October 2006 decisions

Hancock buys Carter Holt Harvey’s forests

Takeover of Kathmandu clothing completed

Bacardi buys local Whisky firm, 42 South

Nikko Principal Investments buys Truck Leasing Ltd (Esanda)

Dutch food firm takes over two companies

BNZ buys leasehold from Centreport, Wellington, for construction of new office

Land to TrustPower for Tararua wind farm, Waipori and Arnold Valley hydros

Approval concerning “Electricity & Gas Supply” almost entirely suppressed

Strategic Finance buys lease of its office on Princes Wharf, Auckland

Land for wine

Other rural land sales

Summary statistics

Hancock buys Carter Holt Harvey’s forests

Hancock Natural Resource Group, Inc of the U.S.A. has approval to acquire the Carter Holt Harvey Forest Estates from Carter Holt Harvey Limited, owned by New Zealand’s richest man, Graeme Richard Hart. These forests consist of:

176,902 hectares of freehold comprising:

·        15,714 hectares in the Bay of Plenty region;

·        48,744 hectares in the Northland region;

·        20,889 hectares in the Nelson region;

·        534 hectares in the Gisborne/Hawkes Bay region; and

·        91,021 hectares in the Waikato region.

63,615 hectares of leasehold comprising:

·        26,913 hectares in the Bay of Plenty region;

·        12,228 hectares in the Northland region;

·        162 hectares in the Nelson region; and

·        24,312 hectares in the Waikato region.

The price is suppressed. Media speculation puts it between $1.5 billion and $2 billion, but given that the net total for all of this month’s OIO decisions is $1.676 billion (see the statistics at the end of this month’s commentary), and other net approvals come to well over $200 million, it is likely to be between $1.4 and $1.5 billion.

According to the OIO,

Hancock Natural Resource Group Inc (Hancock) is a subsidiary of Manulife Financial Corporation, an insurance and investment company in Canada and the United States of America listed on the New York Stock Exchange. Hancock acts for investor clients to identify and complete commercial forest plantation acquisitions and to manage these plantations following acquisition. Hancock’s investors comprise public and corporate pension plans, high net-worth individuals and foundations and endowments.

Hancock is the successful bidder in the sales process being conducted by Carter Holt Harvey Limited (CHH) in respect of the Carter Holt Harvey Forest estate (CHH Forest Estate). Hancock has entered into a Sale and Purchase Agreement with CHH in respect of the acquisition of shares in certain CHH subsidiaries and the acquisition of various forest assets from certain CHH companies. The CHH Forest Estate, located in the Northland, Central North Island and Nelson regions, includes freehold and leasehold interests in sensitive land, Crown Forestry Licences, Forestry Rights and other forestry assets. The CHH Forest Estate has an area of approximately 207,000 hectares comprising mostly radiata pine. The Forest Estate is expected to produce approximately 2.9 million tonnes of wood in 2006 increasing to approximately 5.6 million tonnes in 2019.

The acquisition of the CHH Forest Estate will provide further geographical diversification to Hancock’s timberland investment portfolio. Hancock’s intended strategy for the CHH Forest Estate is to maintain significant aspects of the basis under which the assets have been operated to date and to support management plans for growth and productivity improvements.

While the OIO also states that

The proposal is likely to result in the following benefits:                

(a)          increased efficiencies to the Forest Estate and added market competition in the New Zealand forest products market;

(b)          the creation of a public walking track and ancillary facilities which is likely to form part of the proposed Te Araroa (a series of walking tracks linking Cape Reinga to Bluff); and

(c)          improved public access over the land.

it does not mention a hard fought campaign to stop the sale by Māori owners of some of the land on which the forest stands.

The campaign included trying to prevent OIO approval for the sale. Hamilton lawyer Willie Te Aho, a former manager with Carter Holt Harvey, represented three Trusts (including Maraeroa C and the Pukemakoiti Trust) which own the Te Kuiti-based Kokakotaea Forestry Corporation and 10,000ha of forest leased by Carter Holt. When Kokakotaea heard that Carter Holt was selling its forests, it asked to buy back the leases, but Carter Holt refused, wanting to sell to one buyer. Te Aho called on Ministers and other politicians – including the Prime Minister of Canada because Hancock’s owner is Canadian company Manulife Financial which Te Aho also tried to talk to – for help. The trusts resolved to terminate their leases and enter their land if a satisfactory resolution was not found, asked for an urgent hearing before the Waitangi Tribunal and for an injunction from the Maori Land Court to block the sale, claiming breaches of the Maori Land Act. The matter was to be heard in February 2007. One of the complaints was “the decision of the Overseas Investment Office on 16 October 2006 requiring Hancock to create walking tracks and improved public access on lands which includes those” owned by the trusts.

According to the New Zealand Press Association, Hancock

is owned by the large Canadian financial services corporation Manulife Financial. It puts together investments in forests for mutual and endowment funds and rich individuals. The purchase of the bulk of the former Carter Holt estate makes Hancock the biggest manager of forests in New Zealand. It now oversees 296,000ha of forests for a range of investors. The second-largest estate is owned by Havard University’s endowment fund.

… two Australian funds – UniSuper Ltd and Perpetual Investment Management Ltd’s Diversified Infrastructure Fund – were two of the investors behind the transaction. UniSuper was a retirement fund servicing Australian universities and Perpetual a diversified financial services group in Australia.

(NZPA, “CHH forest buyers revealed”, 1/12/07, http://www.stuff.co.nz/print/3885035a13.html)

[Decision number 200620063.]

Takeover of Kathmandu clothing completed

Quadrant Private Equity Pty Limited as manager of Quadrant Private Equity No. 1A and Quadrant Private Equity No. 1B owned in Australia, and Goldman Sachs JB Were (NZ) Holdings Limited, owned by Goldman Sachs JB Were (NZ) Holdings Limited as manager for the Hauraki Private Equity No.2 Fund of Aotearoa (50% each), has approval to acquire up to 100% of Milford Group Holdings Limited for $50,000,000 from Janet Heather Cameron of Aotearoa.

The OIO states:

In May 2006 the Overseas Investment Office approved the acquisition of 100% of the shares in Kathmandu Group Limited (Kathmandu) by Milford Equities Limited (MEL). MEL is wholly owned by Milford Group Holdings Limited (MGHL). Kathmandu is the holding company for a group of companies that conduct business under the outdoor clothing and equipment brand ‘Kathmandu’. MGHL proposes to issue shares to Quadrant Private Equity No.1A, Quadrant Private Equity No.1B (together QPE) and Goldman Sachs JBWere (NZ) Holdings Limited (GSNZ), or their nominees. Following this issue MGHL proposes to buy back and cancel the 49% of shares held by Janet Heather Cameron. Given their business skills and governance experience QPE and GSNZ can add initiatives and drive to the continued growth of Kathmandu.

In fact the previous approval was in April 2006 (see our commentary for that month for further details). At that point, Cameron, the founder of this well known sports clothing brand, retained 49% of the company. She is now selling this remaining share.

[Decision number 200620056.]

Bacardi buys local Whisky firm, 42 South

Bacardi New Zealand Holdings Limited, owned in Bermuda by Bacardi Limited, has approval to acquire up to 100% of 42 Below Limited of Aotearoa for $137,000,000.

According to the OIO,

Bacardi New Zealand Holdings Limited (Bacardi), a member of the Bacardi group of companies proposes to acquire all of the equity securities in 42 Below Limited (42 Below) through a full cash offer under the Takeovers Code. The Bacardi group is a privately held global spirits group whose premium portfolio includes Bacardi rum, Martini vermouth, Dewar’s Scotch whiskey, Bombay Sapphire gin, Grey Goose vodka and Cazadores Blue Agave tequila. The proposed acquisition of 42 Below, the creator and marketer of premium liquor products including 42 Below vodka and South gin, will increase Bacardi’s business and market share in the New Zealand and Australian markets.

[Decision number 200620067.]

Nikko Principal Investments buys Truck Leasing Ltd (Esanda)

Fleet Holding (NZ) Limited, owned 55.0823% in Japan, 13.6773% in the U.S.A., 10.192% by “various overseas persons”, 6.916% in Canada, 5.1324% in the U.K., and 9% in Aotearoa, has approval to acquire up to 100% of Truck Leasing Limited for A$379 million for the Australian and New Zealand business assets of Fleet Partners from UDC Finance Limited, owned in Australia by ANZ Banking Group Limited.

Fleet Partners is an Australian company owned by ANZ subsidiary, UDC Finance. In turn, it owns New Zealand subsidiary Truck Leasing Ltd (which earlier had merged with Avis Lease).

According to the OIO,

Nikko Principal Investments Limited (NPIL) proposes to acquire 100% of the shares in Truck Leasing Limited (trading as Esanda Fleet Partners), a subsidiary of Australia and New Zealand Banking Group Limited. NPIL also proposes to acquire the Australian business through the acquisition of FleetPartners Pty Limited. Esanda Fleet Partners carries on business as a provider of motor vehicle operating leases and fleet management services. The acquisition is part of NPIL’s strategy to build a significant private equity business in Australia and New Zealand.

[Decision number 200620060.]

Dutch food firm takes over two companies

NBL Holding Limited, owned in the Netherlands by Adrianus Mattheus Maria Zijerveld, Matthias Abraham Antonius Zijerveld and Gerardus Johannes Maria Zijerveld, has approval to acquire 4.4 hectares at 85-89 and 91 Adams Drive, Pukekohe, Auckland for $7,162,500 from Dianne Helen Simson and Richard Barrie Stening as trustees of the Dorling Trust, and Simon Middleton Palmer and Dianne Helen Simson as trustees of the Franklin Trust of Aotearoa. The land adjoins “a reserve, a public park, or other sensitive area”.

In fact this is part of a corporate takeover in the food industry. According to the OIO,

The Applicant is a subsidiary of Mijwo Beheer B.V. a family-owned company headquartered in the Netherlands with operations in the cheese (processing and trade), food ingredients and poultry (processing and trade and fresh and frozen) industries in Europe. Mijwo Beheer B.V. proposes to commence business in New Zealand by the acquisition, via a wholly-owned subsidiary, of the business of Natures Food Ingredients Limited and Cuisine Resources NZ Limited.

The Applicant proposes to acquire the land to provide sufficient land to construct new factory premises to accommodate these businesses and to provide scope for the future growth of the businesses.

[Decision number 200620058.]

BNZ buys leasehold from Centreport, Wellington, for construction of new office

Bank of New Zealand, owned in Australia by National Australia Bank Limited, has approval to acquire 1.5 hectares of leasehold at 90 Waterloo Quay, Wellington for $55,491,752 from CentrePort Limited, owned 76.92% by the Wellington Regional Council, and 23.08% by the Manawatu Wanganui Regional Council. The land adjoins the foreshore.

The OIO states:

The Bank of New Zealand (BNZ) proposes to enter into a lease with CentrePort Limited (CentrePort) in respect of a commercial office building to be constructed on the subject land. CentrePort is to construct the new building of which it is intended that the BNZ will occupy as the main tenant. Construction is due to be completed in June 2009. The BNZ will lease part of the ground floor area for retail premises and car parking and 15,000 square metres of office space for office premises. The proposal will provide the BNZ with new office premises.

Centreport is the operator of the Port of Wellington. It even has a web camera available on the internet to show construction of the new building. The six-storey building will be for BNZ business support operations in Wellington. (Centreport media statement, “BNZ Joins Harbour Quays”, 31/10/06, http://centreport.co.nz/news_items/bnz_signing.htm.)

[Decision number 200620059.]

Land to TrustPower for Tararua wind farm, Waipori and Arnold Valley hydros

TrustPower Limited, owned 23.77% in the U.S.A. by Alliant Energy Corporation Inc, and in Aotearoa 35.18% by Infratil Limited, 28.56% by Tauranga Energy Consumers Trust, and 12.49% by minority shareholders, has approval to acquire

·      16 hectares at 177 Forest Hill Road, Aokautere, Palmerston North, Manawatu for a suppressed amount from Karl Matthew Hartman and Angela Crabb Hartman of Aotearoa. According to the OIO, “The Applicant (TrustPower) proposes to acquire the subject land as part of the establishment of the Tararua Wind Farm extension and a new 220 kV transmission line. As part of Tararua Wind Farm extension, TrustPower was granted consent by the Palmerston North City Council to erect a new 220kV overhead transmission line connecting a proposed substation on the wind farm site with an existing Transpower 220kV line. Due to operational and land access reasons, the consent was varied resulting in the proposed transmission line being located closer to the subject land.” Part of the rationale is then suppressed, and the OIO continues: “The proposal is likely to give effect to TrustPower establishing the Tararua Wind Farm extension and the new transmission line. The establishment of the transmission line is of critical importance to the Tararua Wind Farm extension…” [Decision number 200620055.]

·      30 hectares of leasehold at Eldorado Track, Mahinerangi, Otago for $1 from Dunedin City Council of Aotearoa. It is not explained why Dunedin City Council sold the lease of the land to TrustPower for a token amount. The OIO states: “TrustPower currently owns and operates the Waipori Hydroelectric Power Scheme (Waipori) situated 60 kilometres southwest of Dunedin. Waipori comprises a network of four dams and power station on the Waipori River and produces 190 giga watt hours (GWh) of electricity per annum. Waipori uses water principally from the Deep Stream and Upper Waipori River catchments. The principal storage for Waipori is Lake Mahinerangi, an artificial lake formed by the construction of a 34 metre high concrete arch dam. In August 2005, TrustPower received consent to acquire 854.0580 hectares of land as part of TrustPower’s proposed Deep Stream Enhancement Project to increase electricity generation. The Deep Stream Enhancement Project is likely to provide further electricity generation of approximately 23 GWh per annum. This application is to lease approximately 30 hectares from the Dunedin City Council for the purposes of constructing a reservoir for the Deep Stream Enhancement Project. The Deep Stream Enhancement Project proposal is likely to result in the following benefits: … increased efficiencies and generation from TrustPower’s Waipori Hydro Scheme and an increased security of supply to Dunedin City Council’s water supply.” See our commentary for August 2005 for further details of the previous consent mentioned. [Decision number 200620065.]

·      72 hectares at Arnold Valley Road, Kokiri, West Coast for a suppressed amount from Honey (Gene Edward and Joan Mary Martha) of Aotearoa. The OIO states: “The Applicant (TrustPower) proposes to acquire the subject land as part of the development of the Arnold Valley Hydro-electric Power Scheme (Arnold Valley Scheme), which will comprise a new intake dam, canal, flumes, head pond, regulation pond, and a power station, situated at the Arnold River on the West Coast of the South Island. TrustPower currently owns and operates an existing hydro-electric power station on the Arnold River, which will be decommissioned and demolished following construction of the Arnold Valley Scheme. The subject property is integral to the Arnold Valley Scheme as TrustPower proposes that one of the canals required for the Arnold Valley Scheme will be built through the land. Construction of the Arnold Valley Scheme is likely to commence in up to 7 years time. Following construction of the scheme it is likely that the portion of the subject property not required as part of the scheme will be on sold.” For details of TrustPower’s last purchase of land for Arnold Valley scheme, see our commentary for August 2006. [Decision number 200620066.]

Approval concerning “Electricity & Gas Supply” almost entirely suppressed

The only information released about this decision, other than its sector, is the contact for it: Craig Nelson of the Auckland law firm Simpson Grierson. An appeal for release of the information deleted was refused by the Ombudsman, but the Ombudsman did reveal that the transaction did not proceed. [Decision number 200620057.]

Strategic Finance buys lease of its office on Princes Wharf, Auckland

Strategic Finance Limited, owned 50% in Australia by Allco Principals Trust and 50% in Aotearoa, has approval to acquire 0.79 hectares of leasehold at Levels 1 and 2, Shed 22, 147 Quay Street, Princes Wharf, Auckland for an initially suppressed amount revealed on appeal to be $4,331,250, from Truman Investment Trust Limited of Aotearoa. The land is or includes the foreshore or seabed.

According to the OIO,

Strategic Finance Limited (Strategic), following a change of ownership where Allco Funds Management (NZ) Limited (Allco) acquired 50% of Strategic Investment Group Limited (SIGL) (Strategic is a wholly-owned subsidiary of SIGL), is considering its future strategy in relation to the long-term accommodation of its operations and staff. Strategic currently has a sub-lease of the land for a period of less than three years with no rights of renewal. Strategic proposes to either acquire the sub-lessor’s interest in the land (which is for a term exceeding three years) or vary its existing lease by providing two further rights of renewal of three years each. Strategic advises that the proposed acquisition will provide certainty of tenure for Strategic for its office premises. The proposed transaction will provide continued stability for the Applicant’s business resulting in greater efficiencies for the Applicant to provide enhanced domestic services in the New Zealand financial services sector.

[Decision number 200620062.]

Land for wine

·      Pernod Ricard New Zealand Limited, owned 100% in the U.K. by Allied Domecq Plc, has approval to acquire 61 hectares of leasehold at Marfell Downs, Sea View Road, Seddon, Marlborough for $2,570,223 from P.H. Redwood and Company Limited of Aotearoa. The land is “deemed a heritage or historic area”. The OIO states: “The Applicant’s principal operations in New Zealand are the growing of grapes, production of wine, buying wine and the wholesaling and retailing of wine and other beverages in New Zealand and overseas. The Applicant is the largest participant in the New Zealand domestic wine business and future growth opportunities are limited. The Applicant has identified the acquisition of further vineyards or land for development for the growing of grapes as a way of being able to compete more effectively in the national and international wine markets. The proposed purchase will provide the Applicant with an increased grape supply which will enable it to continue to develop its export wine markets and enhance the reputation of New Zealand wine overseas. The ongoing development is likely to result in the introduction of development capital, increase in employment, processing of grapes and export volumes. The Applicant proposes to acquire a leasehold interest over 60.734 hectares of land to undertake a vineyard development The land adjoins land already owned by the Applicant.” The company owns several blocks of land in Seaview Road, Seddon – see for example our commentary on the October 2000 and July 2003 decisions. [Decision number 200620053.]

Other rural land sales

·      Pelham Trustee Limited as trustee of the Pelham Trust, owned in the U.S.A. by Kelleher Family Trusts, has approval to acquire 1,477 hectares at Paraheka Road, Piopio, King Country, King Country for $3,543,750 from Paraheka Station Limited, owned by the Coles Family of Aotearoa. The land includes or adjoins land “held for conservation purposes”. The OIO states: “The Applicant, having selected forestry as a long-term investment to provide a source of income for themselves and family, propose to acquire the land known as Paraheka Station to establish a Californian Redwood plantation. Paraheka Station is currently operated as a sheep and cattle farm. The Applicant’s consultant has advised that Paraheka Station is suitable for the proposed Californian Redwood plantation investment. The Applicant proposes that approximately 800 hectares will be established as a redwood forest while 200 hectares will be further developed as a farming and grazing block.” [Decision number 200620064.]

·      Michel Raphael Tracqui and Heretaunga Trustees Limited as trustees of the Tumuhau Trust of Tahiti has approval to acquire 172 hectares at Aorangi Road, Mangatahi, Hastings, Hawkes Bay for $3,200,000 from Timothy David Grieve and Sally Linda Mildenhall as trustees of the Kowhai Terraces Trust of Aotearoa. According to the OIO, “The Applicant proposes to acquire the subject property which is currently operated as a sheep and cattle grazing and finishing block. The Applicant proposes that approximately 112 hectares will be leased to the current farmer to continue the grazing and finishing operation. The Applicant intends to enhance this operation by upgrading the water source and reticulation on the land, improving fencing and tracks and replacing farm buildings. The Applicant proposes to increase the productivity of the land by planting and developing a vineyard (comprising pinot noir, sauvignon blanc, and pinot gris vines) on 7 hectares of the land and an olive grove on 4 hectares of the land. The land contains an area of approximately 25-30 hectares of steep scarp, gullies, cliff and river facing which contain varying types of vegetation. The Applicant proposes to retire this area from farming and protect it by way of a Queen Elizabeth II Trust Open Space Covenant. The Applicant also proposes to establish a residence on the land which will be used as a base for Mr Tacqui’s (a trustee of the trust) visits to New Zealand.” [Decision number 200620061.]

·      Richard Julian Potez and Mary Josephine Potez of the U.K. have approval to acquire 19 hectares at 129 Brookby Road, Blenheim, Marlborough for $3,200,000 from Kenneth George Giles of Aotearoa. According to the OIO, “The Applicants are intending to reside in New Zealand indefinitely and have made an application for New Zealand permanent residency under the Long Term Business Visa category. The Applicants propose to acquire the subject property as a permanent residence. The Applicants are demonstrating a commitment to New Zealand through applying for and taking up New Zealand permanent residency.” [Decision number 200620054.]

Summary statistics

All investments

The value of investment approved in the year to October 2006 is lower than for the previous October year, but the net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) is considerably higher. By far the greatest part of the value of the approvals is for sale from one overseas investor to another.

Investment involving land

Both gross and net sales of land approved by the OIO during the years to October have increased substantially in area. Refusals (above) have risen in number, area and value, but are still a tiny proportion of the total. There were none this month.

Compiled by:

Campaign Against Foreign Control of Aotearoa,

P. O. Box 2258 

Christchurch.