June 2001 decisionsSumitomo’s Nelson Pine Industries Ltd buys Mataura MDF plant from Rayonier Siemens of Germany buys maintenance division of UnitedNetworks Most details of Lord of the Rings film companies remain suppressed Austrian buys into Remarkables Park resort development in Queenstown Mount Creighton Station owners buy neighbouring 33,000 ha. Branches Station One refusalOne application was refused this month, and unusually had most of the details released. David John McNicholas of the U.K. has been refused approval to acquire six hectares at Otaha Road, Northland for a lifestyle property. The price has been suppressed. He “originally intended to seek and take up New Zealand permanent residency. He proposed to erect a dwelling on the property for his own use. Subsequently, the Applicant advised that he was now not able to take up New Zealand permanent residency. The proposal does not meet the lifestyle policy and was deemed not to be in the national interest.” Sumitomo’s Nelson Pine Industries Ltd buys Mataura MDF plant from RayonierNelson Pine Industries Ltd, a subsidiary of Sumitomo Forestry Company Ltd of Japan, has approval to acquire the medium density fibreboard plant at Mataura, Southland, including 129 hectares of land, from Rayonier NZ MDF Ltd, a subsidiary of Rayonier Inc of the U.S.A., for a sum “to be advised”.
“The Applicant owns and operates one of the largest single medium density fibreboard production plants in the world at Nelson. The acquisition of the me-dium density fibreboard mill at Mataura will compliment the Applicant’s existing medium density fibreboard operations in New Zealand.
The acquisition will enable the Applicant to rationalise its production schedule between the Nelson and Mataura mills. The Applicant currently produces various thickness of medium density fibreboard at its Nelson plant to meet different market requirements. Accordingly, its production runs are reconfigured depending on the particular product required. The acquisition of the Mataura plant will increase the overall production efficiency by reducing the need for reconfiguration of production runs. This will reduce down-time and hence increase the productive capabilities of both mills.”
However the output will be largely tied to the Japanese market of its owner:
“The principle market for the Applicant’s medium density fibreboard is the Japanese market where demand for the product continues to be high. This market is a secure one, because of the Applicant’s ownership by Sumitomo Forestry Company Ltd, and guarantees a market outlet for the bulk of the Applicant’s production. Rayonier does not have access to the Japanese market. The Applicant’s guaranteed market access can only increase the security of employment for the existing workforce at the Mataura mill.
Furthermore, the Applicant is likely to consider the construction of a second production line at Mataura within the next 4-5 years. This would provide approximately 50 further direct employment opportunities.”
The sale of the MDF plant was part of a sale of a number of assets by Rayonier. Four forests in Nelson and Marlborough were also put up for sale. Three are in the Marlborough Sounds – the 2,616 hectare Queen Charlotte Forest near Port Underwood, Mt Duncan near Linkwater, and Onapua. The other is the 3,618 hectare Motueka Forest, Nelson (Press, 10/5/01, “Offer for Rayonier forest”, p.15). Rayonier acquired the Queen Charlotte and Motueka forests as part of a mass purchase of 97,502 hectares of Crown Forest licences in May 1992. It bought the 299 hectare Mt Duncan forest in July 1997 for $4,000,000. It is moving out of processing timber, to return to its “traditional” role of selling standing timber (New Zealand Herald, 16/5/01, “Rayonier puts its roots down”).
It remains the largest forest owner in Southland, in June 2000 buying 39,213 hectares of land in forests in Southland and Otago from Ngai Tahu Holdings Corporation Ltd, part of the land over which Rayonier acquired the Crown Forestry licences in 1992. Te Runanga o Ngai Tahu acquired the land on which the forests grow in its Treaty of Waitangi settlement with the Crown. According to the New Zealand Forest Owners Association, Rayonier is the third largest forest owner in Aotearoa, with 105,000 hectares in 2000 (“New Zealand Forest Industry facts and Figures 2000/2001”).
Carter Holt Harvey and Fletchers also operate MDF plants, and the sale to Nelson Pine Industries was cleared by the Commerce Commission on 31/5/01, despite the fact that it will have 60% of New Zealand capacity for standard MDF production. Fletchers (which has a Taupo plant but also buys output from the Mataura plant under contract) will have 17% and CHH (through its Canterbury Timber Products Ltd plant at Rangiora) 23%. However most production is exported: total annual production in New Zealand is around 700,000 cubic metres, but domestic consumption is around 115,000 – 120,000 cubic metres per year. Total New Zealand capacity is estimated as 950,000 cubic metres per year (Commerce Commission Decision 431, 31/5/01). Siemens of Germany buys maintenance division of UnitedNetworksSiemens AG of Germany has approval to acquire the assets of the Contracting Field Services division of UnitedNetworks Ltd for $72,000,000. UnitedNetworks, which is an electricity lines company and gas retailer now expanding into telecommunications, is owned 70.2% by Utilitcorp United Inc of the U.S.A. A further 19.1% is owned overseas. It is one of the four largest line companies in Aotearoa, operating in Wellington, Auckland, Bay of Plenty and the Coromandel.
“The proposed sale by UNL will involve the outsourcing of the CFS operations (all of its electricity and gas repair and maintenance work, meter reading and the maintenance of various power generation assets)” to Siemens. The outsourcing will be governed by a service contract for seven years and six months, with a one year right of renewal.
Siemens claims it can do the work better and cheaper, and “it is anticipated that the domestic and commercial electricity and gas consumers will benefit by UNL being able to pass along these benefits in the form of reduced charges and/or better services”.
There is more to come from this entry into Aotearoa: “Siemens will also be well placed to utilise its wealth of resources and expand the scope of its services to other industries in New Zealand such as the telecommunications industry where for example, significant advances are being made in two-way communications via electrical lines.” Most details of Lord of the Rings film companies remain suppressedSix decisions that were originally suppressed almost in full were released in part on appeal in July 2002. However many details remained suppressed. All referred to New Line Productions Inc of the U.S.A., AOL Time Warner’s film subsidiary which backed the Lord of the Rings trilogy. Two companies also have names referring to the second and third Lord of the Rings films. It is likely that these were part of the complex transactions used in financing the films, designed to maximise tax concessions. Gordon Campbell (Listener, “Planet Middle Earth”, 15/12/01, p.17-24) estimates that the film cost the New Zealand Government up to $200 million in lost tax revenues. In addition, the third of the trilogy – The Return of the King – “is being financed by Hannover Leasing of Munich via a reported US$150 million tax shelter – i.e. half the budget for the entire three films – with each German investor needing to pony up US$43,000 to join”, reports Campbell. The second film – The Two Towers – probably had similar financing. In other words, German taxpayers are contributing another substantial part of the cost, based on the same expenses as the New Zealand tax concessions. Both New Zealand and Germany have since changed their tax laws – but in the New Zealand case, with a “grandparenting” clause which allowed the Lord of the Rings to retain the concessions. New Line itself, after New Zealand tax breaks, merchandising and so on, “had only US$20 million riding on each movie”.
Richard F Reiner, mentioned in two of the decisions as an alternative offeror, is the owner of a company called Shooting Star Pictures Inc, which organises the financing of films (frequently involving tax avoidance). In December 1997 we reported deals with a similar flavour, again involving Reiner, but then with the two TV series, Xena and Hercules. We wrote:
It appears that the ownership of the two TV series, “Xena, Warrior Princess”, and “Hercules: The Legendary Journeys” is being split. In three related decisions, the OIC has given approval to BNZ Investments Ltd, Universal Television Enterprises Inc, and Shooting Star Pictures Inc, each to “acquire property being the copyright and other assets associated with” the two series. BNZ Investments is paying US$58,381,837, Universal is paying $US65,679,567, and Shooting Star is paying $US65,579,567.
BNZ Investments, a subsidiary of the Bank of New Zealand Ltd, owned by National Australia Bank Ltd of Australia, is acquiring its share from Universal Television Enterprises. Universal Television Enterprises, a subsidiary of Universal Studios Inc, whose majority shareholder is The Seagram Company Ltd of the U.S.A., is acquiring its share from Screen Holdings Ltd and Iraklis Eleven Ltd, both subsidiaries of the BNZ. Shooting Star Pictures Inc is owned by Richard F. Reiner, a citizen of the U.S.A. and is acquiring its share also from Universal Television Enterprises.
In each case it is stated that “The transactions form part of Universal’s strategy to produce and distribute films and television series both within New Zealand and world-wide.” The BNZ’s involvement is “to generate a return on capital, support the New Zealand film industry, and to provide further investment opportunities in the film industry”. Reiner’s involvement is “to facilitate and manage the investment made by BNZ Investments Limited”.
The six decisions are as follows (to the limit of the information supplied). All have their business activities categorised as “Cultural and Recreational Services – Amusement/Entertainment”, and the price (“consideration”) is “to be advised”. · Richard F Reiner or New Line Productions Inc of the U.S.A. are applicants. What they are applying for is largely suppressed, but it involves increasing the overseas ownership of what they are acquiring from 60% to 100%. · New Line Cinema Corporation/New Line Productions Inc owned by AOL Time Warner Inc of the U.S.A. are applicants. Again, what they are applying for is largely suppressed, but it involves increasing the overseas ownership of what they are acquiring from 60% to 100%. · The Towers Syndicate, whose ownership is suppressed, has approval to acquire something that is suppressed from New Line Cinema Corporation/New Line Productions Inc owned by AOL Time Warner Inc of the U.S.A. Again, the overseas ownership of what they are acquiring is increasing from 60% to 100%. · Richard F Reiner or New Line Productions Inc of the U.S.A. are applicants. Once again, what they are applying for is largely suppressed, but it involves increasing the overseas ownership of what they are acquiring from 55.55% to 100%. · New Line Cinema Corporation/New Line Productions Inc owned by AOL Time Warner Inc of the U.S.A. are applicants. You guessed it – again, what they are applying for is largely suppressed, but it involves increasing the overseas ownership of what they are acquiring from 55.55% to 100%. · The King Returns Syndicate, whose ownership is suppressed, has approval to acquire something that is suppressed from New Line Cinema Corporation/New Line Productions Inc owned by AOL Time Warner Inc of the U.S.A. And once again, the overseas ownership of what they are acquiring is increasing from 55.55% to 100%. Austrian buys into Remarkables Park resort development in QueenstownProvidence Investment Company Ltd, owned by Dr Hermann Hauser and family of Austria, has approval to acquire up 35.29% of Remarkables Park Corporation Ltd for $9,000,000. Remarkables Park Corporation was previously owned 66% by the Porter Family of Aotearoa and 34% by the South Seas Trust of Hong Kong. It will now be owned 50.01% by the Porter Family, 14.7% by the South Seas Trust, and 35.29% by the Hausers’ company, making it 49.9% overseas owned.
The company, through its subsidiary, Remarkables Park Ltd, is developing the “Remarkables Park Project” in Queenstown.
“This integrated village resort development includes a regional shopping centre (50% built) and significant proposals for a wide range of facilities including hotels, a conference centre, a new golf course and extensive condominium housing development. RPL’s role has been as land developer. In this capacity RPL has been the facilitator of all the projects including the design of all buildings. This has included the use of international leaders in village resort design and architecture. Additionally, major retail stores have been established at the centre, providing greater choice for local and international customers. The capital that will become available to the project from the restructure will enable RPL to concentrate on the development of RP.” Land for forestry· In five approvals, blocks of land in Waikato, near Ngaruawahia, are being purchased by investors from Taiwan (four cases) and the U.S.A. (one case) from the New Zealand Forestry Group Ltd, which is owned 76% by Wesley Garratt of Aotearoa, and 24% by J. Hong of Taiwan. Four of the purchasers are members of the Brooklands Forest group, which has “entered into an arrangement with New Zealand Forestry Group to develop approximately 1,200 hectares of land at Ngaruawahia. Currently 138 hectares of land has been afforested”. The fifth is a member 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 this and other regions organised by New Zealand Forestry Group, the last such sales being in January 2001 with investors in the Ruakiwi Forest group and in March 2001 with investors in the Brooklands Forest group. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. The four Brooklands Forest Group investors in this case, acquiring land at State Highway 22, Te Akau Road, are: · Sing Sally Lee of the U.S.A., acquiring 15.5 hectares for $99,200; · Mao-Ting Yang and Hsiu-Yen Yen of Taiwan, acquiring 40.2 hectares for $257,280; · Lins Family Trust of Taiwan, acquiring 14.9 hectares for $95,360; · Ping-Hui Chang of Taiwan, acquiring 14.8 hectares for $94,720. The Ruakiwi Forest group investors are jointly Jen-Chung Tseng and Hui-Chen Wu of Taiwan, acquiring 12.7 hectares of land at Ruakiwi Road for $78,740. · Makorori Forests Ltd, owned by Thomas Edward and Veronica Carroll of the U.S.A., has approval to acquire 29 hectares of land adjoining a heritage or historic area, at State Highway 35, 8km north of Gisborne, for $281,250. The Carrolls currently reside in the United States, but “plan to eventually reside permanently in New Zealand. They visit New Zealand frequently through Mr Carroll’s interests in the Gisborne area. They intend to convert the property from one of non-productive use into a forestry investment. They also intend to use New Zealand expertise extensively to monitor and operate the forestry venture in its initial stages of development. It is advised all of the activity is to be conducted under contract by Kohntrol Forests Limited, who have extensive experience in forestry related activities. The block will eventually be planted entirely in native species suited to the harsh costal surroundings. The planting will enhance the landscape of the area, while also stabilising the soil below.” We have no record of previous purchases by the Carrolls. Land for wine· Montana Group (NZ) Ltd (formerly Corporate Investments Ltd) has approval to acquire a further 24 hectares of land at Jones Road, Wairau Valley, near Blenheim, Marlborough, for $832,500 for growing grapes and wine production. At the time. Montana was approximately 61% owned by Lion Nathan Ltd (headquartered in Australia but dominant shareholder Kirin Brewery Company Ltd of Japan with 46%) and 26.77% owned by Allied Domecq Plc of the U.K. However this was in the middle of a battle for control of Montana by the two companies (see our commentary on the February 2001 decisions for example). Control in the end went to Allied Domecq after an epic and dirty struggle. · Gibbston Valley Wines Ltd, owned 24.2% in the U.S.A., 11.5% in New Caledonia, 0.4% in the U.K., and the rest in Aotearoa, has approval to acquire one hectare of land at Kawarau Gorge, State Highway 6, Otago for $340,000. It adjoins five hectares already being used for a vineyard and winery. The Montagnat family of New Caledonia bought a 27.2% interest in Gibbston Valley Wines in June 1999; they appear to have reduced their interest since then. Gibbston Valley Wines is buying the land from Glenroy Station Ltd. In August 1994 we reported that Glenroy Station Ltd was being bought by a New Caledonian, Georges Maxime Montagnat, for $1,540,000. The Station then had 124 hectares of freehold land and 4,879 hectares of pastoral lease. Mount Creighton Station owners buy neighbouring 33,000 ha. Branches StationMount Creighton Joint Venture, 33.33% owned by C.L. Norrie of the U.S.A., 25% each by H.J. Paterson and W.G. Shaw of Aotearoa, and 16.67% by M. Faber of Hong Kong, has approval to acquire The Branches Station, Skippers Creek, Earnslaw, near Queenstown, Otago, for $2,250,000.
The Branches is made up of 11,209 hectares of leasehold land and 22,335 hectares of pastoral lease. It includes two areas subject to QEII Open Space Covenants: Lake Lochnagar and the MacKay Falls area.
The OIC says: “In May 1999, the Commission granted consent to the Applicant to purchase ap-proximately 15,824 hectares of land known as Mount Creighton Station. The objective was to increase the economic use of the land and to develop a high quality tourist lodge facility. The Applicant considers the acquisition and development of the subject property, The Branches, in conjunction with the Mount Creighton Station, will enhance synergies which exist between the two properties in terms of farming and tourist facilities. Three specific areas being farming, tourism and conservation have been identified as key growth catalysts for The Branches.”
The new acquisition results in an overseas owned station of almost 50,000 hectares (49,367 hectares).
The OIC continues:
“The emphasis of the development of The Branches will be on improving the cattle and sheep breeding stock via the adoption of a farm management plan. In addition, the joint venture will look to reclaim approximately 2,000 hectares of Mt Creighton land consisting of lower bracken country. The reclaimed land will be stocked in part by transferring breeding stock from The Branches, a further example of the interlocking nature of the overall proposal between the two properties.
The tourism attributes that will be enhanced by the joint venture include the development of wilderness/trekking activities, river fishing trips, rafting and kayaking and cross country telemark and helicopter skiing. The complementary advantages created by the close proximity of Mount Creighton Station and The Branches will create a unique tourism experience for the area.
The Joint Venture also proposes to further develop the conservation features of the property including the two areas that are the subject of two QEII Open Space Covenants. The first of these protects Lake Locknagar [sic] and the second the McKay [sic] Falls area. At the time these covenants were put in place it was contemplated that a management plan for each covenant be established. This has not occurred. The joint venture is committed to concluding these plans immediately following the acquisition which will ensure ongoing public access and protection of the areas.
In addition the Joint Venture will commission a report to identify key environ-mental features present on The Branches. As well as conservation issues, this report will include an investigation into heritage and tangata whenua values and any other key cultural features.
The Joint Venture is committed to sound conservation practices so that the tourists they host at the property and the general public can continue to enjoy the unique features contained on the property.”
C.L. Norrie is presumably the same Christopher Lorillard Norrie about whom we wrote in a March 1994 OIC decision:
The Queenstown Lakes District Council is selling a 2.5 hectare property at Queenstown to Fernhill Hotel Ltd, for a price that has been withheld. “It is proposed that the property be developed as a resort Hotel/Condominium complex. There is already in existence planning rights for such a development … the vendor (the Queenstown Lake District Council) is disposing of the property in order to promote the objectives…” Fernhill is 25% owned by U.S. investor Christopher Lorillard Norrie and 75% by Woodland Property Holdings Ltd, in turn 50% owned by T.Y. Tseng of Taiwan. The other 50% of Woodland Property Holdings is owned by the Woodland Group. Norrie was involved in the élitist Broadway housing development in Newmarket, Auckland [see the March 1994 decisions]. The Sunday Star-Times reports that Norrie “is an American lawyer who was based in California when he bought the land, but has since moved to Seattle, has interests in horticulture in Hawaii and was distantly related to former Governor-General Lord Norrie. … His joint-venture partner is Neville Mahon, who had been running Project Group’s Wellington operation until that company’s demise in 1988. Woodland Group, the company Mr Mahon formed after leaving Project, is the main contractor for the Broadway project.”
Other rural land sales· Fuji McKinley Trust of Japan has approval to acquire 16 hectares of land at 1 Kellys Road, Whitford, Auckland for $3,000,000 as a lifestyle property. The unnamed principal beneficiary of the Fuji McKinley Trust, and a number of his siblings who are also beneficiaries of the Trust, have the “intention to seek and take up permanent residency in New Zealand.” · Valor Ideal Ltd, owned equally by Frederico and Richy Chamyan of Uruguay, has approval to acquire 30 hectares at Richardson Line and Settlers Line, Palmerston North, Manawatu from Setters Farms Ltd of Aotearoa for $912,000. “The property is currently leased to a local farmer who uses it as a run off for grazing 30 cows during the summer dry off season.” The Chamyans “already have established links with the New Zealand agricultural industry particularly in relation to the purchase of pelts for export to Uruguay, propose to substantially increase the productivity of the property. It is proposed to establish an intensive beef fattening and calf rearing operation on the land.” Their company is “also proposing to establish a centralised hub for its New Zealand business operations particularly in relation to the procurement of pelts for export to its manufacturing operations in Uruguay. Currently 140,000 pelts are exported each year. This would be likely to increase to approximately 300,000 following the establishment of a centralised operation. Furthermore, in the medium to long term the Applicant intends to investigate creating the farm into a “model farm”. This would be used to demonstrate farming techniques and provide a base for a farm advisory service to Uruguayan farmers. This would be likely to strengthen ties between Uruguay and New Zealand particularly in the farming sector.” · Rodin Securities Ltd, owned by David John Dicker of Australia has approval to acquire 41 hectares at the corner of McLennans Bush Road and Rosehill Road, RD Rakaia, Canterbury from Rosehill Farming Company Ltd for $277,875. The land is part of a 340 hectare farm and is near Mount Hutt and the Inland Scenic Route along the Southern Alps. Dicker “intends to develop an exclusive lodge/tourist accommodation facility, with the aim of attracting international tourists”. He also “proposes to extend the existing forestry planting programme on the property by planting a further eight hectares”. · Premier Dairies Ltd, owned by the Clinton Family Trust of Ireland, has approval to acquire two more blocks of land in Southland for dairy farming. Their last such purchase was in May 2001. The two this month are: · 115 hectares at Pullar Road, North Makarewa, for $1,265,625; and · 81 hectares at 200 Collinson Road, Invercargill for $1,518,750. · Lagore Enterprises Trust, whose beneficiaries are Mr and Mrs O’Hare of Lagore, County Meath, Ireland, has approval to acquire 319 hectares at Otahuti, Southland, for $5,359,284. The O’Hares “are in the course of realising their assets in Ireland and propose to move to New Zealand. Mr O’Hare has farmed in Ireland in partnership with his brother and now wants to buy a dairy farm in New Zealand. The O’Hares propose to reside on the property and farm it themselves. They believe that they can increase the property’s productivity through the use of supplementary feed techniques, improving the irrigation on the property and improving the pasture quality through intensive regrassing programmes.” |
