June 2008 decisionsOrigin Energy buys Swift Energy’s assets for $110m, including TAWN gas fields US “Grave Dancer” may take 100% of Sanctuary Residences retirement villages Quadrant Private Equity increases holding in Seniors Money Brookfield Multiplex Developments buys Takapuna land for development Trustpower buys 81 hectares in Marlborough for hydro scheme Black family change ownership of Amalgamated Holdings forestry company Holcim buys North Otago land after dumping on neighbour Negociants acquires further 14 ha. vineyard at Renwick, Marlborough Fletcher Concrete swaps sensitive Wiri land with 14 hectares of Crown land Tourism Holdings to lease public land at Waitomo Caves
Origin Energy buys Swift Energy’s assets for $110m, including TAWN gas fieldsOrigin Energy Limited, owned 81.2% in Australia, 6.18% in the U.S.A., 7.68% by “unknown overseas persons”, and 4.94% in the U.K., has approval to acquire the business and assets of Swift Energy New Zealand Limited, Southern Petroleum (New Zealand) Exploration Limited and Swift Energy New Zealand Holdings Limited owned in the U.S.A. by Swift Energy Company, for $109,594,864. This includes 50 hectares of freehold at 567-593 Bird Road, Stratford, Taranaki, and 160 hectares of leasehold at Mana Road, Ratapiko, Standish Road, Toko, 115 Stanley Road, Kupe-Wharehuia, and 503 East Road, Stratford-Douglas, Taranaki.
Origin is 51% owner of major electricity generator and retailer, Contact Energy. Although the OIO does not state so, according to the Ministry of Economic Development (“Origin and Contact acquire Swift Energy’s NZ interests”, 8/2/2008, http://www.crownminerals.govt.nz/cms/news/2008/origin-and-contact-acquire-swift-energy2019s-nz-interests/),
Contact will contribute approximately $54 million to the total purchase price for the right to own and develop the Ahuroa field (part of the TAWN fields) as an underground gas storage facility and purchase the remaining gas and LPG reserves in the Ahuroa reservoir.
Gas produced from the TAWN fields and all LPG is contracted to Contact.
The “TAWN” fields are the Tariki, Ahuroa, Waihapa and Ngaere gas fields.
Contact chief executive David Baldwin said the Ahuroa gas storage facility will enable Contact to use its gas-fired power stations as and when required, mitigating the financial consequences of not using natural gas under ‘take or pay’ contracts. The facility is expected to be fully operational by mid 2010.
The Ministry, which records the price at the slightly higher $115 million, explains that
The Swift Energy assets being acquired include: the Tariki, Ahuroa, Waihapa and Ngaere (TAWN) fields; the Waihapa production station; the Rimu, Kauri and Manutahi fields; the Rimu production station; and separate oil and gas pipelines from Waihapa production station to New Plymouth.
It also reveals that
Swift Energy will still continue to have an interest in New Zealand through royalty agreements and options for permit working interests which it has negotiated with Origin.
Origin said that in certain parts of one field, Swift Energy will have an option to take-up a 30% working interest within 10 years.
In some fields Swift Energy will earn a 10% over-riding royalty interest once a production volume threshold is exceeded. In other fields Swift Energy will earn a 10% overriding royalty plus an option to convert this to a 30% working interest within 10 years.
Origin Energy said it will be taking over the Swift Energy New Zealand office space leases in Wellington and New Plymouth and will be extending offers of employment to the current New Zealand staff.
It is interesting that the deal was completed in December 2007, according to the companies, several months before the OIO gave its approval (Joint ASX/NZX Media Release, “Origin Energy and Contact Energy Acquire Swift Energy Oil & Gas Assets in New Zealand”, 20/12/2007, contactenergy.co.nz/web/pdf/financial/Contact_Origin_Swift_Purchase_final.pdf). There is no explanation for the delay.
According to the OIO,
Swift Energy Company, a company incorporated in the U.S.A., having reviewed its position in the New Zealand market conducted a sales process to potentially sell some or all of its New Zealand assets which are owned by its subsidiaries Swift Energy New Zealand Limited (SENZ), Southern Petroleum (New Zealand) Exploration Limited (Southern Petroleum) and Swift Energy New Zealand Holdings Limited (SENZ Holdings). The assets include gas producing and exploration properties including the Rimu, Kauri and Manutahi fields and the Tariki, Ahuroa, Waihapa and Ngaere fields which make up the TAWN complex, extensive gas processing and pipeline infrastructure and a subsurface gas storage project opportunity, all located in the Taranaki region.
Origin Energy is the successful bidder to acquire all of the assets of SENZ, Southern Petroleum and SENZ Holdings. The acquisition of the existing productive assets and the development potential of other assets is an attractive prospect to an industry participant such as Origin with the expertise and financial backing to consolidate its current position and realise the potential of the development opportunities of the assets.
With Origin’s extensive experience in the exploration and production of natural gas and already strong ties to New Zealand through its investment in the Kupe Gas Project and its interest in Contact Energy Limited, Origin is keen to expand its New Zealand operations. Origin has the technical and financial capacity to continue the operations of the SENZ and Southern Petroleum assets and where feasible, expand on those operations.
The acquisition apparently involves an “Offer to sell riverbed to the Crown”, but no detail is given. Despite Origin’s existing powerful position in the New Zealand electricity, oil and gas markets, the OIO claims that the deal will provide “added market competition, greater efficiency or productivity, or enhanced domestic services”.
[Decision number 200810055.] US “Grave Dancer” may take 100% of Sanctuary Residences retirement villagesFive Star Developments Limited, owned 16.34% by Samuel Zell of the U.S.A. and 83.66% in the U.S.A. by minority shareholders, has approval to acquire rights and interests in up to 100% of the shares of Sanctuary Residences Limited, including 10 hectares comprising 7 hectares at 67, 79 & 95 Gills Road, Albany, Auckland and 3.0 hectares at 15, 17, 19, 27, 37 & 39 Natzka Road, Ostend, Anzac Bay, Waiheke Island, Auckland. The acquisition is for a suppressed amount and is from existing shareholders of Sanctuary Residences Limited (other than Five Star Development Limited) consisting of Brian Paul Keene (50%), Susanna Catherine Cook (25%), and Clifford James Cook (25%), all of Aotearoa.
Clifford Cook is the founder and former CEO of the major aged care business, Metlifecare. He sold out to Macquarie Bank and the FKP Group in 2005 (see our commentary for October 2005 for further details).
The purchaser, which is initially just
increasing its share from 24.9% to 28%, is Equity International, part of a
group controlled by Zell, a billionaire. Zell is owner of the Chicago-based
Tribune Company, which owns the Chicago Tribune, Los Angeles Times,
Baltimore Sun, eight other daily newspapers, 23 television stations
and the Chicago Cubs professional baseball franchise. Zell bought the Tribune
Company in a leveraged buy-out leaving it with US$1 billion in annual loan
repayments. With falling advertising revenue on top of the cost of the debt,
the Tribune Company filed for bankruptcy protection in December 2008 (“Tribune
Co. files for bankruptcy protection”, 9/12/08, Business Courier, bizjournals.com/cincinnati/stories/2008/12/08/daily16.html).
The Chicago Tribune was also in the centre of corruption allegations
that Illinois Governor Rod Blagojevich tried to sell then President-elect
Barack Obama’s vacated senate seat to the highest bidder. The newspaper had reported
on the investigations of allegations of corruption against Blagojevich and
called for his impeachment. Blagojevich allegedly responded by confronting
its owners with demands that members of the newspaper’s editorial board be
sacked, using the threat of withholding state assistance (Press, “Obama’s
Senate seat ‘for sale’”, by James Bone, 11/12/2008, p.B1; Chicago Tribune,
“Blagojevich arrested; Fitzgerald calls it a ‘political corruption
Zell has invested elsewhere in Aotearoa. EGI-Fund (08-10) Investors LLC, a fund co-owned by Zell, bought 13.8% of milk company A2 Corporation, after buying into aged care businesses Renaissance Lifecare and Sanctuary Residences in 2007 (“A2 pulls in big US investor”, by Denise McNabb, 2/10/08, The Independent, p. 3).
Gareth Vaughan of the Dominion Post quotes the New York Times reporting that “Mr Zell made his first fortune in the 1970s by buying distressed real estate and fixing it up, earning him the nickname ‘the grave dancer’.” Not a comforting name for the aged residents of the Renaissance Lifecare and Sanctuary villages and rest homes.
But the chief executive of Sanctuary Residences, Richard Davis, takes a different view: “Equity was a great company to be involved with because of its experience. The firm liked the potential of a global retirement village business.” Saying that Equity had paid US$75 million (NZ$97 million) for its shareholdings in Sanctuary and Renaissance, David told Vaughan:
Sanctuary has a village on Waiheke Island and plans to build retirement villages around Auckland in Remuera, Albany and the North Shore, and at Remarkables Park in Queenstown.
It expects to announce a joint venture next month to develop villages in Sydney and Melbourne.
“We’ve basically started from March and are rapidly growing,” Mr Davis said. “We’re really aiming at five-star facilities in high-value locations.”
(Dominion Post, “Cook plans global village group”, by Gareth Vaughan, 7/12/2007, http://www.stuff.co.nz/4314802a13.html, accessed 14/12/08.)
According to the OIO,
Pursuant to an investment agreement dated 13 November 2007 (the ‘Agreement’), the Applicant purchased 24.9% of Sanctuary Residences Limited (‘Sanctuary’), a New Zealand company, via the issue of just under 600,000 new shares.
Sanctuary is in the business of developing and operating luxury retirement homes. Via one of its subsidiaries, Sanctuary owns and operates the Waiheke Retirement Village on the Waiheke Land. Via a second subsidiary, Sanctuary owns the Albany Land, on which it eventually intends to build a retirement village.
Pursuant to an option in the Agreement, the Applicant is acquiring a further 103,185 shares in Sanctuary, which will be new shares that the company issues to it. This will increase the Applicant’s holding in Sanctuary to 28%.
Subsequently, the Applicant intends to further increase its holding in Sanctuary, possibly to 100%.
Purchasing the shares will allow Sanctuary to further develop the Waiheke Retirement Village.
[Decision number 200810061.] ASB sets up ASB Cash FundASB Group Investments Limited as manager of the ASB Cash Fund, owned 100% in Australia, has approval for investing on behalf of its unit holders $100 million or more of its funds in a New Zealand dollar on-call interest bearing deposit with ASB Bank Limited. “The Fund will receive cash subscriptions from unitholders in excess of $100 million.”
The OIO states:
ASB Group Investments Limited (ASBGI) is a New Zealand incorporated company that is an indirectly wholly-owned subsidiary of Commonwealth Bank of Australia (CBA), an Australian bank. ASBGI is currently the manager of a number of unit trusts and group investment funds.
ASBGI is establishing a new unit trust which is to be known as the ASB Cash Fund (the Fund). ASBGI will be the manager and Trustees Executors Limited (TEL) will be the trustee of the Fund. The Fund will invest, on behalf of its unitholders, in a New Zealand dollar on-call interest bearing deposit with ASB Bank Limited (ASB Bank). ASBGI expects that the Fund will receive cash subscriptions from unitholders in excess of $100 million. The investment of these subscriptions will mean that the Fund is making an overseas investment in significant business assets as defined in section 13(1)(c) of the Overseas Investment Act 2005. The Fund will be open-ended and ASBGI will continue to invest subscriptions received in accordance with the Fund’s investment policy in the future.
The establishment of the Fund is consistent with ASBGI’s strategy to be a market leader in the financial services industry. The Fund will offer a competitive investment product for New Zealand investors and complement the other unit trusts and group investment schemes ASBGI currently offers.
The ASB Cash Fund is a Portfolio Investment Entity (PIE), a government-sanctioned type of fund for which the maximum tax rate on income is 30%, compared to the two higher-income tax rates of 33% and 39%. Instead of investing in assets such as property or shares, this ASB fund “invests” in a bank deposit with the ASB. All banks are setting up similar PIE funds which are from the customer’s viewpoint normal accounts with the banks but with a lower maximum tax rate. This one “operates like an online savings account”. It is remarkable that the ASB considered it required OIO approval, given that no other similar Funds run by other overseas owned banks have apparently requested approval.
[Decision number 200810063.] Quadrant Private Equity increases holding in Seniors MoneyQuadrant Private Equity Pty Limited as manager of Quadrant Private Equity No. 1, owned in Australia, has approval to acquire “rights and interests in” up to 65% of the shares in Seniors Money International Limited, Auckland for $15,400,000 from its existing shareholders, of whom 28.23% are in Australia, 1.38% in the U.K., 1.12% in Kenya, 1.53% are “various overseas persons” and 67.74% are in Aotearoa.
The OIO states:
The Applicant currently holds 19.9% of SMIL’s ordinary shares.
The Applicant, as manager of Quadrant Private Equity No. 1A (QPE1) will subscribe for up to 65% of Redeemable Preference Shares (RPS) issued by SMIL. Each RPS is convertible on a one-to-one to ordinary shares in SMIL and conversion must be completed within 5 years from the date the Overseas Investment Office grants consent.
The proposed investment will allow SMIL to raise funds through the issue of shares to the Applicant. The Applicant is an existing major shareholder and wishes to support SMIL by subscribing for the shares.
According to its web site http://www.seniorsmoney.com/,
Seniors Money International is a specialist international financial services group providing financial products and services to those approaching, at, or in their retirement years.
We specialise in the lifetime mortgage (sometimes called reverse mortgage) version of Home Equity Release, helping people release the value they have built up in their home without having to move from it, relinquish ownership of it or worry about having to make regular repayments.
Seniors Money International currently provides lifetime mortgages in six countries. [Decision number 200810062.] Brookfield Multiplex Developments buys Takapuna land for developmentBrookfield Multiplex Developments (NZ) Limited, owned 59.72% in Canada, 35.98% in the U.S.A., and 4.3% by “various overseas persons”, has approval to acquire 0.8 hectares at 6-10 The Strand and 19-29 Hurstmere Road, Takapuna, North Shore City, Auckland for $13,000,000 from Strand Investment Properties Limited of Aotearoa.
The property adjoins land “that is listed, or in a class listed, as a reserve, a public park, or other sensitive area by the regulator under section 37”.
According to the OIO,
The proposed investment involves acquiring the Land to develop a mixed use facility at Takapuna Beach named “Gateway Takapuna”. Gateway Takapuna will include 100 premium residential apartments, 2,028m2 of commercial space, 4,192m2 of retail space, and 378 basement car parking spaces. The development will occur in two stages and will maximise through-site pedestrian linkages between Hurstmere Green and Takapuna Beach.
The proposed investment is an extension of the Applicant’s existing New Zealand operations and fits well within the Multiplex Group generally as:
The development of the land will provide long-term sustainable returns; and The investment provides limited liability to Multiplex through the joint venture arrangement.
[Decision number 200810059.] Trustpower buys 81 hectares in Marlborough for hydro schemeFollies Limited, owned 9.7799% in the U.K., 7.1903% by “various overseas persons”, and 83.0298% in Aotearoa, has approval to acquire 81 hectares situated at 3487 State Highway 63, Wairau Valley, Marlborough for a suppressed amount from Douglas Walter Landon-Lane of Aotearoa.
According to the OIO,
TrustPower has identified an opportunity to develop a hydroelectric scheme in the Wairau Valley in the Marlborough region. The proposed scheme is an extension of the Branch hydroelectric scheme owned by TrustPower. Under the project, part of the Wairau river flow would be diverted into the existing Branch scheme and the water conveyed through interconnecting canals and penstocks to five new generating stations.
TrustPower has already entered into conditional easement option agreements with landowners of about 60% of the land required to be occupied under the project. TrustPower considers purchasing land only if negotiating an easement option fails or where a landowner actively seeks to sell the land.
TrustPower proposes to acquire the subject property to enable it to proceed with construction of the project once resource consents are granted under the Resource Management Act. In particular, it is intended that the relevant land will be used to construct a portion of the canal, and associated access ways, for the proposed scheme.
TrustPower’s core business is to generate and sell electricity. TrustPower currently has a gap between the electricity it generates and the electricity it sells to consumers, meaning it is required to purchase electricity to sell to consumers leaving it vulnerable to price movements when hedges are not available. The proposed construction of the Wairau Valley scheme will assist in reducing TrustPower’s potential exposure to electricity price rises.
While the OIO reports this as a TrustPower purchase, it does not explain why the consent is for Follies and what its relationship is to TrustPower. However in March 2008 it gave two approvals for Follies Ltd, to acquire land in the Wairau Valley for canals for the power scheme. There, the OIO described Follies as “a wholly-owned subsidiary of TrustPower Limited”. However Follies’ official Companies Office record (at 22 December 2008) shows it as having just two shareholders, Bernard G Rowe and Brian A. Fletcher, both of Blenheim.
[Decision number 200810054.] Black family change ownership of Amalgamated Holdings forestry companyGraeme Lewis Sims Black (33.33%), Quentin John Sims Black (33.33%) and Nerissa Margaret Guest (33.34%), of Australia have approval to acquire 100% of Amalgamated Holdings Limited for a suppressed amount from their sister Marian Catharine Black of Aotearoa.
The purchase includes 3,556 hectares comprising:
According to the OIO,
Amalgamated Holdings Limited (AHL) is the ultimate parent company of Craigpine Timber Limited which owns approximately 3,555 hectares of land primarily in radiata pine forestry in the Southland region. Craigpine operates a sawmill operation at Winton which processes the logs from the forestry plantations for both the domestic and the export market.
The shares in AHL are held by members of the Black family, and their associated family trusts. Together the Applicants are currently the majority shareholders of AHL. The Applicants propose to purchase the remaining shares of AHL from their sister, Marian Catherine Black. The transaction will increase their ownership from 81% to 100% of the share capital of AHL.
The vendor of the shares in AHL, Marian Catherine Black, wishes to exit the company, and to use her capital for other purposes. The Applicants, as existing shareholders, have pre-emptive rights in respect of those shares, and wish to exercise those rights to ensure that the company remains 100% owned and controlled by the Black family.
[Decision number 200810053.] Holcim buys North Otago land after dumping on neighbourHolcim (New Zealand) Limited, owned 23.6% in Switzerland by Thomas Schmidheiny, 66.4% in Switzerland by minority shareholders, and 10% in the U.S.A. by Capital Group Companies, has approval to acquire 3.4 hectares at Limekiln and McLay Roads, Dunback, North Otago for $7,313 from Sainsbury (Stuart John) Central Lodge Trustees 2006 Limited (sic) as trustees of the Sadira Family Trust, owned by Stuart John Sainsbury of Aotearoa.
The OIO states:
The relevant land adjoins land owned by Holcim (New Zealand) Limited (Holcim), upon which Holcim operates a limestone quarry. As a result of confusion over the legal boundaries it was discovered that waste material from the quarry operation had been accidentally dumped outside of the quarry land and on to the vendor’s land.
Holcim will amalgamate the land with the land currently owned by Holcim.
The proposed transaction is the most expedient solution to the issue and will resolve the need to remove the waste material from the land.
[Decision number 200810060.] Negociants acquires further 14 ha. vineyard at Renwick, MarlboroughNegociants New Zealand Limited, owned by Samuel Smith & Son Pty Limited of Australia, has approval to acquire 14 hectares at 52 Lanark Lane, Renwick, Marlborough for $4,106,250 from Cheshire Terraces Trust, owned by Donald Raymond Pilbrow (34%), Simon Cornelis Slooten (33%), and Valmai Ethel Slooten (33%), all of Aotearoa. According to the OIO, “the Applicant’s newly opened Nautilus Estate Winery in Renwick produces sauvignon blanc, chardonnay, and pinot noir wines from grapes grown at vineyards throughout the Marlborough region and the South Island. The Land is located near to Nautilus Estate and is currently used as a sauvignon blanc vineyard. The Applicant wants to grow its own grapes rather than purchase grapes from other vineyards. The Applicant estimates that by growing its own sauvignon blanc grapes on the land it will save between 5 - 10% per litre on the costs of producing a vintage. The grapes will be used to produce the Applicant’s second tier Twin Islands Sauvignon Blanc brand for export.” [Decision number 200810056.] Fletcher Concrete swaps sensitive Wiri land with 14 hectares of Crown landFletcher Concrete and Infrastructure Limited, owned 35% in Australia, 14% in the U.S.A., 9% by “various overseas persons”, and 42% in Aotearoa, has approval to acquire 14 hectares at 172 Roscommon Road, Wiri, South Auckland for $9,787,500 from The Crown. Though a valuation is given, in fact the land is being exchanged for another property Fletcher Concrete owns.
The land it has acquired adjoins a “scientific, scenic, historic, or nature reserve under the Reserves Act 1977 that is administered by the Department of Conservation”. It includes “two areas of significant historic value” and the Crown acquisition will mean that “the public will have access to the foreshore over the property”.
According to the OIO,
Through its operating division, Winstone Aggregates, the Applicant has leased the land from the Crown since 1990, using it as a quarry until 1999, when the land ceased to be economically viable as such, and as a storage site thereafter. The Applicant is acquiring the land and one other property from the Crown in exchange for a third property the Applicant owns nearby.
[Decision number 200810057.] Tourism Holdings to lease public land at Waitomo CavesTourism Holdings Limited, owned 22.19% in the U.S.A., 14.67% in Australia, 3.37% in Hong Kong, 1.9% by “various overseas persons”, and 57.87% in Aotearoa, has approval to acquire 2.8 hectares of leasehold at 39 Waitomo Caves Road, Waitomo Caves, King Country for a sum “to be advised” from the “New Zealand Public”. The owners are the Ruapuha Uekaha Hapu Trust and the Department of Conservation.
The land “adjoins land held for conservation purposes under the Conservation Act 1987”.
The OIO states:
Waitomo Caves Limited (WCL) is wholly owned and controlled by the Applicant. WCL is the lessee under a proposed lease of the Land which comprises the Waitomo Caves (Caves) and certain land surrounding the Caves.
The Applicant’s business, currently operated under a Licence, comprises Cave tours, a café, and a gift shop. In addition to the Licence, the Applicant operates under an Operational Plan agreed with the trustees of the Ruapuha Uekaha Hapu Trust and the Department of Conservation (the owners) covering various matters including the Applicant’s obligations in respect of the environmental management of the Caves (Operational Plan).
The Applicant proposes to enter a lease over the Land. The Overseas Investment Office’s consent is required as the proposed lease is for a 21 year term. The Applicant will also enter a Management Plan with the owners in order to ensure that the natural splendour of the Land is maintained. Under the proposed lease, consideration payable by the Applicant to the owners is calculated as a percentage of takings from retail activity at the visitor’s centre and entry fees to the Caves.
The Applicant wishes to continue to provide its tourism operations on the Land. The proposed lease assists the Applicant achieve this as it gives the Applicant exclusive possession over the Land.
[Decision number 200810058.] Summary statisticsAll investments The value of investment approved in the year to June 2008 is considerably lower than for the previous June year, in both net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) and gross value. 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 June have fallen in area, though they have risen in number. Leases etc have risen in gross area but fallen in net area and in number. Refusals (above) have fallen in number, but have increased in area and value (due to the Auckland International Airport refusal), though are still a small proportion of the total.
Fishing Quota As usual, there was no fishing quota approved for sale this month.
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Compiled by: Campaign Against Foreign Control of Aotearoa, P. O. Box 2258 Christchurch. |
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