Credit Suisse First Boston Corporation, owned by Credit Suisse Group of Switzerland, has approval to acquire up to 27% of Fletcher Challenge Forests Division, valued at $167,853,413. The purchase is as a result of Credit Suisse First Boston underwriting an issue of Fletcher Challenge Forests preference shares which were intended to raise $427 million to repay debt, as part of the break-up of Fletcher Challenge Ltd (FCL). All that will remain at the end of the breakup will be Fletcher Forests, being the only remaining Fletcher listing on the Stock Exchange, as Fletcher Challenge Forests. Sold off are Fletcher Paper to Norske Skogindustrier of Norway (see the May 2000 decisions), Fletcher Energy to Shell and Apache (see the October 2000 decisions). Fletcher Building is being listed as an independent company, and the “technology left-overs” creation, Rubicon is being floated on the share market.
According to the OIC, Credit Suisse First Boston
as underwriter of the Rights Offer has been required to purchase 671,413,653 of the preference shares (representing 27 percent of the total shares of FCF) which were not subscribed for under the Rights Offer. The Applicant’s involvement was solely as underwriter of the Rights Offer, and they do not have any intention to invest strategically in FCF. It is the Applicant’s intention to sell down the any shares which they acquire under their underwriting obligations in a controlled manner, in a reasonable timeframe. In this regard the Applicant has already entered into an agreement to on sell 10.5 percent of the total shares of FCF.
It is interesting to see the land that Fletcher Forests states it controls:
110,825 hectares of freehold comprising:
(a) 75,687 hectares situated at various addresses in the Bay of Plenty/Coromandel, Whakatane, Opotiki, Rotorua and Taupo areas; and
(b) 35,137 hectares situated at various addresses in Gisborne and Hawke’s Bay areas
43,380 hectares of leasehold comprising:
(a) 28,305 hectares situated at various addresses in Bay of Plenty, Whakatane, Opotiki, Rotorua and Taupo areas; and
(b) 15,075 hectares situated at various addresses in the Hawkes Bay area.
This totals 154,205 hectares – considerably less than the 288,000 hectares it has told the New Zealand Forest Owners Association it owns or manages (“New Zealand Forest Industry Facts & Figures, 2000/2001”, publ. New Zealand Forest Owners Association, New Zealand Forest Industries Council, and Ministry of Agriculture and Forestry, p.5). Presumably the 134,000 hectare difference lies in forest cutting rights, whose sale is now exempted from requiring OIC approval – despite their conferring considerable control over the land.
It is not clear where its half ownership of the ill-fated Central North Island Forests Partnership fits into this. This partnership with Citic of China has 181,683 hectares of Crown forestry licences, 189 hectares of forestry cutting rights, 1,857 hectares of freehold land and 169 hectares of leasehold land, mostly in the Kaingaroa forest in the Rotorua area. That “partnership” has dissolved acrimoniously after Citic accused Fletchers of selling the logs too cheaply to Fletcher Challenge Paper mills. All parties (except the banks) appear relieved that it is now in the hands of receivers, having failed to make payments on its $1.48 billion debt to an international syndicate of 12 banks.
The ownership of Fletcher Challenge Forests is given as 7.9%, Xylem Fund ILP, U.S.A., plus listed shareholdings in
Telecom Corporation of New Zealand Ltd, owned in the U.S.A., U.K., Australia and Aotearoa, has approval to
enter in to an Investment and Management Agreement with TMT Management Limited under which the applicant [Telecom] commits to invest up to the Australian dollar equivalent of NZ$40 million in investments selected by TMT Management Limited; and to enter in to a Custodian Agreement with TMT Ventures Limited under which TMT Ventures Limited agrees to hold such investments on the applicant’s behalf.
This appears to be a means for Telecom to invest in “businesses in the communications, technology, e-commerce and media industries”. TMT Ventures Limited “as agent and bare trustee of Telecom will hold legal title to investments made by Telecom in businesses in the communications, technology, e-commerce and media industries…” [the “industries”].
Telecom has also entered in to an Investment and Management Agreement with TMT Management Limited. Telecom will place the Australian $ equivalent of NZ$40 million with TMT Management Limited for the purposes of TMT Management Limited procuring and managing investments in the “Industries” on Telecom’s behalf. The proposal will provide investment capital to the “Industries”.
Telecom is owned as follows
Bell Atlantic Holdings Limited, U.S.A. (24.94%)
The Capital Group Companies Inc, U.S.A., (6.45%)
Listed in the U.S.A. (16%)
Listed in the U.K.(10%)
Listed in Australia (7%)
Unknown persons who may be “overseas persons” (5.66%)
leaving its New Zealand shareholding at 29.95%.
Dynasty Hotel Investments Ltd, owned largely by the Tang family of Singapore has approval to acquire 40% of Watermark Hotel Ltd which owns 0.76 hectares of leasehold land at 51 Drive Crescent, Tauranga, Bay of Plenty from G.J. and S.A. Payne of Aotearoa for $3,224,000.
Watermark Hotel has development rights over the foreshore by the property under a coastal permit from the Bay of Plenty Regional Council. It has resource consents for a “four and a half star, three storey, ninety-nine room boutique hotel and 210 person conference centre and 100 person restaurant built to extend out over Tauranga Harbour on the property”.
Dynasty, “under its existing brand, Heritage Hotel, intends to provide a unique accommodation experience in Tauranga, utilising its natural setting and high standard of service”.
Dynasty Hotel Investments is associated through the Tangs with the Pacific Group and its subsidiaries City Life and Dynasty Pacific, which specialise in developing up-market inner city apartments, and also has similar developments in Queenstown. In March 1998, Dynasty Hotel Investments was one of nineteen companies received by Jeffrey Tang (Jeffrey Tang Boon Jek) companies in exchange for 16 given to Pacific Group associate, Stanley Tan (Stanley Tan Poh Leng) (see our commentary for that month).
Dynasty Hotel Investments is owned, according to the OIC
58.61% - J. and K. Tang
16.4% - D. Sandrasegara
12.495% - Chatsworth Trust (Tang Family Trust)
12.495% - Keyworth Trust (Tang Family Trust)
All of these are from Singapore.
In two decisions, the OIC gives approval for subsidiaries of Rayonier Inc of the U.S.A. to sell out of two forestry joint ventures, to investment funds run by UBS Asset Management (New York) Inc of the U.S.A. One of the joint ventures operates near Hunterville, Wanganui, and owns 1,925 hectares of freehold plus an unknown area covered by Crown Forestry Licences. The other is in Northland, owning 1,671 hectares.
In each case, Rayonier had a 25% interest in the joint venture – through Rayonier CNI Ltd, in the case of the Wanganui “Central North Island Joint Venture”, and through Rayonier Northland Ltd in the case of the “Northland Joint Venture”. The remaining 75% was owned by the RII investment funds – RII Madaket Ltd, in the Wanganui case, and RII Mahoe in the Northland case. Rayonier is selling to UBS Madaket II Ltd and UBS Mahoe II Ltd respectively. The price has been suppressed in both cases.
The OIC explains:
In July 1995 RII Madaket Limited (an entity owned by various United States based pension funds, non-profit, charitable and educational institutions) and Rayonier CNI Limited established the Central North Island Joint Venture (CNIJV) with participating interests of 75% and 25% respectively. In August 1995 the CNIJV was granted consent to acquire various forestry assets in the central North Island region, including various Crown Forestry Licences and approximately 1,925 hectares of freehold afforested land. Rayonier now wishes to sell its interest in the CNIJV. UBS Madaket is an investment vehicle comprising of similar investors to those of RII being United States based pension funds, non-profit, charitable and educational institutions that are advised by/clients of UBS Asset Management (New York) Inc.
RII and UBS Madaket will, through their agent Rayonier New Zealand Limited (until 31 March 2001 at which time a new agent will be appointed) continue to manage the forestry assets, the sole cutting rights to the Forestry Assets and the harvesting of the forestry products derived from Forestry Assets and market the forestry products. Essentially the activities in relation to the forestry assets and their management will continue unchanged.
Change the dates to November 1997, “Madaket” to “Mahoe”, the amount of land, and the locality, and the same explanation is given for the Northland sale.
· G.C. Glessing of Canada has approval to acquire nine hectares of land at State Highway 2, Te Wera Road, near Matawai, Gisborne, from Longbow Forestry Ltd for $50,456. Glessing clearly believes the current owners are not managing the forestry block properly, and that by contracting PF Olsen and Co. Ltd to manage it, all will come right: he believes that “New Zealand’s production of exported timber can be increased through properly managed forests. The Applicant [Glessing] states that properly managed the forestry operation is likely to result in more people being involved in downstream opportunities in the industry. The Applicant intends to utilise PF Olsen & Co. Limited as forestry manager and consultant to manage the forestry operation.” However, it is not clear why Glessing has the expertise to make these sweeping statements because “the proposal is in essence a joint venture with the Applicant providing the risk capital and PF Olsen the forestry expertise.”
Five Christian missionary organisations, from Kenya and Switzerland, which in January 1999 received approval to acquire seven farms totalling 1,670 hectares at Mossburn, Southland for a total of $6,480,000, and in June 1999 received approval to acquire a further adjoining farm of 267 hectares for $393,750, now has approval to acquire a high country station. It is the 6,290 hectare leasehold Matukituki Station, at Wanaka, Otago, for $3,487,500.
As previously, they are making the purchase through their company, Biofarm Ltd, now renamed Solobio Ltd, in which each holds a 20% interest. They are Trinity Fellowship and Stiftung Fuer Missionarishe Entwick Lungshilfe of Kenya, and Stiftung Te Amo, Christian Solidarity International, and Aktion Fuer Verfolgte Christen of Switzerland.
In our commentary on the June 1999 decisions, we outlined the controversial background of these organisations and wondered how they afford to spend considerable sums to buy farms in Southland (and now also Wanaka), Aotearoa.
[Solobio] now wishes to acquire a further property to augment its existing farming operations in the Southland region. The Applicant intends to develop the property and replace the existing commercial cattle with registered stud breeding cattle, with a view to breeding superior genetics with export potential. It is also proposed to introduce SRS merino cross breeds, which is likely to result in increased lambing percentages and wool yields. The Applicant also proposes to carry out a feasibility study to determine whether organic farming is viable.
Despite its publicly stated intention to sell off its dairy farms in Aotearoa, Tasman Agriculture Limited has approval to buy two more farms in Southland for conversion from sheep and beef to dairy farming. The two adjacent farms are at Mabel Bush, north-east of Invercargill (note that the OIC says it is north-west of Invercargill, which is at odds with the map; and that one of the approvals is for “Maple Bush”, which doesn’t exist.) One is of 213 hectares for $1,603,125 and the other of 146 hectares for $1,096,875. Tasman “plans to convert the two blocks to form one dairy farm resulting in the conversion of approximately 325 hectares, carrying 1,000 milking cows producing 385,000 kilograms of milk solids”.
As the company said in announcing its interim results (14/2/01):
As approved at the Special General Meeting held on 21 June 2000, Tasman Agriculture Ltd has embarked on the strategic sell down of its existing New Zealand dairy assets.
The first dairy units were auctioned in September 2000 and since then TasAg has unconditionally sold 35 dairy units for a total sale value of $125.93 million, approximately 21% above 31 May 2000 valuations.
Of these unconditional sales, 33 are scheduled to settle on 1 June 2001 at a total sale value of $121.29 million, with the remaining two properties to settle on 1 June 2002 at a total sale price of $4.64 million…
TasAg’s farm sales to date represent 7,789 total hectares, or 54.6% of the existing effective milking area of the New Zealand Operations.
According to OIC figures, it can be calculated that Tasman is 66.1% owned by Brierley Investments Ltd (BIL). Interestingly, the OIC gives two different shareholdings for BIL – pretty good for two applications with the same date (14/12/00). The shareholdings of Tasman work out as follows (take your pick):
· Listed shares owned in Aotearoa – 20.7%
· Listed shares owned overseas (other than BIL) – 13.2%
· Brierley Investments Limited – 66.1% which itself is owned
Cassimir Lodge, on 19 hectares of land at 20 Williams Road South, Pyes Pa, Tauranga, Bay of Plenty, is being sold to Hearthstone Ltd owned by David and Corina Hansquine of the U.S.A. for $3,117,918. Its former owner, Reg Turner and Associates Ltd of Aotearoa will remain as manager for the next five years, and “following that time the Applicant [presumably in fact the Hansquines] intends to obtain permanent residence in New Zealand and to assume management of the operation of the Lodge”.
“The proposal involves continuing to operate Cassimir Lodge as a high class tourist lodge, thus retaining local employment opportunities and benefiting the local tourist industry… The lodge is currently under capitalised. The Applicant will introduce sufficient capital to address this issue. The Applicant also intends to market the lodge facility overseas, particularly in North America using their existing marketing contacts. Currently the lodge is not marketed offshore. It is also intended to extend the lodge’s facilities by adding a number of further guest houses over the medium term.”
Azure Development Holdings Ltd, as trustee for Guise Family Trust, has approval to acquire 0.601 hectares at Closeburn Station, Glenorchy-Queenstown Road, near Queenstown, Otago, plus a one-27th share of the 1,000 hectare station – 37 hectares – for $600,000. It is being purchase from J F Investments Ltd which is 70% owned by David Salman of Indonesia and 30% owned by David Benjamin Broomfield of Aotearoa.
One of the beneficiaries of the Guise Family Trust, Dennis Guise (a New Zealand citizen who has been living in the United Kingdom since 1988), purchased the property on 17 July 2000, for a “holiday and/or retirement home”.
“However, in the course of the estate planning for his family in the United Kingdom, Mr Guise was made aware that he and his wife (if she inherits the property upon his death) will be liable for inheritance tax on the property, were he to die before taking up residence in New Zealand again. Mr Guise intends to transfer the property to the Applicant as trustee of the Guise Family Trust in order to protect it from the inheritance tax. Mr Guise has completed building plans to construct a residence on the property. It is proposed that it will initially be a holiday home and subsequently a retirement home.”
Azure is owned 20% each by D F Guise, D A and F E Guise (together), A L Guise, D L Guise all of Aotearoa, and 20% by C M A Guise of the U.K
The Station is owned by J F Investments which is subdividing nine hectares of the station into 27 residential allotments as “lifestyle properties”, each of which has a share of the remaining station. The station is farmed using the capital from the sale of the residential lots. Each purchaser of a residential lot owns a part of the nine hectares plus a 1/27th share in the remaining Station.
· W.A. Lucas of the U.K. has approval to acquire a further 0.79 hectares of land at Watson Street, Bulls, Manawatu for $30,000 from Transit New Zealand. In April 1999, Lucas received OIC approval to acquire six hectares of land opposite this one in Watson Street for $168,750. He was “closely associated with New Zealand’s Polo horse community” and was “seeking a base for owning and training horses in New Zealand for his international Polo business. The land … was formerly part of the Rangitikei Racing Club and has facilities for stabling up to 38 horses. It is also intended that the property be used as a base for the export of polo horses acquired by both the applicant and other offshore buyers.” Now, “the additional land will enable him to better utilise the existing property and the stables on the property. It will provide additional grazing land which will enable the number of horses being trained to be increased to approximately 38 horses. This will enable the business to become better established and have increased long term prospects for exporting horses trained on the property.” Since April 1999, 25 horses have “been in training on the property” and three have been exported.
· Riversleigh Partnership, owned 50% by Mr W.B.C. Stapleton, 25% by Geoffrey Sprot, and 25% by Belinda Jane Sprot, all of the U.K., has approval to acquire 14.26 hectares at “The Willows”, Conders Bend Road, Renwick, Marlborough, for $1,040,625 from Mr Stapleton. Stapleton was granted consent in September 1999 to purchase 14.59 hectares of land which adjoined land purchased by the Riversleigh partnership in March 1999. He is subdividing this property, retaining an area containing a house, and selling the balance of 14.26 hectares to the Partnership, which intends to develop its two blocks of land as a vineyard, with development of the current piece of land starting in 2003. In March 1999 the Partnership was owned 50/50 by William Bruce Cameron Stapleton and Geoffrey Sprot, both of the U.K. It acquired 20 hectares of land at Conders Bend for $1,507,500. They had “been frequent visitors to New Zealand in recent years” and were “combining their extensive business and viticulture backgrounds to establish what they hope will be the beginning of a successful vineyard and winery investment focusing on quality wines for export, predominantly to the U.K.” The September 1999 land purchase by Stapleton was for $1,321,875. About a third of the land was planted in apple trees, which he then told the OIC that he intended to replace with grapevines before 2002 and run in conjunction with the joint venture on the adjoining land.
· Glenburn Ltd, owned 43.33% by J.B.R. Sheldon of the U.K., 23.34% by D.S. and J.C. Fraser of Aotearoa, and 33.33% by P.H. Hunter-Weston of Aotearoa, has approval to acquire 824 hectares at Hurunui Bluff Road, Hawarden, North Canterbury for $900,000 from H. and G. Hunter-Weston and A.J. Hubbard who is trustee for the Hunter-Weston Family. Mr Sheldon and the Frasers are the owners of the adjoining 1,520 hectare Mt Benger Station, through Mt Benger Ltd. The Glenburn property is on a short term lease to Mt Benger, but the owners of Glenburn want to sell, retaining a 33.33% share. It will continue to be leased to Mt Benger. In July 1994 we reported that John Basil Robertson Sheldon had bought “up to 50%” of Mount Benger Ltd, which was then said to own 1,401 hectares. He was investing “as a business associate” and the farm was to be managed by the other shareholder. They were considering developing a tourist lodge and expanding into dairying and forestry.
· Clarenshelf Forty-Three Ltd, owned 50% each by A.G. Rickman and R.J. Rickman both of the U.K., has approval to acquire the 194 hectare “Gower Downs”, near Waiau, North Canterbury, for $1,094,063. Clarenshelf already owns a 376 hectare farm near Kaikoura, and the Rickmans own Lynton Downs Ltd which owns a 4,192 hectare property near Kaikoura. “The Applicant states that the existing properties are not well suited to finishing stock and the water supplies are insufficient for irrigation or intensive cattle raising. The property at Gower Downs is being acquired to enable the optimisation of stock grazing at Kaikoura and allow for the wintering of stock from the existing property. Gower Downs will be used to finish stock from the two existing properties within the region. This will enable the Applicant to change the utilisation of these properties to a breeding focus.” They have apparently changed their minds since acquiring their 100% interest in the 376 hectare property in September 1992, when we reported the Rickmans’ purchase of the 76% of Clarenshelf they didn’t already own, for $835,000. They said then that the 376 hectare farm was “only marginally viable as a pastoral property and will be better utilised as an agro-forestry operation utilising the extensive expertise that the shareholders of Lynton Downs have in the forestry business.” The adjoining 4,192 hectare property had been owned and operated by Lynton Downs Ltd as an agro-forestry operation for over thirty years.
· Lance Cornell Weller of the U.S.A. has approval to acquire 44 hectares of freehold land at Speargrass Flat Road, Queenstown, Southland for $1,800,000. “The Applicant proposes to convert at least 20 hectares of the property into a commercial chestnut operation. The remainder of the land will continue to be used for deer farming along with the establishment of a small douglas fir plantation. The establishment of the chestnut grove will require a high capital investment. The development is likely to result in a more productive utilisation of the property, given that it is too small to be an economic deer farming unit.”Premier Dairies Limited, owned by the Clinton Family Trust of Ireland, has approval to acquire a further farm of 274 hectares at Ryall Bush, Southland for $1,029,375 which adjoins a 41 hectare property they already own and together will “provide an economic platform (unit) for dairy milking… The land being purchased is planned as a run off to carry young stock all year and graze non-lactating cows in the winter period from the Applicant’s two existing dairying operations. The Applicant further advises that the acquisition of the subject property will allow the Applicant’s existing farms (being the 41 hectare adjoining property and a 387 hectare property at North Makarewa, Southland) to be devoted entirely to milk production.” In October 2000, the 41 hectare block was described as adjoining the 387 hectare property, approval for whose purchase was given by the OIC in June 2000.