September 1996 decisions

First refusal for six years: "lifestyle" land acquisition declined

This month we see the first application to the OIC that has been refused since 1990. Most of details are suppressed, but it involved the Richard D. Collison Revocable Trust, a personal trust of Mr R. D. Collison of the U.S.A. He wanted "to acquire land exceeding five hectares" in Marlborough for "lifestyle purposes". Though the OIC explains that "the application for consent has been refused as it was not considered to be in the national interest test" (whatever that means!), we understand his application was not noticeably different from all the other questionable ones that are regularly approved. His lawyer simply cocked it up. Don’t be surprised if he tries again and succeeds.

Forestry Corporation privatised to Chinese government/Fletchers/Brierley’s

The largest remaining block of forests in government ownership was sold by the National government prior to the October election amidst considerable controversy and exaggerated or inaccurate claims of benefits. Forestry Corporation was set up by the Labour government to hold and run Crown forests. Its board, dominated by the New Right saw its job as privatisation (its Chair, Rosanne Meo, is an associate member of the Business Round Table and a prominent New Right warrior; its CEO, Tim Cullinane, salary between $410,000 and $419,000, is a full and outspoken member of the BRT). Accordingly, it was a leader amongst forestry companies in maximising its financial returns by exporting raw logs rather than in their further processing.

It was sold to a consortium consisting of Citifor Inc. (37.5%), Fletcher Challenge Ltd (through its forestry division, Fletcher Challenge Forests Ltd, which will manage the business, 37.5%), and Brierley Investments Ltd (25%).

Citifor, which according to the OIC paid US$409,458,333 for its share (but see below), is a subsidiary of CITIC USA Holding Inc., in turn a subsidiary of China International Trust and Investment Corporation (CITIC), ironically a Chinese state-owned corporation. CITIC "has in the space of 17 years emerged as a major international conglomerate with assets of US$1,700 billion [actually 17 billion yuan net assets at the end of 1995 – "CITIC Success Story Continues", by Wang Xiaoying, http://china-window.com/edu/books/bjreview/april/96-16-19.html], 60,000 staff and 36 subsidiaries scattered around the globe. The CITIC investment in Forestry Corporation will be managed through the U.S. subsidiary CITIFOR, which has extensive experience in timber and associated wood based industries. CITIC expects to make an active contribution to the management of the New Zealand asset, and will bring to the consortium access to the Chinese and regional markets for timber based products." (The Sino-File, New Zealand Embassy, Beijing, August/September 1996, "China invests in New Zealand trees", p.1.) CITIC is China’s biggest investment company overseas, and is growing rapidly: its assets grew 5.6 times between 1990 and 1995 (Wang Xiaoying, op. cit). Its investments include an industrial bank, part ownership of Cathay Pacific, Dragon Air and other airlines, and satellite communications, and it is something of a world of its own. One affiliate, Poly Technologies Inc, engages in arms trading. It is very influential in Hong Kong, and is the playground of a number of off-spring of top Chinese leaders who are subject to criticism for their opulent life styles. The head of one of its major subsidiaries, CITIC Pacific, Larry Yung, is the son of former CITIC head and current Vice President of China, Rong Yiren. "Yung gave new meaning to the word princeling in 1993 when he purchased a 335-hectare country estate and a 14-bedroom mansion in England that were once owned by the late British Prime Minister Harold Macmillan. Yung's devotion to conspicuous consumption – he reportedly owns three Mercedes-Benzes and a Porsche – has set a benchmark for taiziis." He has lived in Hong Kong for 18 years. On Hong Kong’s future he is quoted as saying: "I wish Hong Kong had someone like Lee Kuan Yew. Hong Kong needs a guy like him. He should be strong and have really contributed to Hong Kong as Lee Kuan Yew has contributed to Singapore." (Far East Trade Press Ltd and Times Information System Pte Ltd, http://web3.asia1.com.sg/timesnet/data/ab/docs/ab0951.html). The son of late Vice President Wang Zhen, Wang Jun, is executive director and general manager of CITIC and president of Poly Technologies (Asia, Inc., January 1995, "Revolution's Children", By Angelina Malhotra and Joe Studwell, http://198.111.253.144/articles/taizi.html).

The sale was condemned by three former director-generals of the New Zealand Forest Service, saying the Forest Service, which established the plantations being sold "was recognised internationally as having the leading edge in forest management" and that New Zealand taxpayers would be best served by the forest remaining a public asset earning good income for the people of New Zealand (PSA Journal, July 1996, "Forest sale condemned", p.1-2). Their claims were borne out in the announcement shortly after the sale that the Corporation had returned record profits of $168 million and a return on equity of 12.8% and on assets of 10.3% – considerably more than will be gained by repaying debt from the proceeds of the sale (NZ Herald, 28/8/96, "$168m profit by Forestry Corporation"). As if to confirm this, Brierley CEO Paul Collins claimed in November that its $160 million investment in Forestry Corporation was worth 30% more than what Brierley’s had paid for it just three months before (Press, 23/11/96, "Claims ‘vindicate’ forest-sale stance", p.14).

Even the claims for debt repayment were grossly exaggerated. The net proceeds from the sale were $1.6 billion ($2.026 billion less $426 million repayment of the corporation’s debt) which repaid only the barely relevant net foreign currency public debt, not the $22 billion full public overseas debt (most of which is now owed in New Zealand dollars) as many news sources claimed.

Another side effect is likely to be less publicly funded research – and hence probably less research – into forestry in Aotearoa. Fletcher was reviewing all its co-operative research, with possibly devastating effects on the Logging Industry Research Organisation and the Forest Research Institute. (NZ Herald, 19/8/96, "Research fears over forest sale", p.1.) With Carter Holt Harvey under U.S. control, it too is more likely to do its research in the U.S.A., leading to a steadily declining research effort in Aotearoa.

Claims for increased processing in Aotearoa have yet to be confirmed in practice, talk at Fletcher’s Annual Meeting being of "rationalisation" of its sawmills. If increased processing occurs (which is by no means certain) it is more likely to be by expansion or maintenance of existing facilities, or developments that would have occurred anyway. Any benefits to job numbers must have counted against them the 120 redundancies in Rotorua and Auckland announced in December by Fletcher Challenge Forests because of its merging the management of the new acquisition with its own operations (Press, 2/11/96, "Fletcher Forests to cut staff", p.27; 14/12/96, "Fletcher’s makes start on integrating forest operations", p.29). Fletchers promised $260 million in value-added processing – only half of what the government said would be required if it retained the Corporation – and 700 new jobs over the next eight years and this included plans it had made before the purchase (NZ Herald, 21/8/96, "Net gain raises questions on new jobs").

The price achieved for the Corporation was about book value, but a better price had been widely expected (ibid.). Further, the complex mechanism for payment spoke more of tax advantages than an honest price:

"Mr Fletcher said that Fletcher Forests had, after being the official buyer of Forestry Corporation for $2.03 billion, onsold 25% to Brierley and 37.5% to Citifor. This meant the tax value of the trees to the investment partners would be stepped up to the sale price, from their $630 million value in the Forestry Corporation accounts bought by Fletcher Forests. In effect, the division assumed a tax liability on about $1.5 billion of assets and was being paid $236 million for that by the consortium. The Forests division and Citifor each contribute equity of $240 million and Brierley $160 million to the consortium. The Forests division provides subordinated debt of $316 million and Brierley $30 million. Bank debt is to provide $1.2 billion. After receiving its $236 million, the Forests division outlay is $320 million."

Brierley’s has been given an option to sell its 25% stake after three years to Fletcher Forests for the market value of 93.3 million Fletcher Forests shares, to be paid in cash or shares. Fletcher Forests may in turn force Citifor to buy half Brierley’s holding for cash. Fletcher Forests also sold off its 24,800 hectare Hikurangi Forest Farms forest on the North Island East Coast to Glenealy Plantation of Malaysia for $210 million to help finance the purchase (NZ Herald, 22/8/96, "BIL able to quit forestry holding in three years"; Press, 21/12/96, "Fletcher’s sells East Coast forest to Malaysian company", p.21).

Forest ownership in New Zealand

as at 1 October 1996

Company Overseas company? Hectares Percentage of total
Fletcher Challenge Forests

8

380,000

25.7

Carter Holt Harvey

8

325,000

22.0

Rayonier New Zealand

8

97,000

6.6

Juken Nissho

8

52,000

3.5

Crown leases  

51,000

3.5

Hawkes Bay Forests

8

33,000

2.2

Wenita Forest Products

8

25,000

1.7

Ernslaw One

8

25,000

1.7

Timberlands West Coast  

25,000

1.7

Crown Forestry Management  

24,000

1.6

Private Sector  

441,000

29.8

Total     .0
Total overseas (at least) 8 937,000 63.4

The forests involved are 12% of the total plantation forests in Aotearoa. They are in the Bay of Plenty area – mainly the huge 188,000 hectare Kaingaroa forest, one of the biggest plantation forest in the world. They include:

  • 1,219 hectares of freehold land;
  • 1,456 hectares of leasehold land;
  • 187,048 hectares of Crown forestry licences; and
  • 534 hectares of "cutting rights etc other land than Crown forest licences".

Given that Fletcher Challenge is an overseas company (although arguably New Zealand controlled: FCL Forests is overseas owned 54.2%, FCL Energy 40.5%, FCL Building 42.1%, and FCL Paper 47.7%, according to FCL’s 1996 Financial and Operating Report, p.61) and so is Brierley Investments (BIL’s Chief Executive, Paul Collins, was quoted in the NZ Herald ["Swoop on Brierley causes no surprise", 16/3/96] as estimating overseas ownership of the company at "around 50%"), the sale represents a large increase in the overseas ownership of forestry in Aotearoa. The above table, using Ministry of Forestry data, illustrates this. Note that it uses hectares of forest calculated in 1995, but redistributes them according to October 1996 ownership. Fletcher’s forests now cover well over 400,000 hectares.

(For more detail on the Forestry Corporation privatisation, see Foreign Control Watchdog, number 83, December 1996.)

Works Civil Construction privatised to Paul Y ITC Construction of Hong Kong

Downer and Company Ltd, a subsidiary of Downer Group Ltd, in turn owned by Paul Y ITC Construction Holdings Ltd of Hong Kong is the buyer in another privatisation: that of Works Civil Construction Ltd, part of Works and Development Services Corporation New Zealand Ltd, which is now left little more than a shell. The purchase price was $44 million, of which $14 million was repayment of shareholder’s (i.e. government) advances. The purchase includes 30 hectares of freehold land, 42 hectares of leasehold land, and 221 hectares of other interest (primarily profit prendre).

Ironically, Downers used to be a major locally owned construction company, until it was sold by Brierley Investments to Paul Y in June 1994 in exchange for Paul Y shares. The OIC says:

"It is advised that Downers see the proposal as a way to extend its business activities in New Zealand which in turn will create one of the largest contracting companies in New Zealand, whilst at the same time allowing Downer to become a nation-wide New Zealand construction company."

Which adds further to the irony because the reason given by Brierley to the OIC for the sale of Downer in 1994 was that:

"Both Paul Y-ITC and Downer carry on business in the project management, civil engineering and building construction field. The Commission is advised that approximately 50% of Downer’s work is now Hong Kong based and with the increasing importance of Hong Kong sourced work Downer is more likely to flourish if merged with and becomes a subsidiary of a well recognised Asian construction company."

Who’s kidding whom?

Downers also got Works Geothermal Ltd in the same sell-off. See our commentary on the August 1996 OIC decisions for further details of the Works privatisation.

Skellerup sells its share of salt monopoly to Ridley of Australia

Skellerup Group Ltd has sold its 50% share in the only salt producer in Aotearoa, Dominion Salt Ltd, to one of its suppliers, Ridley Corporation Ltd of Australia for $36 million. (Note that this price was initially suppressed by the OIC, but was widely published in the news media. That price was released by the OIC in March 1997, on appeal, confirming the reports: $35,975,000. Only $6 million was paid immediately, the balance due by the end of 1996.) Skellerups was itself sold in February 1996 to Maine Investments Ltd, 84% owned by Goldman Sachs (U.S.A.) and 16% by members of the senior management of Skellerup Group Ltd. Dominion Salt, originally founded by George Skellerup in a joint venture with the government, eventually became a joint venture between Skellerups and Cerebos Greggs (owned by Suntory, Japan). Brierley Investments, formerly 30% owner of Skellerups, said in its 1993 Annual Report (p.35) that Dominion Salt was "the sole producer and refiner of industrial, food, rural and pharmaceutical salt products in New Zealand… The company operates solar salt fields at Lake Grassmere, Marlborough and an import facility at Mt Maunganui." Thus the sale includes 1,583 hectares of land at Lake Grassmere, Marlborough, and four hectares of land at Mt Maunganui, Bay of Plenty.

Dominion Salt is believed to have more than 90% of the domestic salt market, importing half of its annual sales of 120,000 tonnes from Ridley’s Cheetham Salt Ltd in Australia and producing the rest itself. Cerebos retains its share of Dominion, and not coincidentally has a joint venture (called Salpack Pty Ltd), with a Ridley subsidiary in Australia, Cheetham Salt Ltd.

The formality of this takeover is that CSL No.3 (Pty) Ltd, a subsidiary of Ridley Corporation Ltd, is acquiring 50% of Dominion Salt Ltd; 50% of Dominion Salt (NI) Ltd; and 49% of Cerebos Skellerup Ltd. Effectively this is an expansion of the Ridley/Cerebos "Salpack" business into Aotearoa. (Ref: Canterbury Business Monthly, September 1996, "Skellerup passes salt for $36m", by Chris Hutching; Press, "Ridley into NZ salt business", 24/8/96, p.25.)

Since its own sale to Maine Investments of the U.S.A., a Goldman Sachs subsidiary, (which we reported in February) Skellerup’s main activity appears to have been selling subsidiaries. The "rationale" for the sale of Skellerup to Maine was that "the operation of the various business units within the Skellerup Group has been constrained by public ownership. It is claimed that a return to private ownership will provide a more appropriate basis for the efficient management and allocation of capital between the Group’s businesses with resultant benefits." The constraints appear to have constraints on selling the "business units". In May Skellerup sold CablePrice Ltd to Hitachi of Japan.

Blue Star buys PC Direct Ltd

In a decision initially almost completely suppressed by the OIC and released only in March 1997 after appeal to the OIC, but widely reported in the news media, Blue Star Group Ltd, a subsidiary of U.S. Office Products Company of the U.S.A., gained approval to buy PC Direct Ltd. It was financed by issuing USOP shares to PC Direct’s owners but the valuation of the takeover was still not revealed by the OIC until an appeal to the Ombudsman showed it to be $28.25 million. However news media reports had already put the value of the company at $28 million after 25% shareholder in PC Direct, Direct Capital Partners (also originally a 20% shareholder in Blue Star before its take over by USOP), announced it had sold its PC Direct shares to Blue Star for $7.06 million. (DCP made a handy profit over its purchase price of $4.16 million in May 1995.)

PC Direct is an award-winning PC "clone" assembler and distributor which gained a national presence largely through direct-marketing. In 1996, it was rated in surveys as being second only to the world’s leading PC vendor, Compaq, in the supply of desktop PCs in Aotearoa. In 1995 it had opened a factory turning out over a hundred machines daily. The company was founded in 1989 by Maurice Bryham and Sharon Hunter who continue to work for the company under contract. The purchase leaves only PC General as a locally owned national PC retailer.

At the same time as the purchase of PC Direct was announced, Blue Star also announced it had bought an Auckland radio equipment supplier, Hart Candy Communications, and a Melbourne commercial contract stationer, Goodman Cannington Prince. Blue Star Chief Executive, Eric Watson, said he wanted more companies in Australia, having bought more than 90 companies there since the early 1990’s. USOP has bought 130 companies worldwide since incorporating in 1994. (Ref: Press, 19/10/96, "Blue Star buys PC Direct", p.29; 22/10/96, "Blue Star Buys PC Direct in shopping drive", p.22; Independent, 25/10/96, "Will Blue Star, the share-fuelled corporate cannibal, stop or pop?", p.40.)

Georgie Pie dies; cadaver sold to MacDonald’s

Progressive Enterprises Ltd, 57% owned by Foodland Associated of Australia, is selling off its fast foods Georgie Pie chain. Seventeen outlets (five freehold and 12 leasehold, four of which were franchises), the intellectual property and various assets are being sold to McDonald’s Corporation of the U.S.A., through its subsidiary, McDonald’s System of New Zealand Ltd for "approximately $15 - $25 million". The purchase of the intellectual property is more likely a spoiler action than any intention to continue the Georgie Pie concept. McDonald’s announced intention is to "open restaurants on 11 of the sites and close the others." McDonald’s claims that "all persons employed in the restaurants will be offered employment with McDonald’s" (Press, 8/11/96, "Prog Ent sales down for quarter", p.32) but with six sites to be closed it seems unlikely that all the 700 jobs that are at risk will be replaced.

The demise of Georgie Pie was the cause of much heartbreak. The modest hope was that it "would be New Zealand’s own homegrown alternative to the global fast-food industry giants such as McDonald’s, Pizza Hut and Burger King" although it was in many ways a copy-cat of McDonald’s. The first restaurant opened in Auckland in 1977, but Progressive expanded it rapidly only in the 1990s, announcing plans in late 1994 to open 25 new outlets a year, reaching 114 by 1998. By the time Progressive decided to close it, there were 32 outlets, employing about 1,300 people, 80% under 20 years old. It paid its staff even less than McDonald’s: it had hourly youth rates starting at around $5 for 15 year olds, compared to a base $8.41 at McDonald’s, regardless of age. As Graham Kelly, head of Progressive, conceded in acknowledging their facilities were too expensive for the meals they were selling, "Georgie Pie did not apply the same rigour to its real estate as it did to keeping down its labour costs and menu prices". The 15 outlets not going to McDonald’s, plus the $18 million, three million pies per week factory at Wiri, are either being closed (four outlets) or offered for sale, and "there was no shortage of potential buyers, as several overseas fast food chains were looking to enter the New Zealand market" (Press, 3/10/96, "Progressive profit plunge breaches bank loans", p.24).

Graham Kelly considered the expansion "was a decision taken without much logic. No one researched the pie, no one analysed how the pie was perceived. No one really thought through whether the pie suited the family restaurants image that Georgie Pie was trying to foster." He says the trend is away from hot fast foods, from red meat to white, and from stodgy to light, bland, foods.

On the other hand, Brian Popham, general manager of Georgie Pie until 1995, who describes himself as "one of the original creators of Georgie Pie", has a quite different view. In a letter to the Listener (5/10/96, "Georgie Porgy ran away") he described the decision to "axe" it as "unnecessary". He wrote:

"Progressive shareholders should question why – if the concept was inherently and historically unsound to the extent portrayed by the current CEO – the ‘guardians of shareholder wealth’ (the Progressive board) approved some $40 million in new investment over the last five years, as well as supporting the strategy to develop it as a major player locally and internationally. The facts are that ongoing investment approval was driven primarily by performance. In 1994, 26 restaurants were serving 600,000 pies a week, up 100% on the previous year. Pre-tax profit was $2.1 million.

"The reason Georgie Pie failed is that, with a structure geared for growth momentum, it could not sustain the massive 66% decline in customers over the last 12 months. The decline was caused by retail price increases that destroyed the value proposition and competitiveness. The curtailing of new development and the reduction in advertising compounded the downward spiral. No, not one-dollar pies or the pie itself, that’s all nonsense. Chain fast food is an art and a science. They lost it. McDonald’s got a ‘Happy Meal’ too cheap."

In other words, Progressive panicked and increased prices too much. The background to this is Progressive’s own financial problems, which it blamed partly on Georgie Pie. In the year ended 28/7/96, Progressive’s after-tax profit crashed 81.3% to $3.55 million, forcing it to skip paying dividends for the year (contributing to a 10.1% fall in its controlling shareholder’s profits) and, most notably, left it in breach of the conditions of its bank loans. Georgie Pie was said to be to blame for $8.5 million of the profit fall. However there were other problems in the group, indicated by static or falling sales, which led, among other changes, to the management of Progressive’s three supermarket chains – Countdown, Foodtown, and 3 Guys – being reorganised into one group, causing 60 redundancies at a cost of $2 million. (Ref: Press, 1/10/96, "Georgie Pie cools Progressive Ent", p.39; 3/10/96, "Progressive profit plunge breaches bank loans", p.24; 10/10/96, "Foodland profit down", p.29; 8/11/96, "Prog Ent sales down for quarter", p.32; 30/11/96, "Progressive starts year strongly", p.28.)

Singatronics of Singapore buys Auckland Airport Travelodge for $28.2 million

The Auckland Airport Travelodge, has been sold by the Tower Corporation (one of the few remaining New Zealand-owned insurance companies) to Glopeak NZ Hotels Pte Ltd, a subsidiary of Singatronics Ltd of Singapore, for $28,200,000. Singatronics "is experienced in acquiring hotel properties and improving operating results … it is seeking to take advantage of the synergies that can be extracted from the combined operation of various hotels throughout Australasia." It is its first major hotel purchase in Aotearoa, though it owns hotels in Australia. The three-and-a-half star Auckland Airport Travelodge was built in 1982, has 243 rooms and is the largest freehold hotel in the Auckland Airport area (NZ Herald, 11/9/96, "Airport Travelodge changes hands").

Malaysian company buys Duncan and Davies’ Taranaki plant nursery business

Crystal Accord Sdn Bhd, a private Malaysian company, has approval to take over Duncan and Davies Contracting Ltd for "$3,366,224 for 76%". Duncan and Davies have a "domestic and international ornamental shrub and plant nursery business" which Crystal says it will expand and operate in conjunction with "a similar operation to be established in Malaysia". Sounds like buying Kiwi expertise. The operation includes 44 hectares of freehold land and 38 hectares of leasehold land in Waitara, Taranaki.

Richina consortium increases shareholding in Mainzeal Group

A U.S.A./China consortium which currently owns 50.95% of Mainzeal Group Ltd has approval to increase its shareholding by another 5.32% for "approximately" $15.41 million. "The increased shareholding is a result of a private placement and the underwriting of a rights issue by Mainzeal which will assist in financing the construction and operation of an aquarium in Beijing." The consortium comprises Richina Enterprise Holdings Ltd, which is ultimately owned by Richina Equity Trust I of China, Anaconda Partners, L.P., which is ultimately owned by Junction Advisors Incorporated of the U.S.A., Chemical Asian Equity Associates L.P., which is a limited partnership of which Chemical Banking Corporation of the U.S.A. is a partner, R.E. Rainwater of the U.S.A., Ziff Investors Partnership L.P. II of the U.S.A., T.F. Frist II of the U.S.A., W.R. Frist of the U.S.A., P.C. Frist of the U.S.A., E. Metz of the U.S.A., J.M.R. Syme of Aotearoa, W.A. Caughey of Aotearoa, and T.J. O’Boyle of Aotearoa. The consent to acquire the original 50.95% was given in April 1995, when P.F. and C.A. Elcan of the U.S.A. and T.F. Frist of the U.S.A. were also owners. Mainzeal is also trying to get full control of its partly owned subsidiary, Mair Astley Holdings Ltd (see the November 1995 decisions).

Queenstown’s Millbrook Country Club of Japan rearranges its ownership

Three parties from Japan are swapping debt for shares in the Millbrook Country Club Ltd. In the past the Too Corporation, Tatemono Co. Ltd and Millbrook Partners Japan have "substantially financed" the Millbrook Resort "by way of interest free loans and subscription for preference shares" (an example of direct investment by loans rather than equity). They are now converting those to ordinary shares in Millbrook Country Club Ltd, in the ratio 76%, 13.4% and 10.5% respectively, valued at $21,780,024. "It will assist in encouraging the Japanese shareholders to provide the further funding that is needed to complete further resort facilities including a 200 plus room hotel of international standard." The company owns 190 hectares freehold and 14 hectares leasehold land at Lake Hayes near Queenstown. Last time we heard about Millbrook through the OIC was in 1992 when the Millbrook Country Club was being described as a golf club. At that time it was acquiring further land for a second 18 hole golf course to enable club members and visitors to play when the principal course was closed for tournaments. Millbrook then had 205 hectares of land and was owned in Japan, Hong Kong and Aotearoa.

Aral Property of Singapore and Hong Kong buys Pacific Plaza, Whangaparaoa

Aral Property Holdings Ltd, registered in the British Virgin Islands (presumably for tax purposes) but owned in Singapore and Hong Kong, is buying a 50% interest in the Pacific Plaza Shopping Centre in Whangaparaoa, Auckland for "$29.5-30.5 million" from Churchill Group Holdings Ltd. The shopping centre includes over two hectares of land. In case you worried that the British Virgin Islands registration of Aral Property Holdings cast doubt on its owners’ characters, be reassured: "The Commission is advised the persons exercising control over the company are all of good character and not the kind referred to in section 7(1) of the Immigration Act 1987." We are sure it has checked as well as it did for German con-man Ralf Simon. Aral "has considerable involvement in property ownership and management including various properties in New Zealand".

Milburn buys more land for quarry in Hawkes Bay

Milburn New Zealand Ltd, "approximately" 73% owned by Holderbank Financiers Glaris Ltd of Switzerland, has approval to buy four hectares of freehold land at Mere Farm, Mere Road, Hawkes Bay for $62,000 to add to associated land of 160 hectares it already owns on Mere Farm for the purpose of stock-piling quarry products.

Sealed Air Corporation of the U.S.A. buys four ha. on Waitemata foreshore

Danco (NZ) Ltd, a subsidiary of Sealed Air Corporation of the U.S.A., has approval to buy four hectares of land at 24 Bancroft Crescent, Glendene, Auckland "which adjoins the foreshore being an estuary comprising part of the Waitemata Harbour" from Donaghys Holdings Ltd for $4,200,000. It will be used for "the establishment of new premises allowing the business to grow, resulting in additional job opportunities in the area and also ensuring that the protective packaging product range will continue to be manufactured in New Zealand, rather than imported from Australia". The company also claims that it will result in "the introduction of specialised technology from Sealed Air Corporation into the existing operations". In December 1994, we reported that

"The giant U.S. packaging manufacturer, Sealed Air Corporation, is buying out Aotearoa manufacturer Trigon Industries Ltd for an undisclosed sum through its subsidiary Sealed Air Holdings (NZ) Ltd. Sealed Air invented bubble packaging and is the largest producer of the material in the world. Trigon was founded by its majority shareholders, chairman Bill Foreman and chief executive Diane Foreman, 25 years ago in Hamilton. It is one of the biggest suppliers of plastic packaging in Aotearoa. It manufactures plastic packaging and employs 730 people in Aotearoa, Australia, the U.S.A. and Europe. The Foremans will be employed as consultants for Trigon for the next five years. This appears to be a clear case of takeover of a successful firm, rather than investment."

Other land for forestry

  • Atadair Forests Ltd, owned by Carter Holt Harvey Ltd (78%, U.S.A.), South Wood Exports Ltd (19.9%, Japan) and Itochu New Zealand Ltd (2.1%, Japan), is taking over the lease of 813.28 hectares of land from Parengarenga A Incorporation for a "nominal amount". It is "part of the Parengarenga B3C Block created by partition order of the Maori Land Court on 5 May 1977". The transaction is another result of the bankruptcy of Northern Pulp Ltd which had established a Triboard mill in Kaitaia, Northland, with associated forestry rights. The acquisition of the mill by Juken Nissho of Japan was highly controversial because the Muriwhenua Corporation had wanted to buy it as a development project for its people. Muriwhenua unsuccessfully challenged the OIC's decision to approve Juken Nissho's purchase. The current transfer of the lease is a takeover of "the interest of Northern Pulp". Atadair "intend to continue to maintain the forest they established in pinus radiata back in 1979/80". South Wood Exports (which is heavily involved in forestry development in Southland and Otago in association with Southland Plantation Forest Company of New Zealand Ltd, owned by New Oji Paper Company Ltd and Itochu: see another decision involving them below) is said here to be owned 51% by Itochu Ltd of Japan and 49% by M.K. Hunt Foundation Ltd of Aotearoa, although in the past it has been described as owned 66.6% by MK Hunt Foundation and 33.3% by C Itoh and Company of Japan (another name for Itochu). Itochu New Zealand is a wholly owned subsidiary of Itochu Ltd.
  • Ernslaw One Ltd, owned by the Tiong family of Malaysia, is buying further land in the Manawatu for forestry. This time it is 1,449 hectares 20 kilometres north of Hunterville, for $1,500,000. Ernslaw

"aims to establish a Pinus Radiata forest in the Horowhenua/Manawatu and Southern Hawkes Bay/Dannevirke regions over the next five years. …The new planted area in conjunction with Ernslaw’s existing forest interests in the region will provide Ernslaw with the resource base required to establish a major wood processing plant in a 15 to 20 year time frame."

  • Carter Holt Harvey Ltd, approximately 51% owned by International Papers of the U.S.A., has approval to acquire "approximately" 11.6 hectares of land at Oio No. 2 Road, Owhango, King Country, Wellington for $20,068 for forestry from "Mr and Mrs Eames". "In September 1995, CHH received consent to acquire 455 hectares of land at Oio Road, Owhango, from R. and B. G. Barnett. The western boundary of that property adjoins land owned by Mr and Mrs Eames by a boundary of convenience. This application legalises that boundary of convenience." The Eames got a better price for waiting too: $1,730 per hectare, as against $1,209 per hectare to the Barnetts.
  • Three residents of Belgium have approval to buy a half share in 555 hectares of land in Ihungia Road, Te Puia Springs, East Cape, Gisborne for $515,000. They "have been granted New Zealand permanent residency status and intend to immigrate to New Zealand, to establish a residential base in New Zealand." Their company, Belman Holdings Ltd, is buying the half share from Trustwood Forests (Kiteroa) Ltd which is owned by two New Zealand residents, and the land forms part of a 870 hectare property owned by Trustwood. Approximately 500 hectares has been planted in pinus radiata and Trustwood is selling the share to reduce its indebtedness.
  • Carter Holt Harvey Ltd also has approval to acquire 231 hectares of land at Tuki Tuki Road, Belmont, Hawkes Bay for $347,082 for forestry purposes. It is "part of a larger farm property which is only marginal for agricultural purposes". Tuki Tuki Road must be an attractive place: in February 1995, two Netherlands residents who had been granted permanent residency in Aotearoa, received approval to buy a 13 hectare "lifestyle block" on Tuki Tuki Road, and a Finnish owner of the 553 hectare Tirimoana Station and an adjacent 323 hectares of land in Tuki Tuki Road, "restructured" these forestry investments.
  • Carter Holt Harvey Ltd is also buying former Crown land on the long closed Nelson Glenhope railway line from Landcorp Investments Ltd. The land is 0.6 hectares near State Highway 6, Brightwater, Nelson which lies between two existing CHH properties. It will be used for forestry and is being purchased for $7,500.
  • Blakely Pacific Ltd, as trustee for the South Blakely Trust of the U.S.A., has consent to acquire 1,849 hectares of land in Otago for a suppressed amount. The amount was revealed after appeal to the OIC: $700,000 (although the OIC misprinted this as $700,000,000). Blakely Pacific "have previously been granted consent to acquire approximately 6,594 hectares of land for forestry operations". This will have included 1,981 hectares on Matakana Island, Tauranga which they bought from Te Kotukutuku Corporation Ltd and Matakana Island Trust Incorporated in March 1994 after Matakana islanders’ won their battle to take control of the island’s forestry resources from ITT Rayonier (U.S.A.) and Ernslaw One (Malaysia), including several months blockading the road to prevent continued logging, and a successful, precedent setting, appeal to the courts against the OIC’s decision to give approval to ITT and Ernslaw. Ironically, having won, the islanders had insufficient resources to develop the forestry on their own and sold half of the island to Blakely Pacific. In the present case, "Blakely Pacific propose to establish a Douglas Fir and Pinus Radiata commercial forest on the property."
  • Southland Plantation Forest Company of New Zealand Ltd, ultimately owned by New Oji Paper Company Ltd and Itochu Ltd of Japan, has approval to acquire "approximately" 79 hectares of "rougher" land at Lillburn Valley, Southland, for forestry, in exchange for 40 hectares of "usable farm land", plus $135,000. As usual with its purchases, all forestry activities will be conducted under contract by South Wood Export Ltd (see decision above).

Other rural land sales

  • A resident of the Netherlands "who intends to take up New Zealand permanent residence early in 1997" has approval to purchase 68 hectares of land in the Mangamuka Survey District for $350,000. He

"proposes to use the dwelling on the land as a guest house with facilities for horse-trekking, fishing, tramping, sailing and other outdoor pursuits. … approximately 5.7 hectares of river flats will be used to grow fruit and vegetables to supply the guest house, the surplus being for sale to local retailers. … the balance of the land will continue to be used for grazing stock."

  • Tiong Family company, Neil Construction Ltd, of Malaysia, is buying more land in Albany, Auckland, for residential subdivision. It is four hectares at 258 Schnapper Rock Road for $1,150,000.
  • Universal Homes Ltd, which is owned by HTP Holdings Ltd of Singapore has approval to acquire just under three hectares of land in Guys Road, East Tamaki, South Auckland for $1,030,000 for residential subdivision and construction. The land adjoins 15 hectares the company already owns, and six hectares designated for reserve purposes which is being acquired by the Manukau City Council. The company is "a predominant player in the Auckland housing market and is continually searching for land for residential development". The land will be developed into 35 sections over the next 18 months to two years, building houses in the "mid-cost market bracket". In March 1996, the same company was given approval to buy nine hectares of land at Weymouth, Manurewa, Auckland for $3,320,000 for the same purpose, creating 100 sections. HTP was then described as "HIP Holdings Ltd, a Singapore public listed company which is 27% owned by The Peoples Republic of China".
  • Clearwood Developments Ltd which is 66.6% owned by E.J. Cleary and family of Ireland and 33.3% owned by the RB and KB Lockwood Family Trusts of Aotearoa, has approval to buy seven hectares of land currently used as a "residential lifestyle block" on Whatawhata Road, Hamilton, for $1,400,000, for residential subdivision. The same company was given approval to buy seven hectares at Tamahere, Hamilton for $900,000 in April 1996, also for subdivision. At that time it was stated that "Mr Cleary has been granted permanent residency and proposes to move to New Zealand in the near future". Clearly the future wasn’t that near.
  • Two U.K. residents, M. and C. M. Barker, have approval to buy 92 hectares of land at Bulls, Wellington for $497,500. They are "close friends" of the present owners, R. V. and L.G. Bishop "who are to be the other tenants in common of the land". The Bishops operate a horse stable and training centre from the property and need the money to develop the property. The Barkers intend to emigrate to Aotearoa when Mr Barker retires.
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