November 2002 decisions75% of ICPbio bought by Australian venture capital fund Koreans buy 106-108 Albert St, Auckland from Indonesian company Gardiner Group buys remaining Emerald Capital shares Ernslaw One buys Coromandel dairy farm for sawmill US investors buy 1,340 hectare Whiterock Station, South Canterbury US investor to support restoration of Big Lagoon wetlands in Southland U.K. buyers of Wellsford farm lose residence status six years later One refusalC P Bomar of the U.S.A. has been refused approval to acquire 36 hectares at Mangawhai Heads Road, Mangawhai Heads, Northland for $1,462,500 from MN and P Powley of Aotearoa.
The subject property adjoins land previously acquired by the Applicant in 2001 (16.78 hectares) and by the Applicant’s company Bream Bay Farms Limited (458.5087 hectares in 1991). These properties are currently utilised for farming sheep and cattle. The subject property is currently utilised by the vendors for casual grazing and as a dairy farm runoff. The Applicant intends to continue this use for the short-term by incorporating the subject property into its existing farming operation.
There is a likelihood that the property will be re-zoned rural-residential in the near future and the Applicant may choose to subdivide and/or develop the property. It is also possible that the Applicant will build a private residence and/or tourist accommodation in some stage of the future. It is advised that the proposed acquisition will help to preserve the value of the Applicant’s farm in the short-term and enhance the prospects of both properties in the long-term.
The Commission is not satisfied that the proposal is in the national interest as the proposal is unlikely to result in substantial and identifiable benefits to New Zealand or to a region, district, locality, or other part of New Zealand. Furthermore the property has not been advertised in accordance with the provisions of section 14C (2) of the Overseas Investment Act 1973.
In August 2001, Clifton Patrick Bomar, Jnr, of the U.S.A. received approval to acquire 17 hectares of land at Cove Road and Mangawhai Heads Road, Mangawhai Heads, Northland for $731,250. Bomar’s Bream Bay Farms Ltd owns an adjacent farm which he received approval to buy in January 1991. In 1991 he said he “intends to reside on the farm at various intervals in each year”. See our commentary for August 2001 for further details. 75% of ICPbio bought by Australian venture capital fundGresham Rabo Management Limited, on behalf of the Food and Agribusiness Investment Fund 2 of Australia, has approval to acquire 75% of ICPbio Ltd for a suppressed amount from R and K Sharpin and L and M Simmons (and/or related parties) of Aotearoa. ICPbio owns 0.89 hectares of freehold and 1.2 hectares of leasehold at 26-30 Waipareira Avenue, Henderson, Auckland.
The Applicant is an Australian venture capital fund with a manager with a proven track record of identifying and participating in value creating investment opportunities in the agribusiness sector. The Applicant, who focuses purely on investing in the broad food and agribusiness sector, proposes to acquire a shareholding in ICPbio Limited who is an animal health product manufacturer, distributor and commercialisation business and is acknowledged as one of the pioneering companies in the New Zealand biotechnology sector. ICPbio Limited has reached a position whereby it requires further capital to expand, and has come to an investment arrangement with the Applicant that can add value and assist in the growth of the business.
ICPbio is a biotechnology company established in 1983. Its Chief Executive and co-founder (with Rosemary Sharpin) is Maxine Simmons, a director of Industry New Zealand and a member of the Foundation for Research, Science and Technology Advisory Committee (see http://www.icp.co.nz/ASP/default.asp). Koreans buy 106-108 Albert St, Auckland from Indonesian companyGanada Housing Co. Limited, owned by Jae Ho Huh (48%), Jong Won Song (26%), and Jae Hee Nam (26%), all of Korea, has approval to acquire 0.44 hectares at 106-108 Albert Street, Auckland for $24,500,000 from Chanlon Investments Limited of Indonesia.
The subject property is currently utilised for 136 car parks and a recreational bungy jump-type amusement ride. The Applicant proposes to leave these leases intact for the short-term pending development of the site. The Applicant proposes to develop the property by constructing a multipurpose development incorporating an apartment block, commercial offices with a dual-level retail frontage. Gardiner Group buys remaining Emerald Capital sharesGardiner Group Capital Limited, owned by The Estate of George R Gardiner of Canada, has approval to acquire the remaining 3.6% of shares in Emerald Capital Limited that it does not already own for a suppressed amount from Jacon Investments Limited of Aotearoa.
Emerald carries on business in New Zealand as an investor, and capital provider. The company’s investment philosophy is to provide capital and management expertise for companies and businesses in need of funds for expansion and development. Emerald has made significant capital contributions to the companies in which it has invested in New Zealand including an 82.2 percent shareholding in New Zealand Experience Limited. These contributions have been funded, in part by capital contributions from the Applicant.
The proposed transaction will enable the Applicant, as the sole shareholder of Emerald, to concentrate on optimising the current holdings of the portfolio and its strategy for longer-term capital growth from the major investments held by Emerald.
Emerald Capital’s assets include 4.2 hectares at Bridle Path Road, Christchurch, Canterbury (the Mount Cavendish gondola operation) and 7.2 hectares of leasehold at Rainbows End, Manakau, Auckland (the Rainbows End amusement park), both owned through New Zealand Experience Ltd.
Emerald has investments in addition to New Zealand Experience. For example, in 1998 it bought out venture capitalist Direct Capital Partners Ltd. See our commentary for May 1998 for further details. Its New Zealand Experience investment has had very mixed results (see our commentary for July 1998). Ernslaw One buys Coromandel dairy farm for sawmillErnslaw One Limited, owned by the Tiong Family of Malaysia, has approval to acquire 182 hectares at Opitonui, Whangapoua, Coromandel for a suppressed amount from MJ Armstrong and FJ Brady of Aotearoa.
The Applicant commenced business in New Zealand in 1990 when it was the successful bidder for five Crown Forestry Licences located in the Coromandel, Manawatu and Otago regions. Since this date the Applicant has expanded its New Zealand operations and now owns or leases approximately 70,000 hectares of land located predominantly in the Coromandel, Manawatu, Hawkes Bay, Otago and Southland regions. It also owns and operates the Conical Hill sawmill and remanufacturing plant in Otago. The Applicant has also developed a Douglas Fir seedling nursery in Otago.
The Applicant proposes to acquire the subject property which adjoins its Whangapoua, Coromandel forest planted on land leased from the Crown. At the top of the Coromandel peninsula, the Applicant owns 7,800 hectares of production forest planted on 10,557 hectares of Crown land. The forest is currently being harvested and replanted on a sustainable basis producing 180,000 tonnes of logs per year. It is the Applicants intention to add value to the wood resource by processing these logs at a site near the forest.
The Applicant has advised that it is to build a sawmill, energy plant, kilns and a planner mill on up to 10 hectares of the subject property. It is intended that the balance of the property will continue to operate as a productive dairy unit and will either be leased or share-milked in the short-term and with a view of selling this part of the land once the mill is operational.
The sale was strongly opposed by local dairy farmers, Jean and Paul Bibby, on the grounds that there are only nine other dairy farms in the area and taking one out of production could raise the cost of collection of milk by Fonterra, or jeopardise it altogether. That would at the very least undermine the viability of dairying in the area. They felt that the ten hectares required for the mill could easily be found in the large areas of land that Ernslaw already owned. Their concerns were supported in a letter to the OIC by the Vice-President of Federated Farmers, Charlie Pederson. As well as making submissions to the OIC opposing the sale, the Bibby’s wrote to Ministers John Tamihere, and Jim Anderton. Tamihere passed the letter on to Minister of Finance, Michael Cullen (the present approval can be taken as his reply), while Anderton replied supporting the mill proposal. He also made a press release welcoming the mill.
Although the OIC placed a condition on Ernslaw that it should continue to run the dairy operation on the part of the property not used for the sawmill so long as it was economically viable, the Bibby’s were concerned that it had paid an inflated price for the farm, so the returns from it continuing as a dairy farm would not be sufficiently profitable. Paul Bibby estimated the return on capital could be as low as 1.5%.
The Ernslaw One purchase is through its subsidiary Blue Mountain Lumber Ltd. The sawmill is projected to cost $25-30 million.
The Tiong family is one of Malaysia’s most powerful and wealthy families. They own con-troversial rainforest logger, Rimbunan Hijau, newspapers and magazines. In Aotearoa they also own or owned · The Oregon Group; · Salmond Smith Biolab (Artel Industries Ltd, a plastics and brushware operation; Biolab Scientific Ltd, Click Clack International Ltd, McDonald Dixbro Pty Ltd, Selby Scientific Ltd, Newman’s Export, processors and marketers of berryfruit and owners of a sphagnum moss operation; the New Zealand and Australian business of Rhone-Poulenc Laboratory Products Australia, a scientific products group; Johns Plastics, an Australian based manufacturer of disposable plasticware) with its sister company Selby-Biolab in Australia it claims to have the largest scientific distribution network in Australasia; · The New Zealand King Salmon Company Ltd (80% of New Zealand king salmon farming); · Neil Construction (housing subdivisions); · Ascot Management Corporation, for some time had a minority interest in Force Corporation (cinemas); · Between 1995 and 1998 owned Talk Radio Bay of Plenty in Tauranga and Rotorua. US investors buy 1,340 hectare Whiterock Station, South CanterburyJohn Robert Sierra and Mary Washington Sierra of the U.S.A. have approval to acquire the 1,340 hectare Whiterock Station, Rangitata Gorge, South Canterbury for $3,636,207 from Whiterock Enterprises Limited of Aotearoa. Says the OIC:
The Applicants have a proven record in land management, property enhancement and conservation through having previously redeveloped an agricultural property in Montana, United States of America. They propose to acquire the subject property which is currently utilised as a sheep and cattle farming operation.
The Applicants propose to provide capital to further develop the property and increase the productivity of the property over a three year development period. In particular it is proposed to increase stock carrying capacity and diversify into running deer. It is proposed to develop approximately 200 hectares of the tussock hill country, and implement changes in the breed of sheep and cattle currently being farmed into higher performing breeds primarily Romney/Texel cross and Angus cattle. The day to day management of the property will remain with the current management. The current vendor is unwilling to commit further development capital to the property. US investor to support restoration of Big Lagoon wetlands in SouthlandAnthony Elton Reiger of the U.S.A. has approval to acquire 50 hectares at 232 Rouse Road, Taramoa, Southland for $478,125 from DJ & GJ Forbes of Aotearoa. The OIC tells us:
The Applicant, who has an established reputation and background in wetlands conservation, proposes to acquire the subject property which contains a drained lagoon and wetlands known as “Big Lagoon”. It is intended to restore the lagoon to its past appearance and importance and enhance the lagoon and wetlands area which provides habitat for a number of rare native bird species and gamebirds. It is further proposed as the restoration progresses to develop a research and educational facility to enhance a greater understanding and awareness of wetland protection and hunting procedures to students, for tertiary research and eco-tourism. The Applicant has visited New Zealand on a regular basis since 1978, and since 1997 every year primarily to support New Zealand native wetlands conservation.
The Applicant’s proposal has been supported by and it is proposed to be developed in co-operation with the Southland Regional Council, the Department of Conservation, Fish and Game New Zealand, Ducks Unlimited, the National Wetlands Trust of New Zealand and the Queen Elizabeth II Trust. It is proposed to protect the property under a QEII covenant, build fence lines, restore native vegetation and implement a management plan with Fish and Game and the Wetlands Trust.
The Big Lagoon is so named because historically the area was one of the largest wetland areas in coastal Southland and was approximately 17 hectares (comprising 12.5 hectares on the subject property and 4.5 hectares on an adjoining property) in size prior to draining in 1982. As a result of draining for farming purposes the lagoon is approximately 3.2 hectares in size. The property is currently utilised by the vendors to graze dairy cattle. Land for wine· Te Awa Vineyard Limited, owned 75% by Julian Hart Robertson and 25% by the Oliver Family Trust, both of the U.S.A., has approval to acquire 173 hectares at Ngatarawa Road/State Highway 50, Hastings, Hawkes Bay for a suppressed amount from Kaiwhenua Farms (HB) Limited of Aotearoa. “The Applicant proposes to acquire the subject property which currently has 43 hectares planted in vines. An associated company, Te Awa Winery Limited, is also acquiring the winery business assets. Following settlement approximately 63 hectares that is currently used for cropping is to be subdivided and sold to one of the vendor’s shareholders. A further 42.4 hectares of land currently used for cropping is to be leased to the vendor, pending the Applicant undertaking further grape plantings.” The acquisition by Te Awa Winery Limited appears to have required no OIC approval. Robertson is a billionaire who has being buying up New Zealand land with enthusiasm. His last purchase was approved in April 2002, 312 hectares at Matauri Bay, Northland. This was the third purchase by Robertson in as many months, which added to two he already owned. See our commentary for April 2002 for further details. · Woollaston Estates Limited, owned 80% by Glenn Schaeffer of the U.S.A. and 20% by Philip and Carol Woollaston of Aotearoa, has approval to acquire 9.7 hectares at Livingston Road, Brightwater, Nelson for $1,050,000 from Philip and Carol Woollaston. The Woollastons “are established vineyard proprietors operating the Wai-iti River Vineyard at Brightwater, Nelson. They produce wines under the Wai-iti River Vineyard label. The Applicant is a company incorporated in November 2000 between the Woollastons and Mr Schaeffer as a joint venture whereby Mr Schaeffer is providing capital and the Woollastons the management of the operation. It is proposed that the subject property which is owned by the Woollastons be transferred to the Applicant as part of the business relationship. The Applicant is in the process of establishing a significant business operation as a premium wine grower and estate bottler in the Nelson area producing high quality wines exclusively from its own grapes, and competing in the export market for fine wines. This is likely to be achieved principally in the United States through its shareholder’s interests and the South-East Asian market. The Applicant intends to operate the property, in conjunction with their existing properties in the Nelson/Marlborough region which comprise approximately 67 hectares as a commercial vineyard and winery operation. Together these properties will provide the Applicant with a land area that will result in economies of scale and ensure the viability of the viticultural operation.” The last land purchase by Woollaston Estates was in October 2001 when it gained OIC approval to acquire 17 hectares at Main Road, Hope, Nelson for $984,375. See our commentary for that month for further details. For details and background on former Labour Cabinet Minister Philip Woollaston and millionaire Glenn Schaeffer, see our commentary on the January 2001 decision approving an earlier land purchase. · J A and S L Vyborny of the U.S.A. have approval to acquire 5.0 hectares at Hawkesbury Road, Blenheim, Marlborough for $208,082 from JW and NM Harwood of Aotearoa. “The Applicant proposes to develop the subject property as an extension to their existing vineyards located on the adjoining land. The property will be planted in Pinot Noir grapes in 2003. The proposed development will provide the Applicant with greater overall balance to their overall operation which currently includes plantings of Sauvignon Blanc and Chardonnay.” They have previously purchased 29 hectares in the region, in October 1998, August 1999, and February 2001. See our commentaries for those months for further details. · Stephen Michael Pellett and Bridget Marieke Tonya Ennals of the U.K. have approval to acquire 11 hectares at Redwood Pass Road, Awatere Valley, Marlborough for $601,875 from KS Sangster of Aotearoa. “The Applicants have applied for New Zealand permanent residency under the General Skills category and propose to acquire the subject property. The Applicants intend to reside on the property and develop a vineyard with 7.4 hectares planted in Sauvignon Blanc and 2.3 hectares in Pinot Noir. The property is currently non-productive and utilised by the vendor as a lifestyle property.” · Morton Estate Wines Limited, owned by the Coney Family of Canada, has approval to acquire 193 hectares at Marama Road, Seddon, Marlborough for $2,401,875 from JR and RA Stevenson of Aotearoa. “The Applicant is one of New Zealand’s leading wine producers with an established winery in Katikati and vineyards located in Hawkes Bay and Marlborough. It has identified the acquisition of further land for viticulture development as being vital to ensure its continued viability and competitiveness in the wine industry. The property is currently utilised as a sheep and cattle fattening unit. Approximately 133 hectares have been identified as being suitable for viticulture. Of this area a total of 115 hectares is proposed to be planted in predominantly Sauvignon Blanc and Pinot Noir. The remaining 60 hectares is hill country and is better suited for pastoral purposes. Accordingly, the Applicant intends to investigate various possibilities to ensure the continued best productive utilisation of the land. This includes the possibility of leasing it to a neighbouring farmer.” · Berridge Vineyard Estates Limited, owned by Richard David Berridge of the U.S.A., has approval to acquire Drystone Vineyards Limited which owns 20 hectares of leasehold at State Highway 6 (Cromwell to Frankton Highway), Gibbston Valley, and Felton Road, Bannockburn, Otago, for $750,000 from Felton Road Holdings Limited. Felton Road Holdings is owned 85% by the Nigel Douglas Greening Family Trust, and 5% each by Alan Brady, Stewart Elms and Blair Walter, all of Aotearoa. “The Applicant, who has previously acquired seven properties for vineyard developments in the Central Otago region, is proposing to acquire the shares of Drystone Vineyards Limited, a company that leases the subject land for viticultural purposes. A total of approximately 16.1 hectares is currently planted predominantly in Pinot Noir with some Pinot Gris and Riesling. The proposal to acquire two established vineyards will enable the Applicant to receive an income whilst there is a delay for the new plantings on recently acquired land to produce grapes. This income will enable the development of the Applicant’s existing properties. It is also proposed to undertake capital development of the subject properties to lead to increased production from the subject land.” Berridge’s last purchase was in September 2002, when Berridge Vineyard Estates Limited received approval to acquire 4.0 hectares at State Highway 6, Gibbston Valley, Queenstown, Otago. The land adjoined two other properties (of 5.7 hectares and 1.8 hectares) owned by Berridge whose purchase was approved by the OIC in October 2001 (see our commentary for that month). U.K. buyers of Wellsford farm lose residence status six years laterCharles Roger Schenn and Alison Jill Schenn of the U.K. have approval to acquire 180 hectares at 960 Whangapiro Valley Road, Wellsford, Northland for $635,625 from MC Long of Aotearoa. “The Applicants are applying for New Zealand permanent residency under the business category and propose to acquire a lifestyle property situated at Wellsford. The property is currently utilised by the vendors for grazing sheep and cattle. The Applicants intend to reside on the property and undertake improvements on the property to develop it into a viable farming unit.”
In 2008 the Schenns were refused permanent residency after buying the property for $560,000 in 2003, and farming it (including, they claimed, spending about $1 million upgrading it). The Immigration Department said that it was “not satisfied that the couple's farming business met the … policy with respect to the criteria that the business be of benefit to New Zealand. It was also unclear whether or not Mr Schenn had actually been running the business for at least two years”. The couple did not have experience in farming when they were granted long-term business visas when they bought the farm. The Schenns accused Immigration of incompetence but failed in an appeal to the Residence Review Board and four requests for ministerial intervention. They transferred the farm to Roger Schenn's brother who had lived in New Zealand for 25 years (Sunday Star-Times, “Immigrants get the boot after spending $1m on their farming dream”, by Tony Wall, 15/06/2008, p.A5). Other rural land sales· Trade Lines Malaysian Limited of Australia has approval to acquire 189 hectares at North Road, Clevedon, South Auckland for $5,062,500 from H K Hattaway Family Trust of Aotearoa. “The Applicant proposes to acquire the subject property which is currently operated by the vendors for grazing cattle as an overflow for their main farm. It is proposed to establish a high quality beef cattle stud farm. In addition to the beef cattle the property will also be utilised for the keeping, training and breeding of polo ponies. A related company to the Applicant is one of the largest beef producers in Western Australia and operates one of the largest polo pony breeding and training operations in Australia. It is intended that the New Zealand operation will become an integral part of the Western Australian operations providing live bulls, horses and semen for breeding programmes in Western Australia.” · Lawrence Gregory Prosor and Cynthia Powers Prosor of the U.S.A. have approval to acquire 11 hectares at Lynsar Street, Wainui, Gisborne for $765,000 from Hikatu Farming Company Limited of Aotearoa. “The Applicants have applied for New Zealand permanent residency under the business/investor category and propose to acquire a property situated at Wainui, Gisborne. The Applicants intend to construct a dwelling on the property and establish eight hectares as an olive grove with the assistance of an experienced consultant. The property is part of a subdivision of a larger block of a sheep and cattle farm.” · Michael Iver Christian Salvesen and Nicola Ann Salvesen of the U.K. have approval to acquire 352 hectares at Lockheads Road, Mt Somers, Canterbury for $3,600,000 from JI and JI Winchester of Aotearoa. “The Applicants, who have extensive experience in arable and livestock farming, have applied for New Zealand permanent residency under the Investor category and propose to acquire a lifestyle property situated at Mt Somers. The Applicants intend to reside on the property and continue the current use of the property as a mixed sheep, cattle and cropping farm.” · Derek Burl Roger and Gwendoline Roger of the U.K. have approval to acquire 8.6 hectares at Main Akaroa Highway 5447, Barrys Bay, Banks Peninsula, Canterbury for $675,000 from MN Journeaux and JD Nevell of Aotearoa. “The Applicants were granted a New Zealand residence visa on 12 July 2002, and propose to acquire a lifestyle property situated at Barrys Bay. The Applicants intend to reside permanently in New Zealand from July 2003. The Applicants intend to set up a consultancy business in New Zealand.” Summary statisticsAll investments Again the value of investment approved in the year to November 2002 is considerably higher than for the previous November year, but the net value (i.e. disregarding sales from one overseas investor to another) is considerably lower. By far the greatest part of the value of the approvals is for sale from one overseas investor to another. There is very little investment other than in rural land – only $63 million (gross), and only two decisions did not involve rural land (though another one, the Gardiner buyout of the remainder of Emerald Capital, was not primarily concerned with rural land).
Investment involving land Gross sales of land approved by the OIC during the years to November have increased in area, though net sales are static. Refusals (above) have risen in number, area and value, but are still a tiny proportion of the total. However there is an average of one a month now, which is unprecedented. It appears that the amendments to the regulations which took effect from 1 February 2002 are having at least some effect.
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