September 1994 decisions

Part-Japanese consortium buys Seafield meat works from collapsed Fortex

The purchase of the Seafield meat works from the collapsed Fortex Group Ltd (in receivership) appears this month. It was purchased by Canterbury Meat Packers Ltd, ultimately owned 50% by Phoenix Meat Company Ltd and 50% by Five Star Beef Holdings Ltd. The price was suppressed. Phoenix, of which Fortex owned 15% but is 68% owned by farmer clients, is a West Coast and Nelson meat processor (Press, "Promise of 600 works jobs back", 10/8/94, p.1; "Works offer possible", 11/8/94, p. 24; "Fortex’s two South Island meatworks sold for $31m", 5/10/94, p.25). Five Star is itself 50% owned by Anzco Developments Ltd and 50% by Itoham Foods Inc of Japan. Seafield itself includes 367 hectares of rural land in Canterbury. Anzco is 64.9% owned by the Meat Board (which set it up in 1984 to improve lamb sales to Japan) and 20.8% owned by Huttons Kiwi. With Five Star it owns a Beef Lot near Ashburton ("Major meat industry changes predicted", Press, 22/3/94).

Not long before Fortex’s crash, Anzco’s managing director, Graeme Harrison, predicted increased foreign ownership of the meat industry. He said "there had been significant changes in ownership of meat-processing companies in Australia as major Japanese and United States meat companies made their operations global" (ibid). Similarly, in July, the chief executive of the Alliance Group, Rick Bettle, warned North Canterbury Federated Farmers: "We are in danger of losing control of our business to overseas concerns. If that happened it would not be too long before we would be back to co-operatives to regain control of the industry." (Press, "Call for meat debate", 21/7/94, p.23.) An unwelcome symptom of that predicted overseas interest was the activities of a Bahamas-registered company, TA Pacific, not long before the Fortex crash. In February it took a 13.9% stake in Fortex without the proper notification to the Stock Exchange, which brought Securities Commission intervention. It sold that holding down to 9.87% shortly before Fortex announced a huge half-year loss in March (Press, "Commission to probe Fortex shareholder", 12/2/94; "Foreign investor obligations", 3/3/94; "Fortex in crisis: $40m-$50m loss expected", 12/3/94).

While the general crisis state of the meat processing industry was the root cause of its failure (see commentary on February 1994 decisions), Fortex was in a sense a victim of the Employment Contracts Act. Long before the ECA, it had forced concessions in working conditions in order to run its innovative and modern plants almost 24 hours a day and throughout the year. After a loss in the year ended 30 June 1993 it had negotiated those terms down even further. It had to, because it was now competing with other companies that had forced such conditions through under the ECA. Workers were told that the "belt-tightening" was necessary to save jobs: as events show, it did not. Other, even more ruthless, companies had undercut Fortex. (Press, "Grumpy few add to Fortex’s woes", 19/2/94.) For both this reason, and the fact that it was widely touted as an example of what success technology and innovation could bring, the crash should have been a major embarrassment to the Government.

After Fortex’s receivership, the two main plants run by Fortex were advertised for sale. One of the most public of the bidders was a Malaysian, Mr Lim Hong Liang, who claimed he had had agreement with Fortex, before it went into receivership, to take over the company for $25 million ("Fortex rescue starts at $50m – Asian investor", Press, 22/4/94). In the end seven bids were reportedly made for the assets of the company – the meatworks at Seafield near Ashburton, and Silverstream near Dunedin, and the Summit deer plant near Tauranga. They included the Primary Producers’ Co-operative Society and the Alliance Group (Fortex’s South Island competitors), and Lim Hong Liang (Press, "Bidders for Fortex down to seven", 26/7/94, p.34). The Phoenix/Five Star bid got Seafield, and Skeggs Group Ltd of Dunedin got Silverstream, though later resold it to PPCS ("PPCS to take over Silverstream", Press, 15/10/94, p.29). The total price paid for the two plants was slightly more than $31m, but the individual prices have not been disclosed. Their book value was $107m ("Fortex’s two South Island meatworks sold for $31m", Press, 5/10/94, p.25).

TransTel (U.S.A.) sets up, increases share in Winterfield Telecommunications

The U.S. TransTel Group is setting up in Aotearoa "to facilitate international expansion of its telecommunications business." Its parent company, TransTel International Inc, through subsidiary TransTel New Zealand Ltd, is increasing its shareholding in Winterfield Telecommunications Group Ltd to 60% because it "provides an opportunity through a New Zealand joint venture to expand New Zealand based telecommunications by using TransTel International Inc’s core business, and the EDACS and Cellular businesses already owned and established by Winterfield". Another subsidiary, TransTel Asia Pte, was originally going to own the group’s New Zealand interests, but the group changed its mind to give the parent ownership directly.

New Zealand Rail leaves Clear Communications

The shareholding of Telecom’s main tolls rival, Clear Communications Ltd’s, is changing with the withdrawal of New Zealand Rail Ltd. New Zealand Rail was a shareholder because Clear wanted its fibre optic system, which it gave to Clear in part payment for 15% of Clear’s shares, but now wants to get out. That restores the shareholding to the original, namely 25% each by Bell Canada International (NZ) Ltd (a subsidiary of Bell Canada International Inc of Canada), MCI Financial Corporation (a subsidiary of MCI Communication Corporation of the U.S.A.), Todd Communications Ltd (Aotearoa), and TVNZ Investments Ltd (Aotearoa). New Zealand Rail retains a contract to maintain the cable, which it uses for signals and other communications. The price is suppressed, but New Zealand Rail had first offered its shareholding to other telecommunications companies including the Australian company Telstra. It declined when Telecom, with which it has a reciprocal agreement, warned it off as an "unfriendly act". (Press, "NZ Rail sells 15% Clear stake", 7/9/94, p.26.)

Skellerup (now an overseas company) takes over Levenes

The takeover of the Levene Group of companies by Skellerup Group Ltd is interesting if only because it reveals Skellerups as an overseas company, with 36% overseas shareholding "spread widely". Brierleys also has a 30.3% shareholding. Skellerup is taking over Levenes for $74 m. Levenes has a retail chain of 45 shops selling paint, wallpaper and home furnishings, while Skellerup has interests in finance, manufacturing, distribution, garden supplies (including Palmers Gardenworld), contracting and salt. (Press, "Skellerup buys Levene Corp", 23/8/94, p.44; "Skellerup clears air on its industrial focus", 2/9/94, p.19.)

Macraes Mining (Australia) to develop Globe-Progress gold mine near Reefton

Macraes Mining Company Ltd, owned by the Union Gold Mining Company of Australia has approval to develop the Globe-Progress gold mine which includes the leasing of approximately 5 hectares of land near Reefton. Macraes (which already runs a gold mine at Macraes in North Otago) asserts that "construction of the project will take approximately 12 months and at its peak will employ 270 personnel and during the operation of the mine and processing plant Macraes should employ 110 personnel." The mine was the subject of resource consent hearings in Reefton in September, when commissioners consented to most of the mine’s applications, but declined consent to the construction of a polishing pond and infiltration basin near Reefton township and to the discharge of treated mine water to the pond and ground. They also stipulated a $5.1m bond to be provided by Macraes to the local regional and district councils, and between $500,000 and $1m to the Department of Conservation. There was considerable opposition on environmental grounds, with a classic West Coast anti "greeny" reaction of refusing hotel accommodation to visitors suspected of environmental concerns. The concerns were with heavy metals in the tailings, radioactive materials, and danger to aquatic life in the nearby Inangahua River. Macraes re-applied for the missing consents in October. (Press, "Anxious town awaits decision", 2/9/94, p.21; "Most goldmine application facets accepted", 14/9/94, p.4; "Macraes re-applies for consents", 8/10/94, p.27; "River life in danger from goldmine, says society", 22/11/94, p.3.)

Neil Construction (Tiong family, Malaysia) buys 31 ha. in Albany

The Malaysian Tiong family owned company, Neil Construction Ltd is buying 31 hectares of former farm land on Schnapper Rock Road, Albany for $2 million for subdivision.

General Accident sells Auckland properties to subsidiary Britania Properties

In internal restructuring, General Accident PLC of the U.K. is selling various commercial properties in the central Auckland block bounded by Queen St, Vulcan Lane, High St, and Shortland St to its subsidiary Britania Properties Ltd. The price is not disclosed.

Southern Farm Trust, investor in prime farm land, sells trust units overseas

The Southern Farm Trust, whose plan is "to invest in prime farm land in New Zealand and thereby develop and nurture a diversified farming portfolio" has permission to sell up to 100% of the units in the trust to overseas interests, for $11m. They state that "management and control of the assets remain in New Zealand hands with the unit Trustee and Manager."

Other rural land

• In a decision released only on appeal to the OIC, RII Marlborough Ltd of the U.S.A. is given approval to buy the 921 hectare Craigdean Station (via holding company Newry Down Ltd) at Mangamahu, Wanganui for $1,200,000 for forestry development.
• A person described only as "a Japanese Wool Trader" is buying a 461 hectare farm in North Canterbury for a suppressed amount. "He wishes to use the land to develop and produce specialised wools for export to Japan." On appeal to the Ombudsman, the person’s name, Mr Y. Imagawa, was released, and the price he paid was revealed to be $1,200,000.
• Mr P.K. Kelly, a resident of the U.S.A., is buying 122 hectares of land in South Auckland for $1,150,000 on which he proposes to establish a forestry operation (on 75 hectares), a tourist lodge and golf course, and investigate the viability of an olive growing business. In October, when he was to buy a further adjoining 28 hectares, more specific information was given. His company is Knox Farms Ltd and the farm is in Waikawau Bay, Colville.
• Milburn New Zealand Ltd, 72.5% owned by Holderbank Financiers Glaris of Switzerland is acquiring a 82 hectare block of rural land in Tauranga Bay Road, Westport, for $125,000. The land is adjacent to an existing Milburn quarry for its cement works, and the land is being bought as a buffer against noise and vibration which will either continue to be farmed or "incorporated into the afforestation programme of Milburn which was begun in 1991."
• The sale of 32 hectares of land at Lake Rotoiti to Japanese company Omni Realty and Services Ltd for $700,000, which was first approved in August 1994 (q.v.), is re-approved "due to a change in the vehicle acquiring the land." The land is adjacent to Moose Lodge.
• 22.9660 hectares of land in the Motueka Valley is being sold to a German couple who have permanent residency, for $12,000, for forestry development.
• Rayonier New Zealand Ltd, a subsidiary of Rayonier Inc of the U.S.A. is leasing 13.2 hectares of land at Bulls, and 35 hectares at Edendale Southland for an initial period of four years for conversion into "stool beds" for use as a source of commercial seedling supply. The price was not initially released in either case, but on appeal was revealed to be $12,400 per annum for the 13 hectares at Bulls, and $34,550 per annum for the 35 hectares in Southland.
• A further 30 hectares of land for forestry is being sold at Broadwood in the Far North District, this time to two Hong Kong residents for $75,000. The development of the forestry unit will be by local agents and managers.
• A Swiss resident, Therese Herzog, is buying all the shares in Herzog Wine Collection Ltd for $586,000. The company owns a 13 hectare orchard in Jefferies Road, Blenheim which is proposed will be turned into a vineyard. Ms Herzog’s husband owns a vineyard and winery in Switzerland and "has substantial experience in winemaking technology".
• Advanced Foods of New Zealand Ltd, a subsidiary of Bernard Matthews Plc of the U.K. is buying four hectares of land around its plant in Takapau Road, Waipukurau for $35,000 from Wrightsons to form a "buffer zone". Bernard Matthews bought the plant, including 19 hectares of land, in February 1994 from the New Zealand Meat Producers Board for $40 million.
• In an internal restructuring, the Colin Beaven Trust and the Denise Beaven Trust, of Guernsey, are acquiring a forestry right over standing timber on 117.2 hectares of land near Warkworth, from Colin and Denise Beaven for $925,000. Strong smells of tax avoidance wafting through from this one.

Tee (Singapore) increases shareholding in Sintau Ltd

In another internal restructuring, Ng Siong Tee of Singapore is acquiring a further 14% of the issued share capital of Sintau Ltd which is currently 81% owned by Ng Siong Tee and 19% by Ta Chang Pte Ltd of Singapore. The 14% will buy 14 $1 ordinary shares (for $1 each).

General Accident sells half interest in 151 Queen St, Auckland to subsidiary

Released in part only on appeal (although almost completely suppressed originally) is an internal restructuring (why should it have needed to have been suppressed in the first place?) within the General Accident group (U.K.). Its subsidiary, Alburg Properties Ltd is acquiring a half interest in a commercial property at 151 Queen Street, Auckland for a still suppressed amount.