October 2008 decisionsApplication to buy Taihape land by U.K. pension fund refused Castle Harlan buy Alleasing Trust for $122 million from Allco Private equity corporation PEP buys further shares and notes of A&R Whitcoulls BHP gets approval for failed takeover of Rio Tinto ASB Group Investments Ltd sets up new unit trust for over $100 million Little information released on Trilogy purchase of NZ Communications shares Middle East company buys 50% of Great Northern Developments from AMP PF Olsen for Australian fund buys 218 hectares in Ngatapa, Gisborne Contact Energy acquires 45 hectares of Taupo land from Landcorp Farming Rausing family (Ingleby Company) buys more land at Tokomaru Bay, East Cape
NoteFrom this month, the Overseas Investment Office has begun supplying the decisions in a different format to the past several years. There is less detail available, notably about the ultimate ownership of the Applicant (purchaser) and Vendor. Application to buy Taihape land by U.K. pension fund refusedTrustees of the J O Adams & Son Limited Pension Fund, owned in the U.K., has been refused approval to acquire 62 hectares at Maitai State Highway 1, R.D.5, Taihape for $956,260 from Laurence Joseph Abernethy and Ann Sellors Abernethy of Aotearoa.
According to the OIO,
The proposed land acquisition will bring together the existing farm comprising 159.4269 hectares that the Pension Fund already owns, reuniting land that, until 1981, was farmed as one economic unit. The Pension Fund intends to acquire the land using its cash reserves held in New Zealand. Upon acquisition, J.O. Adams & Sons Limited (the Company) will lease the land from the Pension Fund and will continue the current farm policy of deer and fawn production, as well as sheep and cattle farming.
The Pension Fund and the Company advise that the proposed acquisition of further suitable land in the Taihape area will provide greater economies of scale and create efficiencies to their current farming operations. The proposed acquisition of the relevant land will represent a 22% increase in the Pension Fund’s current landholdings in the area as at the date the application was filed and will increase the number of cattle and sheep across the farms.
The overseas investment transaction has not satisfied the criteria in section 16 of the Overseas Investment Act 2005.
It is not clear why the application was refused. See our commentary for May 2002 for the last application by this Fund (which that time was successful).
[Case number 200710023.] Castle Harlan buy Alleasing Trust for $122 million from AllcoCastle Harlan Australian Mezzanine Partners Pty Limited, on behalf of CHAMP Buyout II Trust; and Castle Harlan, Inc., on behalf of CHAMP II Worldwide, LP, CHAMP II Worldwide Affiliates, LP and CHAMP II Worldwide Cooperatief UA, “or any of them… [or] any associate of the Applicant, including Leasing Finco Pty Limited”, has approval to acquire Alleasing Pty Limited for $122,664,000 from Allco Managed Investments Fund Limited as responsible entity of the Alleasing Trust owned in Australia. “The country of incorporation of the ultimate beneficial owners of Castle Harlan Australian Mezzanine Partners Pty Limited is Australia (50%) and U.S.A. (50%). The country of incorporation of the ultimate beneficial owners of Castle Harlan Inc. is U.S.A. (100%).” Which does not reveal their ownership.
The OIO states:
The CHAMP II fund and the CHI II funds (the Funds) propose to acquire 100% of the shares in Alleasing Pty Limited. The Funds intend to establish a special purpose vehicle, Leasing Finco Pty Limited which will acquire the shares.
Alleasing Pty Limited is a leading equipment finance company, specialising in small ticket leases in the non-motor, non-consumer segments across Australia and New Zealand. The Applicant proposes to acquire 100% of the shares in Alleasing Pty Limited.
CHAMP and CHI view the transaction as a sound investment for the Funds under their respective management as the investment represents an opportunity to earn a superior return for their investors.
[Case number 200821540.] Private equity corporation PEP buys further shares and notes of A&R WhitcoullsPacific Equity Partners Fund IV entities, owned in the U.S.A. (50.3%), Australia (15.1%), U.K. (8.7%), and Various other countries (26.0%) has approval to acquire between 13,500,000 and 17,250,000 shares in A&R Whitcoulls Group Holdings Pty Limited; and between 40,500,000 and 51,750,000 convertible notes issued by A&R Whitcoulls Group Holdings Pty Limited conferring the right to convert into one share per note for $138,000,000 from existing shareholders in A&R Whitcoulls Group Holdings Pty Limited owned in the U.S.A. (77.1%) and Australia (22.9%).
The OIO states:
Various Pacific Equity Partners (PEP) entities comprise Pacific Equity Partners Fund IV (PEP Fund IV). PEP Fund IV is managed by Pacific Equity Partners Pty Limited. The Applicant has entered into a subscription agreement to subscribe for up to all the ordinary shares and convertible notes to be issued by ARW. Upon request by the Applicant ARW will issue the securities where the subscription will be set off against the full or partial repayment of a loan to ARW.
Pacific Equity Partners Pty Limited’s main purpose is to advise funds on investment and business where it identifies opportunities to earn a superior return for its investors and views the proposed issue as a sound investment for PEP Fund IV. Pacific Equity Partners Pty Limited does not have a specific industry focus but evaluates a wide range of prospective acquisitions where careful use of leverage in the capital structure, supported by a clear strategy for improving the business, combine to provide an attractive investment.
See our commentary of February 2008 for an earlier OIO decision on the PEP takeover of this major book and stationery retailer, previously formed from Australian and New Zealand companies Whitcoulls, and Angus and Robertson.
[Case number 200810098.] BHP gets approval for failed takeover of Rio TintoBHP Billiton Group, owned in Australia (57.77%), U.K. (30.95%), South Africa (9.9%), various other countries (0.63%), and Aotearoa (0.75%), has approval to acquire the Rio Tinto Group owned in the U.K. (78.52%), Australia (19.17%), various other countries (2.1%), and Aotearoa (0.21%) for an amount that was initially suppressed but revealed on appeal to be $164,000,000. This is presumably for the New Zealand interests of Rio Tinto Group, because this was part of a US$147 billion takeover attempt by BHP Billiton to take over the entire Rio Tinto group, which failed.
Rio Tinto owns 79.36% of the Tiwai Point aluminium smelter, through its joint venture company New Zealand Aluminium Smelters Ltd (http://www.riotintoaluminium.com/31_new_zealand_aluminium_smelter.asp, accessed 12 April 2009), and the land on which it is sited is listed by the OIO, so it seems likely that this is the major part of the $164,000,000.
In Aotearoa, Rio Tinto “owns or controls” the following land: · a freehold interest in o 114 hectares at Coast Road, Punakaiki-Rapahoe SH 6, Westland; o 125 hectares at Port Marsden Highway, Marsden Point, Whangarei; and o 405 hectares at Tiwai Road, Awarua Plains, Invercargill (presumably part of the smelter site); and · a leasehold interest in o 8 hectares at 101 Collins Avenue, Tawa, Wellington; and o 1667 hectares at Tiwai Road, Awarua Plains, Invercargill (presumably also part of the smelter site).
According to the OIO,
The Applicant has applied to several regulatory bodies worldwide for consent to the proposed acquisition. The application to the Overseas Investment Office is part of that process.
The Applicant comprises BHP Billiton Limited (BHP B Limited) for itself and its direct and indirect wholly-owned subsidiaries, and BHP Billiton plc (BHP Plc). BHP B Limited is incorporated in Australia and BHP Plc is incorporated in the United Kingdom.
BHP Limited and BHP Plc are parties to a dual listed company (DLC) structure. As a result, BHP Limited and BHP Plc have a relationship whereby, while each exists as a separate company, they operate on a combined basis and are run by a unified management team. The Applicant is listed in a number of stock exchanges (including Australia, London, South Africa, and New York).
The Applicant is an important participant in major commodity businesses, including aluminium, energy coal and metallurgical coal, copper, ferro-alloys, iron-ore and titanium. It also has substantial interests in oil and gas, nickel, diamonds and silver. The Applicant has approximately 39,000 employees and 60,000 contractors working in more than 100 operations in approximately 25 countries.
The rationale for acquiring Rio Tinto is that, once merged, the two entities will be better placed to compete in the natural resources industry. The Proposed Acquisition would result in an unparalleled strategic fit in terms of asset mix and quality
[Case number 200820006.] ASB Group Investments Ltd sets up new unit trust for over $100 millionIn a decision originally almost completely suppressed, but released on appeal, ASB Term Fund and any associate “(including, in particular, ASB Group Investments Limited and Trustees Executors Limited)”, owned in Australia, has approval to acquire a New Zealand dollar interest bearing deposit with ASB Bank Limited for $104,615,180.68 from ASB Bank Limited owned in Australia.
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 Term 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 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.
It is not clear why this required OIO approval when there must be many similar funds that never appear among the OIO decisions.
[Case number 200820034.] Little information released on Trilogy purchase of NZ Communications sharesTrilogy International New Zealand LLC, owned in the U.S.A. (81.0%), the U.K. (0.2%), and various other countries (18.8%), has approval to acquire up to 100% of New Zealand Communications Limited for a suppressed amount from Existing shareholders of GEMS NZ B.V. and Tesbrit B.V. owned in Switzerland (35.0%), British Virgin Islands (21.9%), U.S.A. (9.1%), Japan (6.8%), Liechtenstein (5.0%), Luxembourg (4.7%), Austria (4.2%), and various other countries (13.3%).
The OIO states only that: “The overseas investment transaction has satisfied the criteria in section 18 of the Overseas Investment Act 2005.”
However, news media reports in May 2008 recorded that Trilogy had bought 24.9% of New Zealand Communications, gaining board representation. This proportion meant that no OIO approval was required as the threshold for its consent being required is 25%. New Zealand Communications is planning to be a cellphone provider in competition with Telecom and Vodafone. Trilogy was founded in 2005 and though New Zealand Communications says it has mobile businesses in Europe, Asia and Africa, Trilogy’s web site only mentions Haiti, Dominican Republic and Bolivia, other than New Zealand. New Zealand Communications itself notes that the present OIO approval led to an increase in Trilogy’s ownership of the company from 24.9% to only 25.76%, despite the approval being for a full takeover (see http://www.nzcomms.co.nz/wawcs0135835/tn-news.html, and http://www.trilogyinternationalpartners.com/about_us.php, accessed 12 April 2009).
A 15 May 2008 press release by New Zealand Communications stated that
United States telecommunications investor, Trilogy International Partners, has taken a 25% shareholding in NZ Communications, which is currently building this country’s third mobile phone network.
Trilogy has purchased for an undisclosed sum its shareholding from Econet Wireless, the South African based company, which along with the Maori controlled Hautaki Trust, co-founded NZ Communications.
Bill Osborne, Chairman of NZ Communications, said Trilogy’s ownership was good news for New Zealand and consumers as it underlined the company’s commitment to enter the market, and its future ability to offer “competitive alternatives” to mobile phone users.
“Already we are building cell phone towers in Auckland and Christchurch, and will commence building towers in Wellington later this month,” said Osborne.
“We have concluded a roaming agreement with Vodafone, and have a contract with Chinese supplier Huawei Technologies to supply us with the latest mobile phone equipment.”
… Osborne said that through the Hautaki Trust New Zealand would retain a significant investment in the operation… Other shareholders in NZ Communications are Hong Kong based General Enterprise Management (GEMS) -25%, London based Communication Venture Partners (CVP) - 25%, Hautaki -16%, with the right to move to 20 and associated business partners - 5%.
Trilogy will appoint founding partner, Brad Horwitz, and Stewart Sherriff to the board of NZ Communications.
NZ Communications is based in Auckland, and currently employs more than 120 people.
Econet Wireless will retain an interest in NZ Communications through an investment in Trilogy and an ongoing advisory relationship with Hautaki.
(“Trilogy Buys into NZ Communications”, http://www.scoop.co.nz/stories/BU0805/S00356.htm, accessed 12 April 2009)
[Case number 200810088.] Middle East company buys 50% of Great Northern Developments from AMPHaumi Development Limited Partnership, owned in United Arab Emirates, has approval to acquire 50.0% of the shares of Great Northern Developments Limited for $172,800,000 from APEREF II Limited owned in Australia (27.1%) and Aotearoa (72.9%). APEREF II trades as AMP Private Equity Real Estate Fund II.
According to the OIO,
The Target of the Investment is Great Northern Developments Limited (GNDL) and is a special purpose vehicle for funds managed by AMP Capital Investors (AMPCI), incorporated for the purpose of acquiring and redeveloping the Lion Nathan Brewery site located on Khyber Pass Road, Newmarket, Auckland, New Zealand (Property) to comprise mixed use development including commercial office, residential and retail space with integrated public transport and other infrastructure. The business of the Target, namely the development of the Property, will continue to be run by the existing team in substantially the same way in which the business has been conducted to date.
In order to obtain new funds to explore alternatives and develop the Property referred to in the previous paragraph, the Vendor wishes to sell 50% of the issued share capital of the Target to the Applicant.
Abu Dhabi Investment Authority (ADIA), through the Applicant, is interested in continuing to participate in real estate development projects and has evaluated the Investment in New Zealand taking into account several factors that make it meets its investment criteria. ADIA’s intention is to, through its subsidiaries, gain investment exposure to the New Zealand property market in order to create a diversified property portfolio which will complement other investments made by it in the real estate market in other countries. ADIA has already invested in New Zealand. The Investment therefore complements ADIA’s portfolio of long-term real estate investments and infrastructure development within New Zealand.
Haumi Development is “a wholesale fund that provides an opportunity for institutional investors to participate in property development and trading investments in the commercial, industrial, residential and retail markets in New Zealand”.
See our commentary for February 2008 for further details on the purchase of the Lion Nathan site. In that decision, APEREF II gained approval to acquire all of Great Northern Development’s shares.
[Case number 200810042.] PF Olsen for Australian fund buys 218 hectares in Ngatapa, GisbornePF Olsen Tisa Pty Limited as the corporate trustee of the Australasian Timberland Fund II, owned in Australia (85.8%), U.K. (13.2%), and Germany (1.0%), has approval to acquire 218 hectares of land and forest at Wharekopae Road, Ngatapa, Gisborne for a suppressed amount from A C Forestry Limited owned in Aotearoa.
According to the OIO,
Both the Applicant and the Fund have been established for the purpose of investing in forests in both Australia and New Zealand.
The objective of the Applicant in making the proposed investment is to obtain a reasonable return on investment in the business of growing forests on the Land. The proposed investment along with the purchase of the associated forestry right will form part of a wider investment portfolio for the beneficial owners of the Fund.
[Case number 200810100.] Other land for forestry· Pacific Trees Limited, owned in Portugal, has approval to acquire 309 hectares near Opotiki, for an initially suppressed amount which was revealed on appeal to be $528,750, from K & J Farms Limited owned in Aotearoa. The OIO states: “Pacific Trees Limited (Pacific Trees) has identified New Zealand as a good place to make forestry investments. Pacific Trees received consent on 31 March 2008 to acquire 405.2025 hectares in the Opotiki District to undertake a forestry investment. Pacific Trees proposes to undertake further forestry investments in New Zealand. The relevant land contains approximately 217 hectares of radiata pine forestry which is scheduled to be harvested over the next three years. The land is currently subject to a forestry right. Pacific Trees intends to replant the forest as parts of the property are handed back to Pacific Trees under the current forestry right. Pacific Trees intends to re-establish the area of land where forestry is economic and advises that at least 180 hectares will be re-established in radiata pine forestry. Areas that will not be replanted will be allowed to naturally regenerate with native bush. The proposed investment is consistent with Pacific Trees’ strategy to undertake forestry investments in New Zealand.” See our commentary for March 2008 for further details of the earlier decision. That gave the owner of Pacific Trees as being Diogo Fialho De Oliveira of Portugal. [Case number 200810087.] Land for wine· Sauvage Family Vineyard, owned in the U.S.A., has approval to acquire 8 hectares at Burn Cottage Road, Cromwell, Central Otago for a suppressed amount from Brendon Hugh Meehan and Shelagh Mary Meehan of Aotearoa. According to the OIO, “In 2002 the Applicant obtained Overseas Investment Commission consent to acquire the land on which it currently operates a 12 hectare vineyard (Existing Vineyard), known as Burn Cottage Vineyard. The Existing Vineyard adjoins the Land subject to this Application. The grapes are grown under biodynamic principles, where animal manure is used as fertiliser and the grapes are organically grown. The Applicant will plant 5000 vines on the Land and primarily produce Pinot Noir wine. To aid in the production of manure to fertilise its existing grapes and the grapes that will be planted on the Land the Applicant intends to graze several Highland Cattle. The Applicant wishes to purchase the Land as a means of expanding its current vineyard operations. The purchase of the Land is vital to the Applicant to achieve its biodynamic supplies of manure and hay, which it requires to produce the consistent quality of wine for exports.” See our commentary for October 2002 for further details of the earlier approval. [Case number 200810091.] Contact Energy acquires 45 hectares of Taupo land from Landcorp FarmingContact Energy Limited, owned in Australia (42.9%), the U.S.A. (6.4%), the U.K. (3.9%), various other countries (5.4%), and Aotearoa (41.4%), has approval to acquire 45 hectares at Rakanui Road, Taupo for $4,021,809 from Landcorp Farming Limited of Aotearoa.
The OIO states:
The Applicant already holds a registered encumbrance and easement over the land and proposes to acquire the land from Landcorp Farming Limited (Landcorp). The encumbrance and easement enables the Applicant to undertake its geothermal operations in the area. The Applicant proposes to acquire the land in order to protect and facilitate development of its geothermal operations.
The Applicant proposes to enter into a land sharing arrangement with local farming interests to enable local farmers to use the land surface for grazing for other activities that are compatible with geothermal energy operations. The Applicant may also grant rights to various users of geothermal fluid or heat.
[Case number 200820035.] Rausing family (Ingleby Company) buys more land at Tokomaru Bay, East CapeThe Ingleby Company Limited, owned in the U.K., has approval to acquire 1,089 hectares at Owetea Station, Mata Road, Tokomaru Bay, East Cape for $3,487,500 from Christopher’s Management Services Limited owned in the U.K. (33.3%) and Aotearoa (66.7%).
According to the OIO,
The Ingleby Company Limited (Applicant) owns several stations in East Cape including Waikura Station and Puketoro Station, which adjoin the land subject to this application at Owetea Station (Owetea).
The Applicant proposes to acquire Owetea and farm it in conjunction with the Applicant’s existing East Coast farming operations and to afforest approximately 60% of the land at Owetea currently suffering from severe erosion.
This controversial and wealthy family has steadily built up its New Zealand land holdings. See our commentary for December 2007 for its last such purchase.
[Case number 200810015.] Other rural land sales· St John of God Healthcare Incorporated, of Australia, has approval to acquire 6.3 hectares at 26 Nash Road, Oaklands, Christchurch for $7,200,000 from Hospitaller Brothers of St John of God Aotearoa Society Trust Board of Australia. According to the OIO, “The Applicant’s primary objective is to provide health care in accordance with the healing mission of Jesus Christ and the teachings of the Catholic Church. It is the third largest private health care provider in Australia and provides a range of services throughout Australia (and in New Zealand) including health care services, medical diagnostics, and also an outreach programme for oppressed, materially poor, powerless, and/or disadvantaged people. The Applicant is structured as an association incorporated in Western Australia under the Associations Incorporation Act 1987 and is a charitable organisation with tax-exempt status in Australia… The St John of God Aotearoa Society Trust Board (Vendor) previously provided slow-stream rehabilitation services at the St John’s Hospital on the land. The Applicant has assumed provision of these services at the hospital as part of a merger with the Vendor.” [Case number 200720132.] · Armidale Trust, owned in the U.K., has approval to acquire 34 hectares at 179 Pudjeck Road, Timaru for $1,300,000 from Bryan Edward Rapsey of Aotearoa. According to the OIO, “Adrian and Brenda Hall, as trustees of the Armidale Trust, are husband and wife and citizens of the UK. They have farmed for 32 years and in September 2007 they disposed of all their farming assets in the UK. Together, with the assistance of one FTE, they ran an approximate 200 hectare farm with over 2000 sheep and 70 cattle… The Applicant’s Trustees are currently residing in South Canterbury and intend to live in New Zealand indefinitely. Both hold their interim (9 month) Long Term Business Visas (LTBV), which were issued on 19 March 2008. The Applicant’s trustees’ visas will expire on 18 December 2008, after which point they intend to apply for their New Zealand permanent residency. The Applicant intends maintain a 200-280 ewe flock, and rear 50 calves per year on the Land.” [Case number 200821546.] · North Ridge Accommodation Limited, owned in Aotearoa, has approval to acquire 23 hectares at Malaghans Road, Queenstown for $1,999,618 from Roger Keith Sharp and Christine Catherine Sharp of Aotearoa. According to the OIO, “The relevant land is currently owned by Roger Sharp and Christine Sharp who are both New Zealand citizens. Mr and Mrs Sharp intend to transfer the relevant land to North Ridge Accommodation Limited, a company owned by Knight Coldicutt Trustees Limited in its capacity as trustee of the North Ridge Trust. The North Ridge Trust is a discretionary trust whose beneficiary is Mr Sharp’s overseas superannuation fund. North Ridge Accommodation Ltd was formed to acquire the property for the primary purpose of providing holiday accommodation to Mr and Mrs Sharp and for the secondary purpose of providing rental accommodation to tourists during those periods when the property is not occupied for Mr and Mrs Sharp.” [Case number 200820015.] · Dairy Farms Partnership, owned in the U.S.A., has approval to acquire 588 hectares of freehold land and 1.2 hectares of leasehold land at Wilson Road, Ranfurly, Otago, for $5,363,750 from Helenslea Limited owned in Aotearoa. According to the OIO, “The Applicant considers farm land an attractive asset class due to its expected returns and diversification benefits. The Applicant’s particular interest in the New Zealand dairy industry stems from New Zealand’s position as a leader in the global dairy industry and the existence of word-class cattle and bloodstock industries here. The land is currently used for sheep and beef breeding and finishing. The Applicant wants to convert the farm to dairy. The size of Helenslea Farm means the operation will be significantly larger than the average for dairy farms in New Zealand and conversion from sheep and beef farming to dairy will allow more productive use of the land.” [Case number 200810049.] Summary statisticsAll investments The value of investment approved in the year to October 2008 continues to be considerably lower than for the previous October year, both in net value (i.e. disregarding sales from one overseas investor to another, and discounting part New Zealand ownership of the assets) and in 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 Gross sales of freehold land approved by the OIO during the years to October have increased in net area, though halved in gross area. Sales of other interests in land such as leases have risen considerably in net and gross land area. Refusals (above) are one less than the four at this time last year, but have risen in area and value, while still being a tiny 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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