April 2007 decisionsCanadian-led consortium purchases Yellow Pages Ironbridge acquires EnviroWaste Services from Fulton Hogan for $379 million Failed takeover of APN News and Media approved Saurashtra of India takes 25% of Pike River Coal Cloudy Bay Vineyards of France and U.K. buys three blocks in Marlborough Daesung of Korea buys Hawkes Bay orchard to supply its chain of shops Erdmans buy further station near Lake Coleridge: Dry Acheron Goodman Fielder sells pig breeder PIC New Zealand Ltd with 540 ha leasehold Kingma of the Netherlands buys more Southland farm land
Canadian-led consortium purchases Yellow PagesYPG Finance Limited, owned 57.5% in Canada, 21.5% in the U.S.A., 8% in Europe, 3% in Japan, 0.5% in Australia, and 9.5% by “various overseas persons”, has approval to acquire Yellow Pages Group Limited “and certain trade marks and domain names used by (but not currently owned by) Yellow Pages Group Limited and its subsidiary” for $2.165 billion from Telecom Directories Holdings Limited and Telecom IP Limited, owned 33.09% in the U.S.A., 20.05% in Australia, 9.02% in the U.K., 8.76% by “persons who may be ‘overseas persons’”, and 29.08% in Aotearoa.
Though not explained by the OIO, the consortium is explained by Telecom in its announcement of the sale: it is “a private equity consortium consisting of CCMP Capital and Teachers’ Private Capital, the private investment arm of the Ontario Teachers’ Pension Plan”. The sale price was $2.24 billion in total but was made up of “$2.165 billion cash settlement plus approximately NZ$75 million of [Yellow Pages Group] debtors retained by Telecom”.
Despite its name, the Yellow Pages Group is more than just the Yellow Pages: according to Telecom, “Yellow Pages Group is the publishers of the print directories Yellow Pages, White Pages, and Local Directories, as well as the online directories equivalent and the 018 service. Recently, Yellow Pages Group has also acquired the New Zealand Tourism Online, New Zealand Retirement Guide. Each year Yellow Pages Group is responsible for printing and distributing more than 6 million directories – 18 regional editions of Yellow Pages and White Pages, and 22 editions of Local Directories – across the nation”. It therefore has a virtual monopoly on telephone directories. (Telecom Press Release, “Telecom Sells Yellow Pages Group for NZ$2.24 Billion”, 26/3/07, http://www.telecom.co.nz/binarys/final_version_release_2603.pdf).
Adding to the impression that the sale was further evidence of Telecom’s lack of imagination or willingness to innovate in the fast moving area of online directories and related information was its announcement following the sale that $1.1 billion of the $2.1 billion would be paid out to shareholders rather than invested in its groaning network which is desperate for new investment. Profits, arm-twisting the government, and its ill-fated Australian investments came first. “Future investment in Telecom’s broadband and mobile networks is not fundamentally linked to the return from the YPG sale,” said Telecom Chairman Wayne Boyd. “Any further investment in broadband will be contingent on being able to obtain sufficient regulatory certainty and being able to earn a fair rate of return on that investment. Other relevant factors which have been taken into consideration include Telecom’s earnings outlook, and the acquisition of PowerTel in Australia.” (Telecom Press Release, “Telecom proposes $1.1 billion capital return to shareholders”, 3/5/07, http://tinyurl.com/2jgj7b.)
According to the OIO,
The investing funds, together with CCMP Asia and OTPP are referred to collectively as the Consortium. The Consortium believes that YPG represents an attractive opportunity to acquire a unique business with substantial growth potential. The Consortium has identified YPG as an acquisition where the careful use of leverage in the capital structure, supported by a clear strategy for improving the business, will combine to provide an attractive investment for the Consortium’s managed funds.
The members of the Consortium have access to highly experienced directors and will ensure that the Applicant is able to provide high level strategic advice and access to capital resources which the Consortium believes will enable YPG to successfully implement management’s growth strategies.
[Decision number 200710037.] Ironbridge acquires EnviroWaste Services from Fulton Hogan for $379 millionBarra Bidco Limited has approval to acquire EnviroWaste Services Limited, including 3,767 hectares of freehold and 225 hectares of leasehold in Auckland, Canterbury, Manawatu, Otago and Waikato for a suppressed amount from Fulton Hogan Limited, owned 21.99% in the Netherlands by Royal Dutch Petroleum Company (N.V. Koninklijke Nederlandsche Petroleum Maatschappij), 14.66% in the U.K. by Shell Transport and Trading Company, and 63.35% in Aotearoa.
Barra Bidco is in fact a creation of private equity corporation, Ironbridge Capital Pty Ltd. It is owned 34.16% in Australia, 19.0936% in the U.S.A., 18.4352% in Singapore, 9.2176% in Switzerland, 5.2672% in Japan, 4.6088% in the U.K., 4.6088% in the Netherlands, and 4.6088% by “various overseas persons”.
Although the price has been suppressed, media reports put it at $365 million. It is however possible to calculate the official figure using the OIO’s monthly statistics: $379,054,338.
In true private equity style, Ironbridge attempted to immediately resell the South Island assets of EnviroWaste plus 50% of the shares in Manawatu Waste.to large Australian waste services company, TransPacific, which last year bought the largest waste company in Aotearoa, Waste Management (see our commentary for June 2006 for further details). Not unexpectedly, the Commerce Commission declined clearance saying TransPacific would have too high a market share and “the move could have lessened competition among wheelie bin-refuse bag collectors in Wanganui, Palmerston North and Dunedin; certain front-end-load waste collection markets from Taupo to Dunedin, the refuse transfer station market in Wanganui and the national multi-regional waste management market.” (Press, “Commission explains ruling”, by David Hargreaves, 30/6/07, p.E2; Stuff, “Competition watchdog gives reasons for EnviroWaste decision”, 30/6/07, http://www.stuff.co.nz/print/4112602a13.html.) EnviroWaste’s South Island assets include half ownership of Canterbury Waste Services, the other half being owned by TransPacific, which with Canterbury local governments owns the region’s sole landfill at Kate Valley. Canterbury Waste Services is also contracted to operate the landfill.
In fact, the Commerce Commission did allow some of the assets to be sold to TransPacific – see our commentary for September 2007.
The 3,767 hectares of freehold land involved is as follows:
· 20 hectares at Smales Road, Manukau, Auckland and 81 Captain Springs Road, Te Papapa, Auckland; · 212 hectares at Hampton Downs Road, Meremere, Waikato; · 79 hectares at 125 and 127 Old Brighton Road, Dunedin; · 123 hectares at Bruce Road, Turakina, Manawatu; · 3,330 hectares at Mt Cass Road, Waipara, North Canterbury; · 2.7 hectares at 1 Holder Place, Albany, Auckland; and · 0.9 hectares at 102-114A Patiki Road, Rosebank Peninsula, Auckland.
The 225 hectares of leasehold land is: · 74 hectares at Smales Road, Manukau, Auckland and 62 Greville Road, Albany, Auckland; and · 151 hectares at Hampton Downs Landfill, Hampton Downs Road, Meremere, Waikato.
The OIO states:
The Applicant is a company incorporated by Ironbridge Capital Pty Limited (Ironbridge), on behalf of funds managed by Ironbridge, to acquire the shares in EnviroWaste Services Limited (EnviroWaste). Ironbridge was the successful bidder in a sales process conducted by Fulton Hogan Limited in respect of the sale of all the share capital in EnviroWaste a waste collection and disposal business. Ironbridge advises that there are opportunities to increase EnviroWaste’s revenue and profitability through increasing EnviroWaste’s market share in the competitive waste disposal sector.
[Decision number 200710036.] Failed takeover of APN News and Media approvedA takeover led by controlling shareholder, Independent News and Media Plc (INM) of Ireland (run by Tony O’Reilly) of one of Aotearoa and Australia’s largest media empires, APN News and Media (owner of the New Zealand Herald and numerous other newspapers, the Listener and other magazines, and The Radio Network in Aotearoa) is approved by the OIO but was in the end rejected by minority shareholders.
The OIO suppressed the proposed price of the acquisition, but it was widely estimated: the final bid was A$2.97 billion (approximately NZ$3.35 billion, or A$3.85 billion including debt: e.g. New Zealand Herald, “Perpetual confirms opposition to APN takeover”, 21/5/07, http://www.nzherald.co.nz/topic/story.cfm?c_id=289&objectid=10440913). However, it is possible to estimate the price the OIO’s official price from its monthly statistics: $3.5 billion (or $3,505,568,355 to be exact).
The consortium included INM and two private equity groups, Providence Equity Partners and the Bush family-linked Carlyle Group of the U.S.A. For more detailed commentary see the paper “News media ownership in New Zealand”, by Bill Rosenberg, at canterbury.cyberplace.org.nz/community/CAFCA/publications/Miscellaneous/index.html.
The formality of the decision is as follows:
Independent News & Media Plc, P6 Normandy Lux l S.a.r.l and CA Normandy Lux l S.a.r.l, owned 37.5% in the U.S.A. by Providence Equity Partners VI International L.P., 35% in Ireland by Independent News & Media Plc, 27.5% in the U.S.A. by Carlyle Asia Partners II L.P. and CAP Co-Investment L.P., has approval to acquire APN News & Media Limited, including 11 hectares at Lower Styx Road, Christchurch for a suppressed amount from Australian shareholders.
According to the OIO,
INM currently holds approximately 41.62% of the shares in APN News & Media Limited (APN) (28.58% through an Australian subsidiary Independent News & Media (Australia) Limited (INMAL) and 13.04% through News & Media NZ Limited (NMNZ)).
The Applicant is a consortium comprising INM, Providence and Carlyle and their associated body corporates and investment funds formed for the purpose of acquiring all of the shares in APN that INM currently does not own. The consortium proposes to give effect to the transaction by:
(a) acquiring 100% of the shares in Independent News & Media Holdings Limited (INMH) (which owns 100% of the shares in INMAL) as a result of which the consortium will effectively acquire INMAL and its interest in APN; and (b) INMAL entering into an Australian-law governed scheme of arrangement pursuant to which INMAL will acquire 100% of the share capital of APN.
APN is an Australian company that has a number of New Zealand subsidiaries. APN’s major New Zealand businesses include the New Zealand Herald newspaper, The Radio Network (which includes radio stations such as Newstalk ZB, Classic Hits and Radio Sport), the New Zealand Listener, Search 4 Jobs online and a number of other regional media publications.
The Consortium members believe that by combining their resources and expertise they will be able to grow and develop the APN business in Australia and in New Zealand over the long-term. By joining with Providence and Carlyle in the Consortium, INM will be able to maintain its investment in APN and APN’s New Zealand businesses whilst freeing additional financial resources which can be used for the expansion of the INM Group and thereby to increase returns for INM shareholders.
[Decision number 200710045.] Saurashtra of India takes 25% of Pike River CoalSaurashtra World Holdings Private Limited, owned in India by Saurashtra Fuels Private Limited, has approval to acquire 25% of Pike River Coal Limited, including 87 hectares North East of Greymouth, West Coast, for $30,054,432 from existing shareholders of Pike River Coal Limited, previously owned 14.14% in Australia, 10.64% in India by Saurashtra Fuels Private Limited, and 75.22% in Aotearoa. Following the purchase, Pike River Coal will be 43.585% overseas owned according to the OIO.
Pike River is about to begin an environmentally highly sensitive major coal mining project at Pike River on the West Coast. This shareholding is one of two Indian partners (the other is Gujarat NRE Coke Ltd – see our commentary for July 2006 for further details), and a public offering of shares is also being used to finance the project.
The OIO states:
Saurashtra World Holdings Private Limited (Saurashtra) currently holds 10.6% of the shares in Pike River Coal Limited (Pike River). Saurashtra and its parent Saurashtra Fuels Private Limited (SFPL) have entered into an Equity Subscription Agreement and Shareholders Agreement which provides an opportunity for Saurashtra to increase its shareholding in Pike River.
SFPL is one of the largest privately owned merchant manufacturers of low ash metallurgical coke in India. SFPL currently imports coal from Australia and proposes to import coal from New Zealand once the Pike River mine is operational. SFPL has contracted to purchase coal for the life of the mine at market prices to meet its demand for manufacturing coke.
Pike River holds a 40 year coal mining permit (MP 41-453) over 2,401 hectares situated on the West Coast of the South Island. The permit allows the mining of the Pike River premium hard coking coal deposit on the land. Pike River is in the process of developing the Pike River coal mine to achieve first coal production in the quarter commencing September 2007. All consents and access agreements have been obtained by Pike River to develop and mine coal from the Pike River coal mine for export. Once in production, the Pike River coal mine will produce premium hard coking coal, a form of metallurgical coal, which will be exported and used in the production of coke and steel.
Pike River is facing substantial mine development costs to develop the coal mine. These costs will be met by the issue of shares to Saurashtra, the issue of shares to Gujarat NRE Coke Limited, an initial public offering (IPO) of shares in New Zealand and Australia and to a number of institutional investors in other countries, and bank financing.
The proposal will provide funds for Pike River to complete the mine development and commence mining and exporting of hard coking coal.
[Decision number 200710035.] Cloudy Bay Vineyards of France and U.K. buys three blocks in MarlboroughCloudy Bay Vineyards Limited, owned 66% in France by Moet Hennessy Louis Vuitton and 34% in the U.K. by Diageo Plc, has three approvals to acquire blocks of vineyard land in Marlborough.
Two of the sales are by Resene Paints Ltd and its subsidiary, Cellier Le Brun Ltd. Resene bought out French founder Daniel Le Brun in the mid 1990s, but the company is now selling its assets after the death of Tony Nightingale, wine lover and head of Resene. The Cellier Le Brun brand was sold to Japanese-owned Lion Nathan in May 2007 by Brian and Nicola Bicknell who had bought it (as well as the winery and warehouse) from Resene.
Cloudy Bay has about 700 hectares of vineyards in Marlborough according its chief winemaker and director, Kevin Judd. The current acquisitions are adjacent to a 40 hectare block the company already owns. It is ripping out most of the existing vines and replanting them with different varieties. (Press, “Le Brun vineyards sell for $2.3m”, by Marta Steeman, 5/6/07, p.A1.)
The three blocks sold are:
· 12 hectares at State Highway 6, Renwick, Marlborough for $2,300,000 from Cellier Le Brun Limited, of Aotearoa. The OIO states: “The land is currently planted in Chardonnay (2.5 hectares) and Sauvignon Blanc (8.3 hectares). Cloudy Bay proposes to replant the area currently planted in Chardonnay with Sauvignon Blanc to meet the growth in export demand for Sauvignon Blanc wine that has been constrained by grape supply.” [Decision number 200710039.] · 26 hectares at Pak Lims Road, Renwick, Marlborough for $5,500,000 from Resene Paints Limited of Aotearoa. According to the OIO, “The land is currently planted in Pinot Noir (6.4 hectares), Chardonnay (3.6 hectares), Sauvignon Blanc (8.9 hectares), Riesling (1.8 hectares) and Pinot Gris (1.1 hectares). Cloudy Bay proposes to replant the area currently planted in Pinot Noir with Pinot Gris to meet the growth in export demand for Pinot Gris wine that has been constrained by grape supply.” [Decision number 200710040.] · 8 hectares at Jacks Road, Renwick, Marlborough for $1,912,500 from Peter David Johansen and Jennifer Jane Johansen of Aotearoa. According to the OIO, “The land is currently planted in a number of varieties. Cloudy Bay proposes to replant the land with Sauvignon Blanc to meet the growth in export demand for Sauvignon Blanc wine which has been constrained by grape supply.” [Decision number 200710041.] Daesung of Korea buys Hawkes Bay orchard to supply its chain of shopsDaesung Group Company RNR Engineering & Construction Co., Ltd of South Korea has approval to acquire 41 hectares at Allen Road, Pakowhai, Hawkes Bay for $2,800,000 from Kiwi Apple Tree Limited of Aotearoa.
According to the OIO,
Daesung Group Company RNR Engineering & Construction Co., Limited (Daesung) intends to acquire the land known as Ohuapai Orchard which comprises 23.83 hectares of apple orchard (Royal Gala, Braeburn, Fuji, Galaxy, Pacific Queen and Pacific Rose), 4.31 hectares of summer fruit (peaches and nectarines) and 4.95 hectares of kiwifruit (Hayward and Zespri Gold). Over a 3 to 5 year timeframe, Daesung intends to replace the current summer fruit plantings with further apple varieties and convert the orchard to a certified organic regime.
Under a proposed management contract with NZ Orchard Management and Export Packhouse Company, Crasborn Group Limited, Daesung aims, over a 3-5 year period, to redevelop the orchard to make it more profitable through product line changes and a conversion to certified organic production primarily aimed at export markets.
Daesung’s businesses includes NEO (New Zealand East Asia Organics) to which this investment relates. Daesung is developing a retail chain of dedicated health and natural product stores throughout Korea. Daesung intends to develop a unique marketing position related to New Zealand’s exported organic produce.
[Decision number 200710034.] Erdmans buy further station near Lake Coleridge: Dry AcheronColeridge Downs Limited, owned 48.08% by Calvin Pardee Erdman, 25.96% by Christian Pardee Erdman, and 25.96% by Sumner Pardee Erdman, all of the U.S.A., has approval to acquire the 1,285 hectare Dry Acheron Station, Coleridge Road, Rakaia Valley, Canterbury for $7,000,000 from Sage Properties Limited, owned by Mark Palmer of Aotearoa. The land “either alone or together with any associated land of that type … is or includes land held for conservation purposes under the Conservation Act 1987”.
The OIO states:
Dry Acheron Station (Dry Acheron) is a sheep, beef and deer farming operation situated in the Rakaia River valley. The Applicant proposes to farm Dry Acheron in conjunction with Coleridge Downs Station (Coleridge Downs) which is situated approximately 4 kilometres from Dry Acheron. The Applicant proposes to replace Dry Acheron’s Merino sheep with Romney Texels, replace Angus Hereford cattle with Angus cattle and continue with the red deer.
The Applicant proposes to increase productivity and stock carrying capacity of Dry Acheron, particularly the hill country, by growing more pasture feed, improving subdivision and stock water and improving pasture quality. The acquisition of Dry Acheron provides an opportunity for Coleridge to complement and expand their existing farming operations.
The Applicant also proposes to implement the recommendations contained in an Ecological Report to protect ecological areas located on the land through conservation covenants under the Conservation Act 1987 and the Reserves Act 1977. Public walking access will also be provided to the ecological areas located on the land by a walking track to be created under section 8 of the New Zealand Walkways Act 1990.
The station was put on the market through Bayleys Realty Group. Its advertisement stated: “Dry Acheron is a trophy property (with it’s own private lake) situated around an hours drive of Christchurch City in the heart of one of the best adventure playgrounds in the world.” It described the property as follows:
The Dry Acheron is a model sheep, cattle and deer property situated in the highly regarded Rakaia Valley. With a 6 year average of 7400 stock units, the property has been substantially developed in the last decade, giving the property an excellent platform for future production. 120ha is irrigable (75ha irrigated) from a low cost gravity feed on farm scheme. The property features a 322m2 superior riverstone clad homestead set on an elevated setting with magnificent alpine views. In addition there is a managers house and full range of buildings. [sic; see http://www.bayleys.co.nz/51878, accessed 1/7/07.]
The Erdmans own the 1,929 hectare Coleridge Downs Station and other property including a 50% share in the 2,688 hectare Annavale Farm, Springfield, Canterbury. See our commentaries for October 2002 and July 2005 for further details.
[Decision number 200710038.] Goodman Fielder sells pig breeder PIC New Zealand Ltd with 540 ha leaseholdPIC NZ Holdings Limited, owned 50% in Australia, and 25% by Garth Walton Smith and Jan-Maree Smith and Nicholas Johannes Hoogeveen, 12.5% by Andrew Rutherford Wallace, and 12.5% by Mark Purcell Tapper all of Aotearoa, has approval to acquire PIC New Zealand Limited, including 540 hectares of leasehold comprising 143 hectares at 562 Monument Road, Pokeno, North Waikato and 397 hectares at 715 Mitchells Road and Ardlui Road, Selwyn, Canterbury, for $6,000,000 from Goodman Fielder Limited.
Goodman Fielder is owned 55.1346% in Aotearoa by Graeme Richard Hart; 1% each by Timothy Guthrie Hardman, Peter Maxwell Margin, and Maxwell Gilbert Ould, all of Australia, and 35.532% in Australia by other minority shareholders; 1% in the U.S.A. by Thomas James Degnan; 0.2232% by “various overseas persons”; 1% in Aotearoa by Hugh Earle Perrett, and 4.1101% in Aotearoa by other minority shareholders.
The OIO states:
The Applicant intends to invest in improving the performance and position of PIC NZ through reinvestment in fixed assets and relevant marketing and strategic plans. The Applicant holds links with global partners and this is expected to result in new technologies and development. The Applicant sees the purchase of PIC NZ as a basis for growth and development of PIC NZ’s operations in New Zealand.
[Decision number 200710043.] Kingma of the Netherlands buys more Southland farm landJan Marten Kingma of the Netherlands has approval to acquire 108 hectares at 388 Slope Point Road, Tokanui, Southland for $883,125 from Ronald James Weir, Noeline Weir, Andrew Ronald Weir and Rebecca Jane Weir of Aotearoa.
According to the OIO,
The Applicant was granted consent on 2 April 2003 to acquire 255.9392 hectares of land situated at Slope Point Road, Otara, Southland. The 255.9392 hectares is comprised in two blocks – one block of 174 hectares and another 81 hectares which is situated approximately 10 kilometres from the 174 hectare block.
The Applicant was granted consent on 15 May 2006 to acquire a 298.1709 hectare property situated at Kapuka, Invercargill. This land contained a 175 hectare dairy farm and 122 hectares utilised as a run-off. The Applicant proposed to establish a facility to import and propagate European genetics into the New Zealand dairy industry. An intensive commercial breeding and rearing enterprise will be established to offer contract mating facilities for dairy farmers. [sic]
The Applicant has entered into Agreements for Sale and Purchase to sell the 81 hectare block and acquire 107.85 hectares adjoining the 175 hectare block. This is likely to result in a consolidation of these properties into one farming block providing increased efficiencies to the Applicant’s farming operation.
The Applicant advises that the Slope Point Road properties will be used as a dormitory farm for heifers that have been artificially inseminated. Some of the labour proposed to be employed at the subject property can travel to the existing property to manage the stock.
For the earlier purchases mentioned, see our commentaries for May 2006 and April 2003 for further details.
[Decision number 200710042.] Summary statisticsAll investments Value of investments approved to April 2007 cannot be compared with the same period the previous year because that year’s April totals were suppressed. However this was a very busy month, gross investment rising from $758 million in March to $6.1 billion in April, and net investment (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) from $76 million to $896 million. By far the greatest part of the value of the approvals is for sale from one overseas investor to another.
Investment involving land Gross and net sales of land approved by the OIO during the years to April have increased substantially in area. There were no refusals this month, and though numbers for the year (see above) have risen in number, area and value, they are still a tiny proportion of the total.
Fishing Quota There was no fishing quota approved for sale this month or this year.
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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