agreed amount. In addition, the Unit Holders will agree to purchase and ANZ will agree to issue ANZ shares for the same amount. To enable ANZ to meet its obligations under the Principal FSPA it has sought consent to acquire up to 100% of the Units.”
Ngai Tahu sells 2,546 hectare Naseby Forest, Otago, to Malaysia’s Tiong Family
Ernslaw One Ltd, owned by the Tiong Family of Malaysia, has approval to acquire the 2,546 hectare Naseby Forest, Maniototo District, Otago for $3,375,000 from Ngai Tahu Holdings Corporation Ltd. This brings Ernslaw One’s ownership of land for afforestation in the Southland and Otago region to 22,437 hectares.
Weyerhaeuser/RII joint venture buy Kaituna timber mill from McVicar
A joint venture of Nelson Forest Products Company (owned by Weyehaeuser Company of the U.S.A., 51%) and RII New Zealand Forests I, Inc of the U.S.A. (49%) has approval to acquire a timber mill on 29 hectares of land at Mahers Road, Kaituna, Marlborough, for a suppressed amount, from McVicar Timber Group Ltd of Aotearoa. They intend to upgrade and expand it.
Genetic engineering firm, PPL Therapeutics, buys more King Country land
PPL Therapeutics (NZ) Ltd, a subsidiary of PPL Therapeutics Plc of the U.K., has approval to acquire 20 hectares of land at 31 Sandel Road, Whakamaru, King Country for $337,500. The last such purchase by PPL was also at Whakamaru, in February 1998, when we reported that it had approval to acquire 93 hectares of land on Tihoi Road, State Highway 32, at Whakamaru, Taupo for $1,250,000. The rationale was almost identical to this decision, which says that “PPL Therapeutics PLC is a United Kingdom public company primarily involved in the bio-production of commercially valuable therapeutic protein. … PPL intend to acquire the property which adjoins the applicant’s existing farming operations for the purpose of expanding their existing inseminated sheep breeding programme located within the Whakamaru District. It is stated the breeding programme will continue to provide additional employment opportunities to the local community, and require the ongoing introduction of investment capital for development purposes.” New is: “The applicant’s ongoing commitment to its New Zealand operations is evidenced by the intended development of a new milking facility on the property which is planned to be commissioned in 2001.” This is presumably related to PPL’s objective to produce a human protein in the sheep’s milk. It is aiming for a production flock of up to 10,000 (Press, 17/3/99, “Public can comment on cow genetics bid”, p.9). PPL is the company that made headlines by cloning the sheep “Dolly” in the U.K. In May 1996 we reported that PPL Therapeutics had approval to acquire a 58 hectare farm at Whakamaru for $1,050,000. See our commentary for that month for further details.
Lilybank Station owner buys another farm
Lilybank New Zealand Ltd (formerly NZ Trophy Guide Service Ltd) owned by L.Y.A. Poh of Singapore, which owns the controversial Lilybank Station, has approval to acquire another farm in Central Otago. The new acquisition is the Willows deer farm, State Highway 8, Ettrick/Raes Junction, Millers Flat, and covers 279 hectares at a price of $956,250. The function of Lilybank Station appears to have changed. Previously it was described primarily as a tourist operation. Now it is described as a deer farm. The OIC reports that “the property will compliment the Applicant’s existing property, Lilybank Station, which is a deer farm concentrating on breeding high quality deer for export. The acquisition will allow the applicant to obtain economies of scale for its deer farming operation which is primarily geared for exporting deer meat and velvet to Asia.” Poh bought Tommy Suharto’s (Hutomo Mandala Putra) 95% share of Lilybank for $1 in September 1999.
Refusal reversed: four hectares at Prebbleton sold to Australians
R. and P. Elliott of Australia have approval to acquire four hectares of land situated at the corner of Blakes Road and Shands Road, Prebbleton, Christchurch, Canterbury, for $180,000. They propose to “develop the property, in conjunction with the adjoining four hectares that the applicants have acquired, into an intensive market gardening operation producing high yielding vegetable crops”. They “propose to make various capital improvements to and additional investment in the land, including the installation of a well and irrigation system to support the market gardening operation”. They will “employ a part time farm manager along with seasonal support staff.” The proposal was originally put in a quite different form and refused. In December 1999 we reported: R. and P. Elliott of Australia have been refused approval to acquire a lifestyle property in Canterbury. The application was refused “as it was not considered to be in the national interest”. Details of the proposed property and price have been suppressed. However it is not clear from the information provided by the OIC why many other similar applications should not all also have been refused. The Elliotts had proposed “to make various capital improvements to and additional investment in the land, including the installation of a well and irrigation system to support market gardening/crop farming on the property”. The farm would be “run on the basis of a leaseback to local farmers”. They also proposed to “construct two dwellings on the land and to make one of the dwellings available for tourist and guest accommodation.” They would reside in Aotearoa for “approximately six months of each year” and intended to make further investment in industrial land and buildings in Christchurch. The OIC gives the explanation for the reversal of its decision as that in December “it was only proposed to lease the property to a local farmer”. They appear to have dropped the “lifestyle option”, and are now holier than thou: “… the establishment of the market gardening operation will also ensure a high productive utilisation of the land in a locality where more and more properties are being converted to ‘lifestyle’ with the resultant loss of agricultural productivity”.
“Mr McKenna has been CEO of Martinborough Vineyard. He has identified the Te Muna region as further vineyard development area for Pinot Noir and Pinot Gris grape varieties. Mr and Mrs Kirby currently have interests in vineyards in Australia and are keen to obtain the assistance and expertise of Mr McKenna. Mr McKenna and Mr and Mrs Kirby consider that the specific climatic and land conditions which prevail in the Martinborough area make it particularly suitable for the production of Pinot Noir and consider that this grape variety has particular export significance for New Zealand. [They] also intend that a substantial winery will be built on the property. The winery will process the grapes produced from the property and possibly grapes from other growers in the Te Muna region.”
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