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Foreign investment in Aotearoa/New Zealand

Overseas Investment Office - March 2010 Decisions

What Next, another Smart move?

A relatively quiet month at the OIO. Firstly Smart Technologies ULC United Kingdom Public (49.9%), Canadian Public (25.05%), and United States Public (25.05%) has been given approval for an overseas investment in significant business assets, being the Smarts' acquisition of rights or interests in 100.0% of the shares of Next Holdings Limited, the value of the consideration of which exceeds $100m. Consideration was stated as to be advised.

The vendors were existing shareholders in Next Holdings being Kuwait Finance House (Bahrain) B.S.C., Kuwait (47%), Jolimont Capital Partners Pty Limited, Australia (11.6%), Ascot Private Equity Limited, United States of America (9 %), Touch Holdings Limited, New Zealand (8.2%), Kuwait Public (6%), Bahrain Public (5.9%), Alan Munro, New Zealand (5.7%), Nigel Devine, Singapore (2%), Ascot Private Equity Number 2 Limited, United States of America (1.5%), Andrew Stevens, New Zealand (1.1%), Simon Bridger, New Zealand (0.8%), Saudi Arabian Public (0.7%), and other overseas (1.5%).

The OIO states: "The Applicant designs, develops and sells interactive technology products. Next Holdings Limited is a designer and manufacturer of optical touch screens for use in all-in-one computers, computer displays, and large format screens. It is a leader in optical touch technology. The Investment will allow the Applicant to enter into the small format consumer touch market; strengthen the Applicant's existing intellectual property portfolio through the acquisition of complementary intellectual property assets; use Next Holdings Limited's technology assets to enhance and better exploit the Applicant's existing innovations; and realise additional value through growth in revenue and earnings".

Founded in 1987 and based in Canada, Smart Technologies ULC is best known for its interactive whiteboards which connects to a computer and digital projector and allows control of computer applications from the display, particularly relevant for classrooms and other group meetings. They are currently on a capital raising exercise via an Initial Public Offering (IPO), proceeds from which presumably will pay for the above purchase.

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Economic chills force Iceland to sell off Versacold

In another overseas share shuffle of a kiwi business AmeriCold Realty Trust United States Public (88.9%), Dutch Public (5.9%), Canadian Public (2.3%), Various overseas persons (1.6%), and British Virgin Islands Public (1.3%) received approval for the acquisition of rights or interests in 100.0% of the shares of Versacold NZ Limited which owns or controls a leasehold interest in 2 hectares of land at 1 Smarts Road, Hornby, Christchurch.The vendor was Eimskip Tango ehf Icelandic Public (49. 8%), United States Public (41.3%), Dutch Public (4.7%), Canadian Public (2.1%), and other overseas (2.1%). The asset value was stated as $57,000,000.

The OIO states: "The Application is in respect of the acquisition by the Applicant of 100% of the shares in Versacold NZ Limited (VNZ), which leases Sensitive Land at 1 Smarts Road, Hornby, Christchurch (Land). As part of the transaction it is proposed that the Applicant will offer approximately 30% of its equity in an IPO planned for early 2010.

The acquisition of VNZ will result in the Applicant becoming the largest owner and operator of temperature-controlled warehouses in the United States and in the world. The Applicant's significant scale allows it to offer its warehouse tenants a broad-based portfolio of strategically located temperature-controlled warehouses and related services, which enables warehouse tenants to optimize their supply chains and reduce costs."

See our November 2005 commentary for details of Versacolds' original purchase of P & O Cold Logistics NZ Ltd including the Smarts Rd property for $60m, and our July 2007 commentary for details Eimskip Tangos' purchase from Versacold for $72m.

Iceland has been the "sovereign whipping boy" of the global credit crunch over the past few years, so it is no surprise, they are now selling off some of their assets. Americold Realty Trust appears to be having problems of its own. As reported by Bloomberg on 6/5/2010, Americold abandoned a US$660m capital raising exercise (the planned IPO mentioned by the OIO) citing the volatile nature of global sharemarkets at the time. Another reason may have been that Americold had lost money for four straight years! Principal shareholder in Americold is Ron Burkle who the New York Post once described as the "Billionaire Party Boy".

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Australian private equity increases shareholding in Seniors Money Intl

Quadrant Private Equity Pty Ltd as manager of Quadrant Private Equity No. 1 Australia (100%) has received approval for the acquisition of rights or interests in 71.0% of the shares of Seniors Money International Limited, the value of the assets of Seniors Money International Limited and its 25% or more subsidiaries being greater than $100m. The vendors were existing shareholders of Seniors Money International Limited other than Quadrant Private Equity Pty Ltd New Zealand Public (67.8%), Australian Public (28.2%), Various overseas persons (1.5%), United Kingdom Public (1.4%), and Kenya Public (1.1%). Consideration stated was $5,500.000.

The OIO states: "The Applicant previously obtained consent on 12 March 2009 (Case No. 200910012) in respect of its acquisition of rights or interests in up to 67.2% of the redeemable preference shares (RPS) and up to 68.5% of the ordinary shares of Seniors Money International Limited (SMIL) which has now lapsed. The Applicant currently holds 19.9% of the ordinary shares and 58.5% of the RPS in SMIL.

SMIL now proposes to issue up to $5.5 million of further RPS on the same terms and conditions as those applicable to the existing RPS previously issued by SMIL. The Applicant has agreed to subscribe for all of the proposed issue of RPS less those subscribed for by other shareholders.

Following completion of the issue of the RPS by SMIL the Applicant will: own between 57% and 64% of the RPS in SMIL and 19.9% of the ordinary shares in SMIL; and have the right to convert each of the RPS (including the RPS which it already holds) into ordinary shares within a five year timeframe which may result in the Applicant acquiring up to 71% of the ordinary shares of SMIL."

See our June 2008 and March 2009 commentaries regarding Quadrants' original entry onto the SMIL share register. Quadrant is a Sydney based private equity fund with over AUD $700m under management. Seniors Money International is a specialist international financial services group providing financial products and services to those approaching, at, or in their retirement years. It specialises 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.

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Now the Germans want our dairy farms

AgrarINVEST Lux S.A. German Public, Germany (100.0%) has received approval to acquire a freehold interest in

• 120.9 hectares of land at 1346 Hundred Line Road West, Scotts Gap, Otautau, Southland; and,
• a freehold interest in 282.3 hectares of land at 309 Waicola Road, Scotts Gap, Otautau, Southland.

The vendors were 46 South Investments Limited Louis Stephen Kuriger, New Zealand (20.6%), Barbara Joan Kuriger, New Zealand (20.6%), Donavan Stephen Smith, New Zealand (17.6%), Sheryll Patricia Smith, New Zealand (17.6%), Stephen David Eichstaedt, New Zealand (11.8%), and David John Gibbins, New Zealand (11.8%). Consideration was $11,728,125.

The OIO states: "The Applicant undertakes investment into agricultural and related businesses worldwide, in particular dairy farming in Australia and New Zealand and beef farming in Brazil.

The Applicant proposes to acquire the land known as Waicola Dairy Farm which comprises two parcels. The smaller block is presently used as a run-off and support to the larger dairy block. The acquisition is part of the Applicant's strategy to invest in agricultural properties that have the potential to improve profitability through further investment and improved management".

But this is not the end of this story. According to AgrarInvests' German website, it also promotes Aquila II Agricultural Investment fund, which "invests exclusively in New Zealand dairy farms". In promoting this fund, it goes on to say:

• "Bargain prices for dairy farms in New Zealand;
• Year-round, making it very cost-grazing, excellent infrastructure;
• For foreign investors optimized market entry;
• The first farm purchase contract already using the fund tied, a further 3 farms preliminary agreement secured;
• Short planned duration of approximately 5.5 years, projected total return of about 158%"

With bargain prices, optimized market entry for foreign investors and 158% returns, what's the bet at least 3 more farms are going to end up in German hands?

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Queenstowns' Jacks Point properties ownership criteria tightened

In 3 separate decisions Jacks Point Residents and Owners Association Incorporated Lifestyles of NZ, New Zealand (33.6%) Budfin Nominees Limited, New Zealand (26%) New Zealand Public (15.8%) Australian Public (8%) Various overseas persons (16.6%) has received approval for an overseas investment in sensitive land, being the acquisition of a freehold interest in

• 0.85 hectares of land at Jacks Point, State Highway 6, Queenstown to Kingston Highway, Lake Wakatipu,
• 2.85 hectares of land at Jacks Point, State Highway 6, Queenstown to Kingston Highway, Lake Wakatipu, and
• 4.27 hectares of land at Henley Downs, State Highway 6, Queenstown to Kingston Highway, Lake Wakatipu.

The vendor in each of the three deals was either Jacks Point Limited or Arith Holdings Limited, both ultimately Budfin Nominees Limited, New Zealand (100%). Consideration in each of the three deals was just $1.

The OIO states in each of the three approvals: "Jacks Point Residents and Owners Association Incorporated (JPROAI) was incorporated to undertake the role of the management of the infrastructure for the Jacks Point Development. The purchasers of lots in the Jacks Point Development acquire a residential lot or a tablelands lot and membership securities in JPROAI. JPROAI will hold, manage and/or maintain communal facilities (including land, utilities, and recreational facilities), create and maintain design guidelines, levy members, and set by-laws for the Jacks Point development... The Applicant already owns and manages common land (open spaces and access areas) and associated infrastructure on behalf of the owners and residents of Jacks Point. The land being acquired will be amalgamated with the adjoining open space lots and common land within the Jacks Point development".

John Darbys' Jacks Point development has struggled to attract buyers, although the Dunedin City Council, via its utility contractor Delta Utility Services did buy 100 undeveloped sections previously contracted to the now defunct Hanover Finance in 2009. Darby also managed to sell some sections in 2009 to some wealthy Singaporeans, see our August 2009 commentary. For our OIO approved transactions involving Jacks Point see our commentaries for December 2001, November 2004, July 2005 and June 2006.

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US Evangelist to set up in New Zealand

And finally for April, Lyonshead Development Corporation Limited Charles Walter Missler, United States of America (1000%) has received approval to acquire a freehold interest in 13.75 hectares of land at 394 Vaile Road, Broadlands, RD1, Reporoa. The vendors were River Lodge Limited George Anderson Campbell, New Zealand (40%), Franciska Johanna Campbell, New Zealand (40%) Sean Peter Campbell, New Zealand (10%), Maria Jane Cuttance, New Zealand (10%). Consideration was $3,102,187.

The OIO states: "The Applicant's sole shareholder is Charles Walter Missler, a U.S. citizen, who intends to reside indefinitely in New Zealand. The Applicant intends to purchase the land, along with the conference centre business at the same address and will continue the conference centre business, including religious ministry conferencing, leadership training and media training".

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