January 2001 decisionsGovernment changes its mind, allows sale of half of Sealords to Nissui of Japan Visy Packaging of Australia buys packaging business from Southcorp Tasman Agriculture buys another farm in Southland Woollastons in 20/80 vineyard interest with U.S. millionaire Glenn Schaeffer
A quiet month – even overseas investors and the OIC have holidays – only thirteen decisions. Government changes its mind, allows sale of half of Sealords to Nissui of JapanIn the May 2000 decisions we reported the Government’s refusal to allow the sale of Brierley Investments Ltd’s half share in the Sealord Group Ltd to a number of overseas bidders. We congratulated the Government on its decision. It has now reversed the refusal, and allowed one of the bidders, Nissui (Nippon Suisan Kaisha Ltd) of Japan, to purchase the half share. The main change is that most of the fishing quota involved – about 30% of the total Hoki quota that is available and in total, about 25% of all New Zealand’s Total Allowable Commercial Catch – will now be owned by the Waitangi Fisheries Commission and leased back to Sealord. Sealord is easily the biggest fishing company in Aotearoa, and one of the top ten seafood companies in the world.
The price has been suppressed.
That is what reportedly has been agreed will happen. However it is interesting that one of the OIC approvals is considerably wider than that. It is for
“Permission to continue to hold or acquire fishing quota, interests in quota, annual catch entitlement and provisional catch history (collectively quota).”
The quota at stake in that particular decision (one of three that together approve the sale) is the bulk of the fishing quota involved, stated as:
Hoki, 74,843.621 tonnes (leasehold) Squid, 29,308.939 tonnes (leasehold) Other, 50,083.003 tonnes (leasehold)
The fact that it is leasehold is the subtlety that the Ministers (the Treasurer and the Minister of Fisheries) approving the sale clung to. In the May 2000 refusal, a distinction was made between ownership of quota and ownership of the fishing industry (see our commentary). As the Ministers said:
While we accept that there is no necessary linkage between foreign shareholding in New Zealand fish quota and the New Zealandisation of either fishing or fish processing, it is clear to us that past and present government policy nonetheless implies that the relevant property rights should ordinarily be held by New Zealand interests.
We were not satisfied that any of the overseas applications satisfactorily met the required national interest tests to outweigh that consideration.
Leasing appears to have satisfied all their concerns.
Sealord continued to hold “other quota” of 334.2 tonnes. The OIC says:
“This permission is required to enable Sealord to continue to own a small portion of quota in order to preserve certain preferential allocation and compensation rights. Once those allocations are made the quota will be transferred to a subsidiary of TOKM.”
(TOKM is Te Ohu Kai Moana, the Treaty of Waitangi Fisheries Commission.)
The formality of the deal is as follows. Nippon Suisan Kaisha Ltd has permission to acquire 50% of Kura Ltd. The other 50% is owned by Te Ohu Kai Moana. Kura has permission to buy 100% of Te Ika Paewai Ltd (TIPL), the holding company through which TOKM and Brierley Investments Ltd (BIL) owned the Sealord Group Ltd.
We have previously described the tangled net which Brierley Investments and TOKM used to hold Sealord. Te Ika Paewai was 50% owned by TOKM’s subsidiary Te Waka Unua Ltd, and 50% by Basuto Investments Ltd. Basuto is a subsidiary of a Brierley Investments subsidiary, BIL (NZ Holdings) Ltd. Basuto also had the distinction of holding exactly one share in the Sealord Group, while Te Ika Paewai owned the rest of the shares.
But the complications don’t end there. Rather than a straight transfer of interests, what will happen is as follows, according to the OIC:
“TOKM and Nissui have reached an agreement with BIL under which Kura will purchase the 50% of shares in TIPL currently held by Basuto, along with Basuto’s interest in quota and certain intra-group advances. TWU has agreed, on Kura acquiring 50% of TIPL from Basuto, to transfer its 50% of the shares in TIPL to Kura, along with its interest in quota and certain intra-group advances. At this stage, Kura will hold, directly or indirectly, 100% of the shares in TIPL. Kura will nominate Sealord to acquire the beneficial interest in 100% of the Fishing Quota. Sealord and TIPL will transfer the legal interest in the quota to a wholly owned subsidiary of TOKM.”
Part of the sale is seven hectares of land at Clova Bay, which is a mussel farm operation. Clova Bay is in Pelorous Sound, Marlborough.
The essential step in getting the Ministers’ and the OIC’s approval is the transfer of the quota to TOKM – and then leasing it back. As noted above, a separate decision gives approval for Sealord to hold the lease over 25% of the Total Allowable Commercial Catch. A third decision gave Sealord the right to hold “other quota” of 334.2 tonnes (see above).
Unusually, the application for the first purchase was made on behalf of almost all the companies involved: “the Treaty of Waitangi Fisheries Commission (Te Ohu Kai Moana), Nippon Suisan Kaisha Limited (Nissui), Kura Limited, and for the benefit of (from settlement) Te Ika Paewai Limited (TIPL) and Sealord Group Limited (Sealord) (together referred to as the Applicants).”
According to the OIC,
“Nissui is an international fishing company with operations encompassing fresh and frozen fish, processed seafoods and refrigerated warehousing and storage. It also operates a fishing boat owning company based in Nelson. This company currently charters a vessel to Sealord. Nissui was a shareholder in Sealord from 1973 to 1990 and is the second largest shareholder in ANZCO Foods Limited (a New Zealand based meat processor and exporter). It is also a sponsor of the New Zealand Rugby Football Union.”
However,
“Ministers reached their conclusions after considering allegations concerning the nature and extent of Nissui’s involvement in Japan’s scientific whaling programme.”
The benefits (we are told) will be manifold:
(a) the creation of a significant number of jobs in the fish processing and fishing industry in New Zealand, particularly in Nelson and Dunedin; (b) the creation of downstream jobs in service and related industries; (c) consequentially, growth of jobs in New Zealand dependent on the fishing sector; (d) the introduction into New Zealand of new technology and business skills to enhance the value added processing used in the Sealord operation; (e) the development of new export markets for new value added products, particularly for the Japanese consumer market; (f) access to new markets for Sealord products through the enhanced distribution chain associated with Nissui; (g) enhanced competition and better productivity in the fishing industry of New Zealand; (h) the introduction into New Zealand of investment capital for the purposes of significant development in the value added processing end of Sealord’s operations; (i) the increased processing in New Zealand of fish species that have not traditionally been given value added processing; (j) benefits to Maori as they enhance their ability to grow their fishing assets; (k) enhancement of the New Zealandisation of fishing quota ownership compared to if the status quo prevailed and BIL retained its shareholding in Sealord.
We wait to be convinced.
In regard to “New Zealandisation” in (k), what the OIC is bragging about is the leasehold arrangement for fishing quota. In fact the beneficial overseas ownership of the Sealord Group rises from 41.5% to 50% (though that ignores the fact that Brierley Investments was in fact an overseas company, with control no longer in New Zealand – not even to the extent of 8.5%).
For further details of the story, see our commentary on the May 2000 OIC decisions.
In the May 2000 decisions, the names of the companies wishing to buy the Brierley share were suppressed. However, some were released in a letter from the OIC to the Chair of Parliament’s Finance and Expenditure Committee on 20/3/01: Nissui, Sea Harvest Corporation Ltd, and Te Ika Paewai with the others as the 50% owner. A surprise late entry (in June 2000) was Ulwandie Taonga Umbotho Ltd, which withdrew its application without it being approved or refused.
For keen Brierley Investments watchers, its changes in shareholding are chronicled by the OIC. The shareholding given in this decision is significantly different to that in the Tasman Agriculture decision described below. In this decision it is:
46.16% – Unknown, Persons who may be “overseas persons” 24.4% – Malaysia, Camerlin Group Berhad 6.90% – Singapore, Singapore Government 5.54% – France, Credit Agricole Lazard Financial Products Bank 17% – New Zealand, New Zealand Public Visy Packaging of Australia buys packaging business from SouthcorpVisy Packaging Holdings Pty, owned by Richard Pratt and Family of Australia, has approval to acquire the Packaging Business of Southcorp NZ Ltd, owned by Southcorp Ltd of Australia. It includes six hectares at 475A and 475B Rosebank Road, Avondale, Auckland.
The proposal is part of an international transaction whereby Southcorp plans to divest its “Packaging Business” assets. [Visy] views the acquisition as a key means of it achieving its goal to provide, through vertical integration, world leadership in the recycling and packaging industry.
According to Visy’s web site:
Visy Industries was established in Melbourne, Australia in 1948 and has grown to become one of the world’s largest privately-owned paper recycling and packaging companies. In 2001, Visy employs more than 8000 people in Australia, New Zealand, and the USA. Total manufacturing revenues exceed $2.5 billion and total manufacturing assets exceed $3 billion. Visy Industries Australia has a BBB+ investment grade credit rating from Fitch Investors Service of New York.
During its first 30 years of operations Visy Industries’ activities concentrated on the manufacture of corrugated cardboard boxes.
In 1979 the company made a decision to begin supplying its own packaging paper needs and built its first paper recycling mill. The Visy group now operates eight paper recycling machines – six in Australia and two in the USA. Together these machines produce more than 1.2 million tonnes of 100% recycled packaging paper annually.
In February 2001, Visy acquired Southcorp Packaging, now named VisyPak, adding new products such as PET bottles and jars, aluminium and tinplate cans, paperboard cartons and rigid plastic packaging to its core corrugated packaging business. The acquisition effectively doubled the size of Visy’s packaging operations in Australasia.
With the addition of VisyPak, Visy now operates more than 100 packaging factories and recycling sites across Australia, New Zealand and in the South East and Mid West of the United States. (http://www.visy.com.au/Downpage/home_main.asp?Content=4)
In the April 1996 OIC decisions we reported:
Land for forestry· In two approvals, the Lu and Chen Family Trust of Taiwan has approval to acquire 31 hectares of land at Ruakiwi Road, Ngaruawahia for $192,200, and Ching-Hua Yang and Su-Yun Wu of Taiwan have approval to acquire 14 hectares also in Ruakiwi Road, for $84,320, from the New Zealand Forestry Group Ltd which is owned 76% by Wesley Garratt of Aotearoa, and 24% by J. Hong of Taiwan. All are members of the Ruakiwi Forest group, which has “entered into an arrangement with New Zealand Forestry Group to develop approximately 245 hectares of land at Ngaruawahia Approximately 233 hectares of the land is afforested with the balance comprising forestry roads and unplantable areas due to contour”. The sale is like many in other regions organised by New Zealand Forestry Group, the last such sale being in November 2000. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. Tasman Agriculture buys another farm in SouthlandDespite its publicly stated intention to sell off its dairy farms in Aotearoa, Tasman Agriculture Limited has approval to buy another farm in Southland for conversion from sheep and beef to dairy farming. This adds to two farms at Mabel Bush, north-east of Invercargill which received OIC approval in December 2000. It is of 350 hectares at Waimea No 6 RD, Gore. Tasman “intends to convert the property from the existing sheep and beef use to that of dairy. The dairy unit will ultimately carry 1,050 milking cows producing 378,000 kilograms of milk solids”.
As we documented in our commentary on the December 2000 decision, this contradicts Tasman’s announced “strategic sell down” of its New Zealand dairy farms.
According to OIC figures, it can be calculated that Tasman is 66.1% owned by Brierley Investments Ltd (BIL). The shareholdings of Tasman then work out as follows: · Listed shares owned in Aotearoa – 20.7% · Listed shares owned overseas (other than BIL) – 13.2% · Brierley Investments Limited – 66.1% which itself is owned · 24.4% by the Camerlin Group Berhad of Malaysia (but which also has ownership in Singapore and Indonesia) · 6.59% by the Singapore Government · 4.13% by Franklin Resources Ltd of the U.S.A. · 19.95% by Société Générale Asset Management Corporation of the U.S.A. · 27.93% by “persons who may be overseas persons” · 17% by small shareholders in Aotearoa
(which is different to that given by the OIC in the Sealord decision above). Woollastons in 20/80 vineyard interest with U.S. millionaire Glenn SchaefferWoollaston Estates Ltd, owned 80% by Glenn Schaeffer of the U.S.A. and 20% by Philip T.E. Woollaston and Carol D. Woollaston of Aotearoa, has approval to acquire three blocks of land in Nelson for viticulture. Philip Woollaston is the former Nelson Labour MP, Minister in the late stages of the 1984-90 Labour Government, and former Mayor of Nelson. The land is as follows: · ten hectares at the corner of School Road and Old Coach Road, Mahana from the T S Brice Family Trust, for $458,625; · 18 hectares at Kelling Road, Upper Moutere from S. R. and J. S. Grove, for $731,250; · 14 hectares at Kelling Road, Upper Moutere from P.T.E. and C.D. Woollaston, for $405,000.
“The Woollastons … are established vineyard proprietors operating the Wai-iti River Vineyard at Brightwater, Nelson. They produce wines under the Wai-iti River Vineyard label. However, they currently do not have access to sufficient capital to achieve the economies of scale necessary to establish a viable export based business. The involvement of Glenn Schaeffer will result in access to the necessary development capital. This will enable the Applicant [Woollaston Estates Ltd] to become a premium wine grower and estate bottler in the Nelson area. The Applicant intends to compete in the export market for fine wines, principally in the United States.”
Glenn Schaeffer, along with David Teece, both described as “American-based millionaires”, has given a “pledge of close to $1 million” for the redevelopment of the Suter Art Gallery in Nelson (Press, 31/3/01, “Govt could help Suter”, p.4).
We reported in the June 1998 decisions that
Pelorus Properties (NZ) Ltd, a subsidiary of Pelorus Properties LLC owned by David Teece, a New Zealand citizen residing in California, U.S.A., has approval to acquire 413 hectares of land in Maungatapu Road, Rai Valley, Marlborough for $288,000 for forestry planting. “A large part of the property is covered in native forest, most of which is protected by forestry rights granted for 999 years.” Approximately 120 hectares is currently planted in pinus radiata and a local forestry manager will be responsible for the day-to-day management and operation of the property.” The land is being acquired from the Marlborough Pine Corporation Ltd.
Teece also owns 90% of CHL New Zealand Ltd which bought Lane Walker Rudkin from Brierley Investments Ltd (see our commentary on the July 1999 decisions). He has been described as an “American-based New Zealander” and is Mitsubishi Bank Professor of International Business and Finance at the University of California at Berkley, where he researches “corporate strategy and public policy, technological innovation, knowledge management, and intellectual property, regulatory and antitrust economics, telecommunications, computers, and energy”. His numerous publications include ones in the area of foreign investment, transnationals, and privatisation. Other rural land sales· St Peter Holdings Ltd, owned by Robert Whitehouse, a New Zealand citizen resident overseas, has approval to acquire a property of two hectares at 752 Matakana Road, Warkworth, Northland, for $345,000 from G4 Holdings Ltd of Aotearoa. He is buying it “so as he has a place of residence in the event he elects to return to New Zealand. It is intended to build a house on the property which will probably be rented out until Mr Whitehouse requires it for his own use.” And why does a New Zealand citizen need approval from the OIC? “As Mr Whitehouse is a New Zealand citizen he could have acquired the property in his own name without the need for consent. However, as he has decided to make the purchase using one of his overseas registered companies, approval is required.” The country of registration is not revealed. · The Ingleby Company Ltd of the U.K. has approval to acquire a 192 hectare dairy farm at Paekaka Road, Piopio, King Country for $3,172,500. In March 2000 we reported that Ingleby had approval to acquire two blocks of land of 414 hectares and 175 hectares at Paekaka Road. In September 1999 it received approval to acquire the 3,616 hectare Puketiti Station, also near Piopio. The Ingleby Company Ltd, then reported to be of the U.S.A., gained approval to acquire the 2,180 hectare Pakira Station, at Te Kumi Road, Hicks Bay, Gisborne, for $5,460,984. It was to be run with cattle and sheep for meat and wool, and “will be made available for research work by Massey University postgraduate students”. |
