Foreign investment in Aotearoa/New Zealand
Overseas Investment Office – December 2009 Decisions
“Vampire Squid” Consolidates Its Retirement Holdings
Goldman Sachs JBWere (NZ) Private Equity Limited and Goldman Sachs JBWere PIA (Management) Pty Limited (as manager and delegated manager of Goldman Sachs JBWere Trans Tasman Private Equity Fund 07 and Hauraki Private Equity No.2 Fund) and associates New Zealand (69.5%), Australia (19.5%), Various (11%) received approval for overseas investment in sensitive land, being the acquisition of rights or interests in up to 100% of the issued equity securities of Vision Senior Living Limited which owns or controls: a freehold and leasehold interest in 4.4 ha of land at 35 Cobham Road, Kerikeri, Bay of Islands; and a freehold interest in 2.3 ha of land at 15 Sel Peacock Drive, Henderson, Auckland; and a freehold interest in 5.2 ha of land at Minogue Drive, Te Rapa, Hamilton.
Approval was also received for an overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in up to 100% of the issued equity securities of Vision Senior Living Limited, the value of the assets of Vision Senior Living Limited and its 25% or more subsidiaries being greater than $100m.The vendors were Existing shareholders of Vision Senior Living Limited other than the Applicant and/or Vision Senior Living Limited New Zealand (100%). The OIO states:
“The Applicant currently controls, in aggregate, 55.23% of the shares in Vision Senior Living (Vision), comprising 35.53% of Vision held by entities associated with the Trans Tasman Private Equity Fund 07 and 19.7% of Vision held by entities associated with Hauraki Private Equity No.2 Fund. The injection of additional capital by the Applicant will provide a part of the further equity capital sought by Vision and the Applicant’s participation in Vision’s capital raising will maintain the Applicant’s strategic majority position. Shareholders (or Vision) may also subsequently acquire shares under arrangements agreed in connection with the capital raising. Accordingly, and to preserve future flexibility to inject further capital, the Applicant has sought consent”. See our commentaries for June 2006 and March 2008 for details of Goldman Sachs JBWere’s original purchase of 55% of Vision. According to Vision Senior Living’s Website:
“Vision Senior Living was founded in 1997 when three business partners – Peter Bourke, Bob Foster and Ron Anderson – perceived a niche in the market to develop, own and manage independent retirement living communities. In 1999 the first community – Vision Waitakere – opened in Henderson, Auckland. And since that time, four more retirement communities have been opened in New Zealand. In 2004, Vision Senior Living constructed more retirement units than any other company in New Zealand. This extraordinary growth was recognised in 2004, when Vision Senior Living was awarded 1st place in the Deloitte’s Fast50 over $20 million category. Construction commitments at the four communities will result in their completed value exceeding $250 million”.
JBWere was previously a New Zealand owned investment bank which merged with Goldman Sachs (the world’s largest investment bank, of Vampire Squid fame) in 2003. Since then they have orchestrated a number of high-profile deals including Pumpkin Patch and CanWest MediaWorks share market floats. They established a $415 million trans-Tasman private equity fund in 2006, and then proceeded with a leveraged buyout of clothing store chain Kathmandu (see our April and October 2006 commentaries), their Vision investment, and also Australian equipment rental business, the Ned Group. More recently they shared lead management of the Kathmandu share market float, earning millions in fees as well as off-loading their shares in Kathmandu
For the past few years the global credit crisis has essentially dried up funds, but it appears now that Goldman Sachs JBWere has money to invest again. And see details below regarding Goldman Sachs JBWere revisiting its MediaWorks investment. And of course Goldman Sachs, is probably Public Enemy No 1 in the US (perhaps BP has recently taken this mantle?) for paying obscene bonuses to its staff during the recession after receiving a tax-payer bailout, as well as being in the “sights” of regulators for their role and subsequent profiting from the sub-prime mortgage debacle and subsequent global credit crunch.
See Rolling Stone (13/7/09, “The Great American Bubble Machine“, by Matt Taibbi), for an excellent summary of Goldman Sachs’ role in most of the recent global bubble and crash cycles, and who termed the phrase, “the Great Vampire Squid!” The article begins: “The first thing you need to know about Goldman Sachs is that it’s everywhere. The world’s most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money”.
Decision # 200920089
Aussie Retirement Operator Plans Southern Retirement Village
Summerset Villages (Dunedin) Limited and Summerset Properties Limited Australia (97%), New Zealand (3%) received approval for the investment in sensitive land, being the acquisition of a freehold interest in 1.9 ha of land at 36 Shetland Street, Dunedin. The vendor was Grey Ghost Property Limited New Zealand (100%). Consideration was $1,406,250. The OIO states: “The Summerset Group owns and operates a portfolio of 12 retirement villages situated throughout the North Island . In addition the Summerset Group owns three further properties which are land banked for further development. The proposed acquisition is part of Summerset’s strategy to expand throughout New Zealand and this will be their first acquisition in the South Island”.
Details of this purchase were reported by Simon Hartley in the Otago Daily Times (10/2/10): “Summerset retirement homes’ Dunedin development, its first in the South Island , could be a $40 million to $50 million investment with villas, multilevel apartments and hospital care facilities for up to 250 people, in Kaikorai. The Australian-owned New Zealand-operated company purchased a 1.9ha block of land in Shetland St, Dunedin, for $1.4 million and last week received Overseas Investment Office clearance. Summerset’s general manager of marketing and sales, Tristan Saunders, contacted yesterday, said Dunedin was short-listed for development of a total five land-banked properties at present.
“Details of the project, resource consent applications and construction tendering were most likely to go ahead during 2011. ‘The Dunedin concept has still not been finalised, but [being urban] will have a mix of villas and multilevel apartments’, he said yesterday. Mr Saunders said Summerset, which has 12 North Island developments housing about 1,450 people, had a ‘typical’ development which was usually on about six hectares of land in a rural setting, comprising 90 to 100 villas and hospital care facilities for 150 to 250 people and costing $40 million to $50 million. He said demographic changes predicted a 150% increase of people aged over 65 between 2010 and 2050.
“Summerset was New Zealand’s third largest retirement operator and maintaining quality lifestyle villages was key to market leadership. Summerset, founded in 1994, is owned by AMP Capital Investors and Quadrant Private Equity Group. Asked if the company was considering listing on the stock market, Mr Saunders said there were ‘no immediate plans’ to do so, but listing was one of several options which could be considered if more capital was sought in the future. Summerset had a strategy to move into the South Island in coming years, but Mr Saunders was unable to disclose if it had purchased any more land, other than the Dunedin section. Summerset’s overall target was to have 20 villages completed, or under development, by 2012, he said”. See our February 2006 commentary regarding AMP’s original purchase of Summerset and our March 2007 and August 2009 commentaries regarding Summerset’s purchase of other retirement villages here, as well as our March 2009 commentary concerning AMP’s establishment of a joint venture with QPE Funds Management Pty Limited.
Decision # 200920084
UK Taxpayer Bailout Of Royal Bank Of Scotland Rumbles On
Her Majesty’s Treasury of the UK Government United Kingdom (100%) has received approval for the investment in sensitive land, being the acquisition of rights or interests in up to 75% of the ordinary share capital; 100% of non-voting B shares and the Dividend Access Share of The Royal Bank of Scotland Group plc which owns or controls:
- a freehold interest in 0.7 ha of land at Porchester Road and Marengo Road Takanini
- a leasehold interest in 18.8 ha of land at Hamilton International Airport, Airport Rd (SH 21) Hamilton
- a freehold interest in 50.6 ha of land at Hamilton International Airport, Airport Rd (SH 21) Hamilton
- a freehold interest in 102.7 ha of land at 105, Middle Rd, Rukuhia, 188 Narrows Rd, Rukuhia
- a freehold interest in 10.3 ha of land at 233A-233B, 225, 231 Porchester Rd, Takanini
- a freehold interest in 3.3 ha of land at Arion Road and Phar Lap Crescent, and Windfola Parkway and/or Porchester Road, Takanini.
An overseas investment in significant business assets, being the Applicant’s acquisition of rights or interests in up to 75% of the ordinary share capital; 100% of non-voting B shares and the Dividend Access Share of The Royal Bank of Scotland Group plc, the consideration of which exceeds $100m The asset value was stated as $878,134,987 (New Zealand Assets). The vendor was The Royal Bank of Scotland Group plc United Kingdom (56.6%), United States of America (22.4%), various (21%). The OIO states:
“Consent was granted on 9 April 2009 for the Applicant to acquire up to 84.54% of the ordinary share capital and 100% of the non-voting B shares in The Royal Bank of Scotland Group plc. The issue of the non-voting B shares has not occurred. The B shares were to be issued in connection with The Royal Bank of Scotland Group plc’s intended participation in the Government of the United Kingdom’s Asset Protection Scheme (APS) under which the Applicant will provide participating institutions with protection against credit losses incurred on one or more portfolios of defined assets”.
In other words, the Royal Bank of Scotland continues to be on British Taxpayer funded life support. As reported by TV3 News (10/8/09): “Royal Bank of Scotland has reported more losses as investment banking profits fail to offset bad debts and the State-owned lender warned of more ‘poor’ results to come. ‘A marathon not a sprint’, is how the Royal Bank of Scotland’s Chief Executive Stephen Hester describes the bank’s long road to recovery. RBS has posted a billion pound loss for the first six months of 2009. That figure came despite profits in the company’s investment banking arm. The bank’s bad debts across the group have hit £7.5 billion. ‘Can I say that there are many things that we are doing to get back to health and repay the support we’ve had for which we’re very grateful and part of that is to get rid of the risks which makes it hard for us to support out customers without Government help, part of it is to rebuild our business so that customers can get their money out, get the 20 billion out at a profit’, says Mr Hester. RBS was taken to the brink of collapse at the height of the financial crisis. It was only saved after a government cash injection, and is now 70% owned by the British taxpayer. The result is a gloomy end to a week of reporting losses for Britain’s banks. HSBC and Barclays posted combined profits of six billion pounds but also reported high debt losses. RBS has also been hit by an exodus of staff, having shed 16,000 jobs since last October (08)”.
Since then several thousand more jobs have gone and further cuts are planned. For a detailed summary of how various banks faired during the global credit crisis, read “HBOS – The bank that couldn’t say no” by Karyn Scherer, reported in the NZ Herald on 2/5/10. You may recall from our April 2009 commentary on the British bailout of the Royal Bank of Scotland (RBS) how a key factor in its demise was its purchase, as part of a consortium, of ABN Amro in 2007 for €71 billion (see our October 2007 commentary).The ABN Amro takeover is now considered one of the biggest flops in corporate history! For those who are interested, John Lanchester’s excellent review “It’s Finished” in the London Review of Books (28/5/09) which gives a thoroughly entertaining commentary on the Royal Bank of Scotland’s demise.
Decision # 200920085
But the “British” Still Have Enough Spare Change To Buy Glencoe Station?
Soho Property Limited United Kingdom (except Isle of Man and the Channel Islands) (100%) received approval for an overseas investment in sensitive land, being the acquisition of a crown pastoral lease in 8,579 ha of land at Glencoe Station, Crown Terrace, Wakatipu. The vendor was Glencoe Station Ltd New Zealand (100%). Consideration was stated as confidential. Glencoe was owned by Queenstown property developer John Darby. The OIO states:
“The shareholder of the Applicant has previously been granted consent to acquire the pastoral leases for Motatapu and Mt Soho Stations. Since the acquisition of Motatapu and Mt Soho Stations a significant development and land restoration programme has been undertaken. That farm development programme is now nearing completion. The purchase of Glencoe Station will significantly enhance the existing farming unit by allowing often otherwise marginally viable, narrow, valley pastures on each side of the perimeter fences to be amalgamated. By incorporating Glencoe Station, the Applicant will have a far more economically viable area of pasture in the valleys. This enhanced economic viability will take pressure off (and in some parts totally avoid the need for grazing) the steeper degraded and thus more sensitive areas. The eradication of noxious animals and plants will be a priority. Cattle (which are very harsh on sensitive land) will be removed and merino sheep will be reintroduced”.
I say “British?” because Soho is actually linked to Canadian singer Shania Twain, who as the OIO mentions above, has received previous approval to acquire 25,000 ha of pastoral leases for Motatapu and Mt Soho Stations (see our commentary for September 2004). This new approval now gives her a massive high country holding between Arrowtown and Wanaka. But why is the OIO approving these sales when her previous purchases are accumulating significant tax losses. As my colleague Murray Horton wrote (Watchdog 123, May 2010; “Shania Twain Buys Another High Country Station: Where Is The ‘Substantial & Identifiable Benefit To New Zealand’“?):
“…An examination of the accounts of the Mototapu and Mt Solo Stations (“Lean earnings from Twain’s high country playground”, NBR NZ Property Investor, 16/2/10) reveals that they have been consistently running at a loss since their purchase. In the case of Soho: ‘It has built up $8.4 million in tax losses that may be applied against future earnings’ plus “liabilities are $61 million, resulting in negative equity of $8.8 million’. Tax losses don’t feature anywhere in the ‘substantial and identifiable benefit to New Zealand’ that the Overseas Investment Office (and politicians and media) trumpeted in relation to these purchases. Tax losses on investment properties are a subject of major public discussion at present and the target of some of the most high profile recommendations of the Tax Working Group’s recent report on tax reform.
“But we weren’t told, in 2005 or this year, that there was any suggestion that these high country station purchases were investment properties for tax loss purposes. Because where is the ‘substantial and identifiable benefit to New Zealand’ in that? Let’s see if these properties continue to remain in their current ownership when, and if, the Government does actually toughen the law relating to tax losses on investment properties, even 25,000 ha ones”. Also see Murray’s excellent article “Shania Twain Buys Up Big In Otago. A New Ingredient In Land Sales: The Celebrity Factor“, in Watchdog 107, December 2004.
Decision # 200910066
And Canadians Nab A Piece Of Middle Earth
Fairlight Station Limited Canada (100%) has received approval to acquire a freehold interest in 1,327 ha of land at Rangitata Gorge Road, Geraldine. The vendors were Harpenden Holdings Limited New Zealand (100%). The consideration was $6,300,000. The OIO states: “The land is a farm known as Tui Station. The Applicant aims to improve the farming operation by introducing investment capital and establishing 300 ha of new forestry on the upper blocks of the property. The proposed investment will create jobs, increase export receipts and introduce investment capital, while at the same time ensuring adequate protections of indigenous vegetation, wildlife habitat and the trout and salmon fishery resource on the land. In addition, walking access arrangements may be forged along the length of the Rangitata River”.
Tui Station is not to be confused with Tui Farm Park, which is discussed in our August 2009 commentary. Fairlight (previously Forest Creek Station) is in fact controlled by the Harpur family which have made a number of other land purchases here. As reported by Martin van Beynen (Press, 6/2/10): “A piece of Canterbury high country connected with Peter Jackson’s The Lord of the Rings trilogy and author Samuel Butler has been sold to Canadians with controversial forestry plans. Dn and Helen Prouting have sold their 1,327-hectare Tui station in Rangitata Gorge Rd near Geraldine to Fairlight Station Ltd for $6.3 million. The sale received the approval of the Overseas Investment Office (OIO) in December (09).
“Fairlight Station is a vehicle for Mari Hill Harpur and her husband, Douglas, who told the OIO they wanted to improve the station’s farming and establish 300ha of new forestry on the property’s upper blocks. The couple already own an 880ha block in the area and also the nearby 2,200ha Forest Creek Station, which they bought from Ray and Margaret Prouting in 2000 for about $3m. About 500ha of Forest Creek Station has been planted in Douglas fir trees. Their holdings include about 3,400ha near Kingston in Southland, where they controversially planted about 450ha of Douglas fir trees. They are also substantial deer farmers.
“South Island Forest & Bird Society spokesman, Chris Todd, said he did not know details of the planting plan, but forestry in the Canterbury high country was a concern for several reasons. ‘Douglas fir is a wilding-prone species. They blow from here to kingdom come. They also displace native vegetation such as scrubland and tussock, which sequester carbon in their own right’, he said. ‘There’s also a landscape issue. This is the heart of The Lord of the Rings territory’. Former Environment Southland chairman Ted Loose said he had opposed the planting on Fairlight Station because of the wilding pine problem on neighbouring properties and the potential effect on water quality.
“Tui Station, which has an area of tussock called Butler Downs, was part of a huge station first farmed by Samuel Butler in the 1860s and named Mesopotamia. Don Prouting’s father, Malcolm, a former farm manager, bought Mesopotamia in 1943. In 2008, other members of the Prouting family relinquished, under the tender review process, 20,000ha of Mesopotamia’s pastoral lease land. The tract is now part of the public estate. Hill Harpur is a photographer who exhibits in Canada, the United States and New Zealand. Douglas Harpur’s father was born in New Zealand, and he has a sister in Christchurch. Hill Harpur’s wealth comes from her father, who was the son of James Hill, an American financier and railroad builder”. See our Decision summaries for April and September 2000, September 2001, and April and October 2002 for details of some of the above Harpur land purchases.
Decision # 200910097
While Mt Gerald Station Goes To Belgium
Adagio Trust Belgium (100%) received approval to acquire a freehold interest in 394 ha of land at 3 Lilybank Rd , Lake Tekapo. Consideration for this purchase was stated as confidential, I hope it’s not being paid for in Euros! The vendors were Mt Gerald Station Limited New Zealand (100%). Mt Gerald Station is associated with local businessman Michael Burtscher. The OIO states: “The persons for whose benefit the Applicant has been established are keen conservationists. Accordingly they wish to purchase a property in the Mackenzie Basin where they can enjoy the natural beauty of New Zealand and preserve the same for future generations. They wish to ultimately move to New Zealand and see this proposed purchase as the beginning of that process. The Applicant wishes to restore the property to a predominantly indigenous condition. A professional long term ecological restoration management plan will be implemented which will establish a predominance of native species and ensure resultant communities are resilient to natural disturbances. This restoration programme will provide an invaluable opportunity for research on the practical implementation of restoration in the South Island high country. In addition, a Land Covenant will restrict future subdivision and new commercial activity over the acquired property and the surrounding land retained by the vendor”. This all sounds very noble, but why does it need an overseas owner to implement it?
Decision # 200920042
MediaWorks (TV3 and RadioWorks) To Get A New Owner
GR Media Holdings Limited United Kingdom (59.3%), Australia (31.9%), New Zealand (8.5%), Brunei (0.3%) have been granted approval to acquire rights or interests in 100% of the shares of MediaWorks NZ Limited (MediaWorks), the value of the assets of MediaWorks and its 25% or more subsidiaries being greater than $100m. The asset value was stated at $825,909,000 (as at 31 August 2009). The vendor HT Media Limited Singapore (36%), Australia (18%), Netherlands (13.7%), United States of America (10%), New Zealand (10%), Switzerland (4.8%), Japan (2.8%), United Kingdom (2.4%), Various (2.4%). The OIO states:
“The Applicant proposes to acquire all of the share capital of MediaWorks. The acquisition of the shares in MediaWorks by the Applicant is part of a restructure of the MediaWorks Group. MediaWorks is New Zealand’s leading private sector broadcast media company”.
Both the buyer GR Media and vendor HT Media are creations of private equity corporation, Ironbridge Capital Pty Ltd which acquired MediaWorks from CanWest Global Communications in June 2007 (see our commentary). CanWest had previously acquired this network in May 2004 (see our commentary). But the above approval does not tell the full story of this sorry tale. As reported by Gareth Vaughan of The Independent (12/2/10), the vampire squid resurfaces:
“Goldman Sachs JBWere has emerged as a significant shareholder in TV3’s parent company following the heavily indebted MediaWorks’ $70 million pre-Christmas recapitalisation. The Independent understands Goldman’s stake in MediaWorks currently sits at 12.9% and could rise as high as 20 to 25% over time. It stems from the conversion of mezzanine debt* held by two Goldman funds into equity and the investment bank deciding to sink additional cash into MediaWorks. *Debt that incorporates equity-based options, such as warrants, with a lower-priority debt. Mezzanine debt is actually closer to equity than debt, in that the debt is usually only of importance in the event of bankruptcy. Mezzanine debt is often used to finance acquisitions and buyouts, where it can be used to prioritise new owners ahead of existing owners in the event that a bankruptcy occurs. Ed.
“Just how much money Goldman, lead manager and underwriter of MediaWorks’ 2004 share market float, has pumped into MediaWorks is unclear. Kerry McIntosh, New Zealand operational partner at MediaWorks’ ultimate parent Ironbridge Capital, referred questions on Goldman’s stake to Goldman Sachs JBWere spokeswoman Hayley Morris. She said the investment reflected Goldman’s favourable view of MediaWorks and willingness to support the business. Australian private equity fund Ironbridge bought MediaWorks for about $790m in 2007 in the last of a wave of big, cheap credit-fuelled, private equity deals in New Zealand.
“Typically, private equity firms use money raised from their investors to pay about 30% of their acquisition costs. They borrow the rest against the assets of the companies they buy, using that business’s cashflow to pay down the debt. About half a private equity firm’s borrowings may come from senior debt, which is packaged by banks and sold to them. The balance is often generated from high-yield loans and mezzanine debt, which is usually unsecured and ranks last for repayment in the event of default.
“Goldman’s Website notes that its mezzanine funds have the flexibility to invest in both secured and unsecured securities. It also says Goldman typically seeks an observer or board seat at companies it invests in. McIntosh said there was no plan for Goldman to take a seat on the MediaWorks board. The investment bank’s mezzanine portfolio also includes investments in EnviroWaste Services, which is also owned by Ironbridge, plus other Australian private equity-owned businesses: Griffin’s and Hirepool. Goldman says it seeks long-term capital appreciation and current income through investments in mezzanine securities and its business partners and portfolio companies have access to its full resources and expertise.
“Announcing MediaWorks’ recapitalisation a week before Christmas, Ironbridge said funds advised by it were contributing $50m of the $70m being pumped into MediaWorks to repay debt, reset fixed interest rate swaps and provide ongoing liquidity. Ironbridge, which didn’t say where the other $20m was coming from, said the recapitalisation was accompanied by a comprehensive restructure of the media group’s banking arrangements. McIntosh said when it bought MediaWorks, which also owns (TV station) C4 and a stable of radio stations including Radio Live, The Rock and More FM, Ironbridge made contingency plans for tough times. However, these didn’t foresee the severity of last year’s advertising downturn. MediaWorks’ Annual Report for the year to August 2008 showed a $40.3m bottom-line loss, annual finance costs of $92.8m, total borrowings of $530.4m and an equity deficit of $18.6m.The 2009 Annual Report is not yet available”.
And when the 2009 Annual Report was finally revealed, the dangers of private equity ownership became clear. Under the heading “Loss blamed on high cost of buying broadcaster”, William Mace reported (BusinessDay.co.nz, 6/5/2010): “A $314 million loss on MediaWorks’ former parent company’s books reflects the high price that Australian private equity fund Ironbridge Capital paid for the broadcaster rather than that its businesses are not performing.
“Forsyth Barr head of research Rob Mercer said the company’s business units – TVWorks and RadioWorks – were achieving what could be expected in the current economic conditions. ‘These guys aren’t performing poorly on a relative basis but they’ve obviously had a private equity structure put in following the takeover and that is what’s causing the financial distress. The debt load has been way too high and that’s causing the business to go through restructuring of those assets. A lot of the private equity firms that have got into this situation have tried to work through a restructure of the capital base that effectively dilutes their interest, bringing in new capital. The cost of the mistake has been borne by the shareholders and the financial institutions that have lent money to the holding company – at the operating level you’ve still got two profitable businesses’.
“Ironbridge spent about $790m to buy MediaWorks in 2007, which Ironbridge’s New Zealand operational partner, Kerry McIntosh, then indicated was a 49% premium on the pre-sale price. Financial statements lodged with the Companies Office show MediaWorks’ holding company, HT Media Holdings, suffered a $314m loss, compared with a $40m loss the year before. Included in that loss was a writedown of $258m in goodwill and a $91m bill for interest costs. The woeful state of its finances forced a capital restructure late last year, including $70m of equity being injected into MediaWorks to repay debt and provide liquidity. Mr McIntosh says the recapitalisation of MediaWorks has reduced its annual cash interest commitments of $20m – from $50m to $30m – putting it on a stronger footing. With the rearrangement of debt, banking conditions and company shares – 13% of which are now held by Goldman Sachs – the company is hoping to trade its way out of a hole.
“The HT Media group has been liquidated and the media assets are now held under GR Media. But HT Media’s accounts give an insight into the broadcaster’s performance through one of the toughest advertising markets in memory. The company paid $91m in finance costs, including $48.8m in cash interest costs, in 2009. Earnings before interest, tax, depreciation and amortisation were $56.2m compared with $66.6m in 2008. Revenues, largely advertising derived, were down $31.8m, or 11.1%.”
For an excellent summary of media ownership in New Zealand, see the paper “News Media Ownership In New Zealand” (PDF), by Bill Rosenberg, available on the CAFCA Website. It is up to date as of September 2008.
Decision # 200920033
Harvey Norman Owner Buys Another Horse Stud
GH Westbury Pty Limited Australia (100%) received approval to acquire a freehold interest in: 108.2 ha of land at 496B Hinuera Rd, 65, 103 Hopkins Rd, 4870-4872 SH29, Hinuera, Matamata; and a mortgage in 108.2 ha of land at 496B Hinuera Rd, 65, 103 Hopkins Rd, 4870-4872 SH29, Hinuera, Matamata. The vendor was Southern Cross Building Society New Zealand (100%), consideration was $6,950,000. The OIO states: “The Applicant is a company formed in Australia on 20 May 2008. The sole shareholder of the Applicant is Gerald Harvey, an Australian resident. The Applicant makes this application as the corporate trustee of the GH Westbury Trust. The beneficiaries of the GH Westbury Trust are Gerald Harvey and all of his children. The land is used as a thoroughbred stud farm and is presently owned by the Twin Pines Waikato Trust (Trust)”.
As the OIO states, GH Westbury is controlled by one Australia’s’ wealthiest men, Gerald Harvey of Harvey Norman fame. You may recall, from our September 2009 commentary, the purchase by Gerald Harvey of Westbury Stud, a prestigious South Auckland stud farm established by Eric Watson of Hanover Finance fame (I should say infamy!). Harvey already has a $100 million plus thoroughbred empire in Australia, and now appears to be developing something similar on this “side of the ditch”. Also see our April 2009 commentary for Gerald Harvey’s original purchase of 50% of Westbury Stud.
Decision # 200920064
Three Related Confidential December Decisions
A Confidential Australian applicant Australia (98.98%), New Zealand (0.78%), Various (0.24%) has received approval to acquire a freehold interest a freehold interest in: 1.34 ha of land at 22-30 Putiki Road and 13-19 Belgium Street, Waiheke Island; and a leasehold interest in 1.34 ha of land at 22-30 Putiki Road and 13-19 Belgium Street, Waiheke Island. Consideration was confidential; the vendor was Alan John Moore and Wynyard Wood Trustee Services Limited as trustees for the Cory Road Family Trust New Zealand (100%). The OIO states: “The Applicant is seeking to expand its operations across New Zealand and the land is being acquired to enable the Applicant to implement its business investment plans. The acquisition will enable the Applicant to increase its presence on Waiheke Island”. I wonder if existing Waiheke Island residents are aware of what the applicant has planned for their island?
Secondly, a Confidential Australian applicant Australia (98.98%), New Zealand (0.78%), Various (0.24%), i.e. exactly the same national shareholding, has received approval to acquire a freehold interest a freehold interest in 12.65 ha of land at 129 Beachlands Road, Beachlands. Consideration was confidential; the vendor was Alan John Moore and Wynyard Wood Trustee Services Limited as trustees for the Cory Road Family Trust New Zealand (100%). The OIO states: “The Applicant is seeking to expand its operations across New Zealand and the land is being acquired to enable the Applicant to implement its business investment plans. The acquisition will enable the Applicant to increase its presence in the Beachlands area”. I wonder if existing Beachlands area residents are aware of what the applicant has planned for their community?
Thirdly, a Confidential Australian applicant Australia (98.98%), New Zealand (0.78%), Various (0.24%), i.e. exactly the same national shareholding again, has received approval to acquire a freehold interest a freehold interest in 7.8 ha of land at Grants Road, Frankton, Queenstown. Consideration was confidential; the vendor was Redwood Group Limited New Zealand (100%). Redwood Group is a significant property development company, founded in 1992 by the sometimes controversial Tony Gapes. Two years ago Gapes infuriated residents of Orakei with plans to build 146 apartments on the water’s edge after digging up an historic pa, with a design which one local councillor described as “East Germany by the sea”.
The OIO states with respect to the above approval: “The Applicant is seeking to expand its operations across New Zealand and the land is being acquired to enable the Applicant to implement its business investment plans. The acquisition will enable the Applicant to increase its presence in the Queenstown/Frankton area”. I wonder if existing Frankton area residents are aware of what the applicant has planned for their community? It doesn’t take a rocket scientist to figure out that this is the same applicant in all three approvals. More worrying is the rubber stamping approach of the OIO, given the word “The” was spelt “Ther” in all three approvals!
The Applicant was subsequently revealed by the OIO as General Distributors Ltd, the property owning entity for Progressive Enterprises Limited (Progressive) which through its subsidiaries operates supermarkets under the Woolworths, Foodtown, and Countdown supermarket brands.
Decision #s 200920021, 200920081, 200920082
Other December Decisions
Wyuna Preserve Residents Association Incorporated United States of America (60%), New Zealand (40%) received approval to acquire a freehold interest in 83.6299 ha of land at Wyuna Station, Glenorchy, Queenstown: and an overseas investment in sensitive land, being the Applicant’s acquisition of membership securities in the Applicant (which owns or controls an interest in sensitive land) resulting in the Applicant having a 25% or more ownership or control interest in the Applicant. The asset value was to be advised once the 83.6 ha has been transferred to the Applicant and has been valued by the Queenstown Lake District Council and the Otago Regional Council for rating purposes. The vendor was Wyuna Joint Venture United States of America (60%), New Zealand (40%), i.e. presumably a change in name only, and not ultimate ownership as such. The OIO states:
“The (former) Overseas Investment Commission gave its consent to the acquisition of Wyuna Station at Glenorchy, near Queenstown. It was intended to create a small and secluded subdivision development consistent with the conservation values being applied at Wyuna Station, primarily in order to meet the costs of development of Wyuna Station. The total area of land involved in the subdivision is 169.8 ha. This application relates only to part of the land covered by the previous decision, namely the 83.6 ha, being the access lot and four native regeneration and open space preserve lots (the land), within the subdivision development. The land needs to be held in common for the benefit of all residents within the subdivision. To achieve this common ownership, the Joint Venture proposes to transfer the land to the Applicant”.
Details of this approval were reported by Henrietta Kjaer in the Otago Daily Times (2/2/10): “The Overseas Investment Office has granted consent for the Wyuna Station to transfer 84ha of preserve land to a residents’ association, clearing the way for a new subdivision on the station. The 170ha subdivision is part of the 8,000-acre Wyuna Station, an active sheep, cattle and deer farm located on the hills on the east side of the Glenorchy-Queenstown Rd close to the Glenorchy airfield and overlooking Lake Wakatipu.
The 34 available home sites range from four acres to nine acres, and the new home owners will be part-owners of the 84ha lot of preserve land, along with a clubhouse with gym, swimming pool and horse stables. Wyuna Joint Venture, which is behind the Wyuna Preserve development, is owned partly by Carbo Ltd, whose director, Tom Tusher, also owns the neighbouring luxury lodge Blanket Bay, and partly by Pisidia Holdings Ltd, headed by Jacks Point developer John Darby. The sections were offered for sale in January through Browns Sotheby’s, where partner Mark Harris said the roads, clubhouse and other amenities are almost completed. ‘There has been good interest in this subdivision and two of the sections are already under contract’, he said. Mr Harris said the individual sections do not require Overseas Investment approvals”.
Decision # 200910030
Jones (Andrew Steven and Denise Jayne) United Kingdom (100%) received approval to acquire a freehold interest in 6.8 ha of land at 1500 The Coastal Highway, Ruby Bay, Nelson. Consideration was $1,568,750; the vendor was Cherry Hill Properties Limited New Zealand (100%). The OIO states: “The Applicants, though UK citizens, were granted New Zealand permanent residency in November 2005 and hold indefinite returning resident’s visas. However, they are considered overseas persons for the purposes of the Act as they are not ordinarily resident in New Zealand. The Applicants intend to reside in New Zealand indefinitely, and apply for consent on that basis”. The Jones’s have previously bought property here; ten ha at 750 Waihopai Valley Road, RD6, Blenheim (see our April 2006 commentary). The OIO stated at the time that: “…The Applicants intend to reside permanently in New Zealand…” Four years later and clearly that still remains just an intention?
Cherry Hill is owned by Alan Trent. Details around the above proposal were revealed by Tracy Neal of the Nelson Mail (20/1/10): “High profile and at times controversial property owner Alan Trent plans to develop a new subdivision on prime land around his house above Ruby Bay. The complex arrangement around the 12 hectare rural three subdivision between Permin Rd to the north and the McKee Domain to the south is on land that incorporates the site of his own house. A cherry orchard has been established within one of the lots under a long-term lease arrangement, resource consent documents show. A resource consent issued last year gives a company named Cherry Hill Properties authority to develop the five-lot subdivision and to amalgamate a 5.83-hectare lot and 3,160-square-metre lot into one title.
“Title was not yet through on the sites but interest in them had been steady, Mr Trent said. He said Cherry Hill Properties was a consortium set up to handle the development. The arrangement meant that he would remain in control of what happened with the land, but the development cost would be worn by the consortium. ‘It’s a bit like having my cake and eating it too. I don’t want to be the developer, but I want to control what happens because it will have a direct impact on where we live’, Mr Trent said. He declined to say who was in the consortium, other than it was attracting interest from Christchurch farmers, and he was more of a ‘third person’ in the set up.
“The New Zealand Companies Office register shows that Cherry Hill Properties was incorporated in June (09). Its director and a minor shareholder was Nelson lawyer Paul Le Gros. Wellington lawyer Grant Pearson was also a minor shareholder. Mr Trent said their involvement extended no further than them being the lawyers who set up the company. The Tasman District Council resource consent documents list Mr Trent and his wife, Shelley, and New Zealand businessman Robert Purdue as consent holders. The planned subdivision is across the road from the exclusive oceanside subdivision Pebble Bay, which Mr Trent has been involved in developing. The 16ha block of land in Permin Rd, zoned rural-residential, had been slowly developed into a ‘park-like’ environment of lots ranging in size from 1ha to 2ha.
“Only nine of the planned 17 sections had been developed, Mr Trent said. ‘I still own all nine and one has the show home on it. The other eight are currently vacant land still, and will go on sale this winter’. In 2004, Mr Trent shelved plans for an 80-section subdivision on coastal land he owned at Tasman because he was waiting for a clearer idea of what would be allowed in the Tasman District Council’s rural three zone. The Cherry Hill subdivision would be built around the existing 3,500 cherry trees, and there were plans for another 5,000 trees. ‘It will be a mix of productive land and housing’, Mr Trent said. ‘We had thought about grapes but the soil is not suited. The next best thing was cherries and I think we can do it’. Mr Trent, who is from the United States and became a New Zealand citizen several years ago, has attracted controversy in the past over his development of land above the Kina cliffs in Tasman. He said the idea for the new development was to ‘make it beautiful and not densely housed. It’s our first cut at interpreting rural three. We have a prime piece of land and we want to get it right’, Mr Trent said”.
Decision # 200920043
Honikiwi Holdings Limited United States of America (50%), Japan (50%) received approval for an overseas investment in sensitive land, being the acquisition of a freehold interest in 788 ha of land at Tapuae Road, Honikiwi, Otorohanga. Consideration was $1,828,125, the vendor was Daniel John Morton and Rachel Catherine Dillimore New Zealand (100%). The OIO states: “The Applicant plans to acquire the Land and develop it into a plantation of Californian Redwood. The proposed Investment will benefit New Zealand by… protecting indigenous flora and habitats for indigenous fauna and trout; and improving walking access over the land”. How the establishment of an exotic redwood forest will protect indigenous fauna and flora is beyond me.
Decision # 200920051
Kirikiri Part, LLC Canada (100%) received approval to acquire rights or interests in the remaining 37.5% of the interest in the Kirikiri Bay Joint Venture (formerly Radiata Bay Partnership) which owns or controls a freehold interest in 517.4 ha of land at Tangoio Settlement Road, Napier. Consideration was $2,000,000; the vendor was Awatea Trust New Zealand (100%). The OIO states: “Mr Paulus, the shareholder of the Applicant holds a 62.5% interest in the Kirikiri Bay Joint Venture. Mr Paulus through the Applicant proposes to increase his existing 62.5% ownership and control interest in the Joint Venture, to initially 80%, and then up to 100%, by the acquisition of the 37.5% interests held by the other Joint Venture parties. This will result in Mr Paulus having a 100% beneficial interest in the property at Tangoio Settlement Road, Napier. Mr Paulus intends to develop the land from its current status as a primarily sheep and beef farm to a mixed plantation forest and specimen arboretum in accordance with the Kirikiri Bay Afforestation Plan (Forest Plan). The implementation of the Forest Plan commenced in 2008 and has continued during 2009. The proposed forestry development will ensure that the land is used for productive purposes and will complement Mr Paulus’ existing forestry investments in New Zealand”.
The Radiata Bay Partnership originally received approval in 2002 (see August 2002) to establish an exotic forest and 30 life style block subdivision. By 2005 however, retrospective approval was needed due to an illegal change in the use of the land from what was approved in 2002, and a change in the structure of the investment. The developers found they could make more money from development and sale of the land than from forestry. See our April 2005 commentary for details of the retrospective approval to purchase this land by Kirikiri Bay Joint Venture (formerly Radiata Bay Partnership), of which 62.5% was on sold to Werner P Paulus.
Decision # 200920052
Summary Statistics December 2009
Asset value
| Dec 2009 | Jan-Dec 2009 | Jan-Dec 2008 | |
|---|---|---|---|
| Number of approvals | 12 | 130 | 98 |
| Net land area (ha) | 3,161 | 22,345 | 13,842 |
| Gross land area (ha) | 3,421 | 265,266 | 32,578 |
* Two decisions in August 2009, being Cases 200910105 and 200910109 were previously published with the consideration attributable to the worldwide transaction. The Overseas Investment Office has now determined the New Zealand asset value for the two transactions. Accordingly, these figures have been amended to exclude the value of those transactions other than that attributable to New Zealand assets.
Freehold land approved for sale
| Dec 2009 | Jan-Dec 2009 | Jan-Dec 2008 | |
|---|---|---|---|
| Number of approvals | 12 | 130 | 98 |
| Net land area (ha) | 3,161 | 22,345 | 13,842 |
| Gross land area (ha) | 3,421 | 265,266 | 32,578 |
Other interests in land approved for sale (for example leases and crown pastoral leases)
| Dec 2009 | Jan-Dec 2009 | Jan-Dec 2008 | |
|---|---|---|---|
| Number of approvals | 6 | 26 | 28 |
| Net land area (ha) | 8,698 | 9,897 | 24,854 |
| Gross land area (ha) | 8,720 | 99,544 | 37,984 |
Applications denied
| Dec 2009 | Jan-Dec 2009 | Jan-Dec 2008 | |
|---|---|---|---|
| Number of declines | 0 | 0 | 5 |
| Total proposed purchase price ($) | 0 | 0 | 4,883,252,517 |
| Total proposed area to be acquired (ha) | 0 | 0 | 4,556 |
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.