Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – May 2009 Decisions
US Company Grabs More Rubicon
A quiet month at the OIO. The most significant OIO approval in May was the overseas investment in significant business assets, being Dorset Management Corporation as Manager of various United States Investment Funds United States of America (100%) acquisition of rights or interests in a further 8.83% of the shares of Rubicon Limited, the value of the assets of Rubicon Limited and its 25% or more subsidiaries being greater than $100m. The vendor was Existing Shareholders of Rubicon Limited other than the various United States Investment Funds United States of America (88.8%), New Zealand (11.2%). Asset value was $294,000,000. The OIO states in the case of Dorset Management, that: “The Applicant is investment manager of various United States Investment funds. Collectively these funds beneficially own 19.48% of the issued share capital of Rubicon and are ‘associates’ of each other for the purposes of the Act. The Investment will result in the funds beneficially owning a total (inclusive of all associated interests) of up to 28.31% of the issued share capital of Rubicon”.
Rubicon directors have recommended shareholders not accept a partial offer for the company, after an independent adviser assessed the shares to be worth as much as three times more than the offer price. And, as reported in the New Zealand Herald (7/7/09):
“The Takeovers Panel has found that companies associated with American David Knott omitted to instruct that their shares should not be voted on a partial takeover for New Zealand company Rubicon. The panel decided not to seek any remedies from Dorset Management Corp, whose President and sole shareholder is Knott, because no harm resulted. It will make orders of costs against Dorset.
“A group of related investment funds collectively known as ‘Knott’ bid to increase their holding in Rubicon from 18.5 per cent to 27.33 per cent and a shareholders’ vote was required to move above 20 per cent. Rubicon supported the Knott offer, but did not recommend it after independent adviser Grant Samuel assessed the full underlying value of shares at between $1.15 and $2.26 each – much more than the offered 70c. The partial takeover went ahead but it was revealed that shares held by Knott companies were mistakenly voted in favour. The vote still passed when the mistake was corrected.
“The Panel’s summary of the case reveals that US-based fund manager Third Avenue International Value Fund, which owns 18.02% of Rubicon, complained to the Panel, believing its votes were miscounted. Third Avenue intended to vote against the offer but an investigation found that because of an administrative error its votes were not cast. The Panel decided to pursue the issue of the counting of the Knott companies’ votes itself and held a number of meetings with those involved in the voting process.
“Goldman Sachs is global custodian for Knott companies. ANZ Nominees, a member of the Austraclear settlement system, acts as the local custodian. A company called RiskMetrics administers and documents the voting of securities held by Knott. The Panel investigated the voting instructions passed down the custodial chain. It found that Knott and David Jeuda, the Chief Financial Officer and Compliance Officer of Dorset, knew the shares were not to be voted but the instruction to abstain Knotts’ shares was not properly communicated to Administrative Assistant Alison Chiappone, Dorset’s primary contact with RiskMetrics. Rubicon was aware the shares were not to be voted and ‘sensibly’ tested the approval numbers it received from registry Computershare against shareholder information it had. There was nothing to put Rubicon on notice of any voting irregularity until it became aware that Third Avenues’ shares had not been voted, the Panel said. Dorset submitted that it did not intend to mislead.”
Rubicon was formed out of the separation of the Fletcher Challenge Group and listed in 2001. It included shareholdings in ArborGen and Tenon which are now its two remaining investments. After considerable restructuring, Tenon is now a wood products company focusing on high value moulding and millwork markets in the United States. It is 58% owned by Rubicon. ArborGen, a forest biotechnology company based in South Carolina whose research includes biofuels, is a third owned by Rubicon. ArborGen has a large Australasian operation. See our March 2001 and May 2004 commentaries with regard to Rubicon.
Decision # 200910069
UK Transnational Grabs Chunk Of Waihopai Forest
Cambium Global Timberland Limited United Kingdom (except Isle of Man and the Channel Islands) (100%) received approval to acquire a freehold interest in 1,378.2374 hectares of land at Waihopai Forest, Waihopai Valley, Marlborough. The vendor was The Proprietors of Wakatu New Zealand (100%). Consideration was stated as confidential. The OIO states:
“The Applicant’s core investment philosophy is in long term sustainable forestry investments with participation, where possible and commercially attractive, in emerging environmental markets. The land is being acquired to create a portfolio of forestry investments in New Zealand, as part of the Applicant’s worldwide ambitions to create a global portfolio of forestry investments. This property is the first in a proposed series of properties that may be acquired”. What other Kiwi forests is Cambium eying up?
Decision # 200910009
More US Interest In Our Wineries
Solomons Island Winery (NZ) Limited United States of America (100%) received approval to acquire a freehold interest in 42.4642 hectares of land at Dakins Road, Gladstone, Wairarapa. The vendor was Mebus Estate Limited New Zealand (100%). Consideration was also deemed confidential by the parties involved. The OIO states: “The Applicant wishes to acquire the relevant land to continue and further develop the vineyard and winery operation presently being conducted on the land”.
Decision # 200910050
Another Mega Bunnings Warehouse Planned
Bunnings Limited Australia (99.43%), New Zealand (0.36%), Various (0.21%) received approval to acquire a freehold interest in 6.7775 hectares of land at Mt Wellington Highway and Ellerslie Panmure Highway, Mt Wellington, Auckland. The vendor was Florencia Properties Limited Hong Kong (Special Administrative Region) (100%). Consideration was again deemed confidential by the parties involved. The OIO states:
“Bunnings Limited (Bunnings) is one of New Zealand’s major suppliers of home and garden improvement products, and building materials and services to retail and trade customers. Bunnings operates a network of hardware stores throughout New Zealand, trading under the brand names Benchmark Building Supplies and Bunnings Warehouse. Bunnings proposes to construct and develop a large format Bunnings Warehouse store on the relevant property as part of a continuation of its expansion and capital investment programme”. See August & November 2006 Decisions for previous purchases by Bunnings.
Decision # 200910068
US Company Eyeing Up Our Red Beech
New Zealand Sustainable Forest Products United States of America (100%) received approval to acquire
- a freehold interest in 12.1841 hectares of land at Gannons Road, Reefton; and
- a freehold interest in 7.8625 hectares of land at Gannons Road, Reefton.
The vendor was Robert Hunt and Valerie Rosalind Hunt New Zealand (100%) Coastpine Limited New Zealand (100%). Consideration was $1,434,375.
The OIO states: “The Applicant is intending to saw, dry and manufacture sustainably logged New Zealand timbers. PCS VacDry Kilns Unlimited (PCS), a sister company of the Applicant, has patented a method to dry previously hard-to-dry hardwoods. The Applicant will use this new technology to create a world first drying facility specialising in red beech. This facility will be based in a disused sawmill situated on the land”.
Decision # 200910065
Other May Decisions
Rudy and Jennifer Van Heerden South Africa (100%) received approval to acquire a freehold interest in eight hectares of land at 99 Loburn Terace Road, Loburn, Rangiora. The vendor was Paul Simpson Sher, Deborah Ann Sher and Parklands Trustee Services Limited as trustees of the Sher Family Trust New Zealand (100%). Consideration was $755,000. The Applicants are residing and working in New Zealand and have been granted New Zealand work visas which expire on 30 July 2010. The Applicants have submitted an expression of interest for New Zealand residency under the skilled migrant category. The Applicants, who intend to reside in New Zealand indefinitely, are acquiring the relevant land for use as their residence
Decision # 200910092
Jack Hughes Riley United States of America (100%) received approval to acquire a freehold interest in 10.1829 hectares of land at 527 Waiare Road, Okaihau, Kerikeri. The vendor was Murray Mervyn Crockett, Pauline Linda Kent and Kenneth Alan as trustees of The Murray Crockett Family Trust and Pauline Linda Kent New Zealand (100%). Consideration was $820,000. Riley was granted a New Zealand Residence Permit on 26 November 2003 and now intends to relocate to New Zealand and reside in New Zealand indefinitely.
Decision # 200910091
Summary Statistics May 2009
All investments
| May 2009 | Jan-May 2009 | Jan-May 2008 | |
|---|---|---|---|
| Number of approvals | 7 | 62 | 50 |
| Net Investment $ | 14,271,640 | 92,522,664 | 83,990,223 |
| Gross value of consideration | 36,945,897 | 1,864,132,357 | 2,930,957,049 |
| Asset Value | 294,000,000 | 11,454,999,858 | N/A |
Freehold land approved for sale
| May 2009 | Jan-May 2009 | Jan-May 2008 | |
|---|---|---|---|
| Number of approvals | 6 | 55 | 40 |
| Net land area (ha) | 1,457 | 13,474 | 4,597 |
| Gross land area (ha) | 1,466 | 198,407 | 9,105 |
Other interests in land approved for sale (for example leases and crown pastoral leases)
| May 2009 | Jan-May 2009 | Jan-May 2008 | |
|---|---|---|---|
| Number of approvals | 0 | 10 | 10 |
| Net land area (ha) | 0 | 916 | 102 |
| Gross land area (ha) | 0 | 90,630 | 10,268 |
Fishing Quota
As usual there was no fishing quota approved for sale this month.
Campaign Against Foreign Control of Aotearoa,
P.O. Box 2258
Christchurch.