April 2003 decisionsAMP Bank sells mortgages, loans and deposits Trustpower buys Cobb Hydro Station from NGC DEC International buys shareholding in ICPBio ING buys Meridian Centre in Dunedin Ngai Tahu buys and sells Waimate Forest to Blakely of the US Nikken Foods buys further land near Oamaru
One refusalWanbrow Trust, owned by Robert William Olson and Joann Mae Olson of the U.S.A., have been refused approval to acquire 56 hectares at Bushy Beach Road, Cape Wanbrow, Oamaru, Otago for $703,125 from Milburn New Zealand Limited, owned 54.62% by the Schmidheiny Family of Switzerland and 45.38% by “persons who may be ‘overseas persons’”. The land includes or adjoins land held for conservation purposes, and land which is provided as a reserve, a public park, for recreation purposes, or a private open space.
The subject property was acquired by the vendor as a possible site for a proposed cement works and depot in the Oamaru area, and has been leased to a local farmer largely for winter grazing pending development of the cement works and depot. This project is now not proceeding and the vendor resolved to sell the property by tender.
The Applicant proposes to acquire the property for a residential/lifestyle block development. The Applicant claims that the property is of marginal to low agricultural value and lends itself to residential development given the region’s buoyant real estate market and the coastal location of the property. The Applicant’s proposal is at a preliminary stage and subdivisional/development plans have yet to be designed and drawn up. The property is zoned Rural General under the proposed Waitaki District Council Plan which will permit as of right residential development of a minimum net area per site of 4 hectares. More intensive residential development as proposed for the upper portion of the property is likely to require a resource consent/zone change application being made to the Waitaki District Council.
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. [Decision number 200310047.] AMP Bank sells mortgages, loans and depositsIn two decisions, the AMP Bank Ltd, owned 89% in Australia and 11% in Aotearoa, is selling off parts of its assets having decided to restructure the unprofitable bank. According to the Melbourne Age, AMP planned to “outsource back-office functions supporting its Australian mortgage and retail deposits… More than 500 of the 600 AMP Bank jobs will also be cut”. “AMP has also sold its credit card business in Australia and New Zealand to American Express for $A236 million”. The previous month “it agreed to sell its banking unit in Britain to Newcastle Building Society” and “it was in talks to sell a further $A490 million in property finance loans.” (Age, “AMP finds buyers for bank divisions”, by Sharon Kemp, 15/4/03, http://www.theage.com.au/articles/2003/04/14/1050172536240.html)
In both the present cases, the amount paid has been suppressed by the OIC, but judging from the summary for the month (see below), the total paid is over $2 billion. The Age revealed that “HSBC has agreed to pay $A24.9 million ($27.5 million) for $A1.7 billion ($1.9 billion) of New Zealand mortgages and, subject to transfer arrangements, $A353 million ($390 million) of New Zealand retail deposits. GE Capital subsidiary GE Commercial Finance will buy $A1.3 billion ($1.4 billion) of Australian and New Zealand commercial property loans for an undisclosed amount.”
In the first decision, The Hongkong and Shanghai Banking Corporation Limited, owned by HSBC Holdings plc of the U.K., has approval to acquire “New Zealand residential mortgage portfolio and retail deposit portfolio from AMP Bank Limited”. Hongkong and Shanghai Banking Corporation, “part of the HSBC group one of the largest banking and financial services organisations in the world, provides personal, commercial and corporate banking and related financial services in New Zealand”.
In the second decision, GE Capital Finance Australasia Pty Limited, owned by the General Electric Company of the U.S.A., has approval to acquire “a portfolio of New Zealand loan receivables and securities from AMP Bank Limited”. GE Capital Finance “is part of the financial services division of the United States conglomerate General Electric Company, and provides a number of financial services in New Zealand including consumer products in the form of personal loans and store finance for whiteware, brownware, furniture, and motor vehicles purchases, and term life and general insurance, and business finance for equipment purchases and floor plans.”
By September, former AMP clients were regretting the sale. GE’s subsidiary, GE Real Estate, was trying to change their loan agreements. Its changes included reserving for itself the right to terminate their loan and demand repayment at any time. It also wanted to be able to reduce credit limits and stop credit at any time chose, requiring customers to promptly provide financial information at their own expense. Payment methods would be changed and they would lose access to other services including cheque books. A banking consultant, Graeme Reid, advised clients to reject the changes, saying they were different from those agreed to with AMP. He accused GE of “taking an arrogant approach” and urged customers to go to the banking ombudsman if they were unhappy with GE’s tactics. GE denied it was breaking its agreement with AMP – just “reconfirming aspects of its loan agreement with customers” (Press, “Bank clients urged not to sign new agreement”, by David King, 12/9/03, p.B5). [Decision numbers 200310055 and 200310062.] Trustpower buys Cobb Hydro Station from NGCTrustPower Limited has approval to acquire Cobb Power Limited, for $92,500,000 from Natural Gas Corporation Holdings Limited (NGC). Cobb Power owns the Cobb Hydro Station on 16.7 hectares of land in Cobb Dam Road, Upper Takaka, Nelson.
The Applicant who is an electricity generation and retail company proposes to acquire the Cobb Hydroelectric Power Station located at Upper Takaka as it has a significant gap between the electricity it generates and the electricity it sells to consumers. Currently, the Applicant generates only 30 percent of the electricity it sells, leaving it vulnerable to price movements when hedges are not available particularly during periods of electricity shortages. The proposed acquisition will reduce the Applicant’s potential exposure to electricity price rises. The vendor (Natural Gas Corporation Limited) has indicated that it wants to sell these assets as part of a programme of divesting its electricity generation assets and to concentrate on energy infrastructure.
Cobb is a small station, one of the earliest built by the government, generating only 32 MW of electricity.
The sale is part of NGC’s divestment of electricity assets following its disastrous entry into the industry. It had bought out TransAlta (renaming the company On Energy) when the Canadian company finally deserted the over-valued mess it had created for itself in the period following the electricity reforms in 1998. At the same time, NGC sold the Taranaki Combined Cycle Power Station: see our commentary on the February 2003 decisions of the OIC.
The OIC claims that
The proposal is likely to result in the following benefits: (a) greater efficiencies to the Applicant’s business operations through an increased share of generation assets; and (b) added market competition in the wholesale/retail electricity markets.
Given the additional consolidation of the industry the first “benefit” represents, the second “benefit” is incomprehensible.
According to the OIC, Trustpower is owned as follows:
and NGC
Until April 2003, Australian Gas Light (AGL), the parent company of NGC, had a significant shareholding in Trustpower, which it had bought in the hope of taking control. In the event, an alliance between Alliant and Infratil won, and AGL sold out when Trustpower offered to buy back its shares. Note also that in March 1999, the OIC gave Lend Lease Corporation Ltd of Australia approval to acquire 100% of H.R.L. Morrison and Co. Group Ltd which manages Infratil. In fact, according to an announcement to the Stock Exchange, Lend Lease bought only 25%, but had a right to increase its shareholding to 100% over a 5-year period (4/3/99, “Lend Lease invests in Infratil manager”). Further, the Hutt Mana community trust sold its interest in NGC in September 2003 (New Zealand Herald, “Hutt Mana trust sells its stake in NGC”, 3/9/2003). [Decision number 200310056.] DEC International buys shareholding in ICPBioDEC International NZ Limited, owned 67% by DEC International Inc of the U.S.A. and 33% by B Thompson of Aotearoa, has approval to acquire up to 33.33% of ICPbio Limited, which includes 0.89 hectares of freehold and 1.2 hectares of leasehold at 26 Waipareira Avenue, Henderson, Auckland, for $2,000,000 from R Sharpin and Rock Isle Finance Limited of New Zealand.
The Applicant carries on business in the agricultural sector as a biotechnology sciences business in the animal health industry. The Applicant is proposing to subscribe to new capital in ICPbio Limited which is a biotechnology sciences business with globally recognised strengths in providing innovative, technical and commercial solutions to the animal health and pharmaceutical industries. 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.
Regarding a June 1996 decision, we reported that DEC International Inc, then a “privately owned multinational corporation based in the U.S.A.” had approval to purchase the assets of InterAg, a division of Carter Holt Harvey Ltd of the U.S.A., based in Hamilton. The price for the sale was withheld. InterAg manufactures and sells a range of milking machines marketed under the brand Waikato Milking Systems. The Animal Health division of InterAg is involved in the manufacture and distribution of products with the brand name EAZI-BREED CIDR that control and stimulate the breeding cycle in production animals.
DEC is based in Madison, Wisconsin. Incorporated in 1947 as Dairy Equipment Company, DEC manufactures the Therma-Stor range of heating and ventilation equipment under several brands.
[Decision number 200310048.] ING buys Meridian Centre in DunedinING Retail Property Fund Australia, owned 30% by ING Real Estate Investments International III BV of the Netherlands, 20% by Prudential Property Investments of the U.K., 20% by GIC of Singapore, 20% by ABP Investments of the Netherlands, and 10% by SBA Artsenpensioenfondsen of the Netherlands, has approval to acquire the Meridian Centre, at 267-285 George Street and 49 Filluel Street, Dunedin, Otago for $52,650,000 from Arthur Barnett Investments Limited of Aotearoa.
The Applicant is part of the global ING group, one of the largest insurance, banking and asset management groups in the world. The Applicant is an Australian based wholesale unlisted property fund with interests in shopping centres throughout Australia. The proposed transaction to acquire the Meridian Centre in Dunedin will enable the Applicant to diversify geographic spread of its properties which are currently primarily located in Australia.
ING was on a buying binge. We reported in the March 2003 decisions that ING Retail Property Fund bought the Dress-Smart clothing chain factory outlets; media reports put the price at $63 million. In November another ING company, ING Property Trust (formerly Paramount Property) bought more than 70 properties in Auckland, Wellington, and Christchurch for $282.7 million, adding to an existing $85.5 million stock of buildings in Auckland. ING employs 120 staff in New Zealand, and operates in 65 countries with more than NZ$1.5 trillion in assets (Press, “ING in $282m property deal”, by Jillian Talbot, 10/11/2003, p.B6). [Decision number 200310058.] Ngai Tahu buys and sells Waimate Forest to Blakely of the USBlakely Pacific Limited (as Trustee of the South Blakely Trust), owned by the Eddy Family of the U.S.A., has approval to acquire 3,629 hectares at Waimate Forest, Donnithornes Road and Limestone Hills Road, Waimate, Canterbury for a suppressed amount from Ngai Tahu Property Group Limited of Aotearoa.
The Applicant, who is an experienced forestry manager/investor, proposes to acquire the subject property that contains a predominantly radiata pine forestry plantation. The forest, which was initially established in 1977, has a total of approximately 2,385 hectares planted. The proposed acquisition is consistent with the Applicant’s investment strategy involving forestry in New Zealand. There has been little silvicultural operations occurring in the forest over the past five years. The Applicant proposes to introduce an intensive silvicultural regime to produce high value clear wood and sawlogs from the property. It is also proposed to plant up to a further 150 hectares of existing tussock land in a douglas fir/larch mix. This area has not previously been planted due to budgetary constraints. The Applicant also proposes to undertake a second forestry rotation as existing trees are harvested.
The subject property is presently a Crown owned forest, subject to Part 9 of the Ngai Tahu Claims Settlement Act 1998 which provides for disposals of certain land to be offered for purchase or lease to Te Runanga O Ngai Tahu in certain circumstances. The Crown issued Ngai Tahu with a preliminary disposal notice in January 2001. In March 2003, Ngai Tahu entered into a sale and purchase agreement with the Crown and the Applicant for back-to-back settlement on 20 June 2003. Ngai Tahu advise that the subject property is being disposed as they consider that they are currently over exposed in forestry.
Blakely has large forestry holdings in Aotearoa. According to its web site, following this purchase “in New Zealand, Blakely Pacific owns or manages a total of 27,472 hectares, of which 4005 hectares is located in the North Island and 23,467 hectares in the South Island. In addition to the fast growing, short rotation Radiata Pine species, Blakely Pacific grow Eucalyptus and Douglas Fir. Some other species include Macrocarpa, Lusitannica, Ponderosa Pine, Corsican Pine, Cedar and Larch.”
[Decision number 200310061.] Land for forestry· Two further investors from Taiwan have approval to acquire land at 152 Elgood Road, Ngaruawahia, Waikato from the New Zealand Forestry Group Limited, which is owned 76% by Wesley Garratt of Aotearoa and 24% by J Hong of Taiwan. They are members of the Elgood Forest Owners Association, which “has entered into an arrangement with New Zealand Forestry Group, the Vendor, to develop approximately 148.6 hectares of land at Ngaruawahia. The majority of this area (80 percent) has already been planted in forestry with the remaining land to be planted in 2003”. They are Wen-Chih Tseng and Wan-Jung Hsu who have approval to acquire 22.9 hectares for $171,850.
These sales are like many in this and other regions organised by New Zealand Forestry Group, the last such sales being in March 2003, also at Elgood Road in Ngaruawahia. The investors provide the money, while New Zealand Forestry Group manages the development of the forestry operation. This is the first involving the Elgood forest. [Decision number 200310053.] · Juken Nissho Limited, owned 85% by Juken Sangyo Company Limited and 15% by Nissho Iwai Corporation both of Japan, has approval to acquire two blocks of agricultural land at Wairoa, Gisborne, for conversion to forestry. They are · 559 hectares at State Highway 2, for $1,068,750 from Awaho Farms Limited of Aotearoa; and · 417 hectares at Waihua Valley Road, for $900,000 from CA Lambert of Aotearoa. Juken Nissho proposes to convert the land into a commercial forestry operation. “This will ultimately provide the Applicant with a further secure supply of wood which will be processed at its existing Gisborne processing mill. This will ensure continuity of processing and employment at the Gisborne mill and will enable future expansion of the value-added production at Gisborne.” [Decisions 200310049 and 200310059.] · Johannes Christiaan van Bergen and Catharina Andrea Ghislana van Bergen of the Netherlands have approval to acquire 17 hectares at Rocky Hill Road, Wairarapa from the Department of Conservation, in exchange for 27 hectares of land.
The Applicants, who acquired Craigie Lea Station in 1997 for forestry, have entered into a boundary exchange agreement with the Department of Conservation (who manage the adjoining Rocky Hills Forest Sanctuary), whereby the Department will gain 27.158 hectares of land that has significant conservation value in exchange for 17.2595 hectares of grassland. In addition the Applicants have agreed to grant a right of way over another part of their property to provide practical public access to the Forest Sanctuary managed by the Department.
The Department has been endeavouring to rationalise the sanctuary boundaries for some time, and as part of the Resource Management application undertaken by the Applicants in 1997 to establish forestry on Craigie Lea, discussions between the Applicants and the Department commenced. These negotiations resulted in an agreement being reached whereby the ridgeline of the two properties will become the new legal boundary.
The exchange will ensure that the significant conservation values, being the forest associations of the Taipo landform on the land, being transferred to the Department of Conservation will revert to New Zealand ownership.
The proposal is likely to result in a rationalisation of the boundary between the Applicants property and the Department of Conservation’s Rocky Hills Forest Sanctuary, whereby the Department will acquire an area of significant conservation value.
The OIC approved the van Bergens acquiring Craigie Lea in July 1997, when we reported that Netherlands resident, Mr Johannes Christian Van Bergen, had received approval to acquire the 1,831 hectare Craigie Lea Station, in the Carterton District, Wairarapa for $1,300,000. “… the land is currently uneconomic farmland requiring development and capital to re-establish it as a viable option. The applicant intends to develop the property for afforestation purposes utilising the services/expertise of New Zealand forestry consultants.” [Decision number 200310052.] Land for wine· Robert Zalmon Gussin and Patricia Elizabeth Gussin of the U.S.A. have approval to acquire 15.6 hectares at Renners Road, Lower Awatere Valley, Marlborough for $3,459,375 from ACJ, AL and KS Graham of Aotearoa. “The Applicants propose to acquire the subject property which is a producing vineyard planted predominantly in Sauvignon Blanc. They propose to enter into a management contract and grape supply agreement with Thornbury Vineyards Limited (Thornbury), who produce internationally acclaimed wines from Sauvignon Blanc, Chardonnay and Pinot Noir grapes grown in the Marlborough region. The Applicants and Thornbury propose to increase the productivity of the property by re-planting of vines at optimal spacing and new planting of 0.8 hectares. Such an increase will assist in meeting Thornbury’s excess international demand for the high quality wines it produces.” [Decision number 200310050.] Nikken Foods buys further land near OamaruNikken Foods Co Ltd, owned 74% by Hirotomo Ochi of Japan and 26% in minority shareholdings in Japan, has approval to acquire a further block of land near Oamaru, Otago, this time 6.8 hectares at 291 Fortification Road, Totara, Oamaru for $176,625 from EJ Orlowski of Aotearoa. Similar purchases were approved in February 2003 (see our commentary for that month for further details and previous purchases) and March 2003, all in order
to acquire approximately 250 hectares in the North Otago region, within a 5 kilometre radius of the Teschemakers college. It is proposed that the land to be acquired will be utilised for experimental/research purposes, as buffer land and for commercial production. The Applicant envisages that the international college will encourage and promote post-graduate study, research and development in the area of organics and healthy-living. This will provide demand for workable tracts of land with boundaries free of contamination from insecticides, herbicides and genetically engineered plants and crops.
Since this decision, two of the main buildings in the historic complex were destroyed in a fire in June 2003. Nikken announced their plans for a college would continue despite the set back (New Zealand Herald, “$3.5m international college dream survives the flames”, 21/6/03). [Decision number 200310054.] Other rural land sales· Robert Geraint Evans and Sonia Moules Evans of the U.K. have approval to acquire 4.5 hectares at 435 Apotu Road, RD1, Kamo, Whangarei, Northland for $150,000 from the Croft family of Aotearoa. “The Applicants have resided in New Zealand since November 2001 under the Long Term Business Visa scheme. In August 2002, they acquired a lifestyle block of 3.5027 hectares, and entered into an agreement with the vendor to acquire the adjoining 4.5495 hectares on which they currently run Hereford cattle. The Applicants intend to apply for New Zealand permanent residency once they become eligible under the Long Term Business Visa scheme in nine months time. The Applicants are demonstrating their commitment to New Zealand by proposing to take up New Zealand permanent residency.” We have no record of the August 2002 purchase, presumably because it is below the minimum area of 5 hectares that requires OIC approval for such land. [Decision number 200310045.] · Xian Zhang of China has approval to acquire 6.6 hectares at 269 Airfield Road, Ardmore, South Auckland for $522,000 from DAM, KM and ZM Williams of Aotearoa. “The Applicant proposes to utilise the subject property which is currently utilised for casual grazing as a market gardening operation initially growing vegetables such as broccoli and Chinese cabbages for the local market. The bulk of the produce will be sold to vegetable brokers. The Applicant has applied for a Long Term Business Visa and intends to reside permanently in New Zealand.” [Decision number 200310051.] · Carosima ApS, owned by Soren Eich of Denmark, has approval to acquire 4.0 hectares at 159 Kina Beach Road, Tasman, Nelson for $1,450,000 from J & AM van der Plas of Aotearoa. “The Applicant proposes to establish a high quality tourist accommodation facility and ancillary vineyard on the subject property. The property currently contains a two bedroom cottage that the Applicant proposes to upgrade and construct a further dwelling which will comprise a manager’s residence, with a double unit and a single unit. The accommodation is intended to cater for both casual guests and pre booked guests primarily from the Northern Hemisphere organised by the Applicant who currently operates fishing equipment outlets and fishing tours. The tourist accommodation business will be complimented by a small vineyard on the property, to be planted in Sauvignon Blanc grapes, which will be managed by an adjoining vineyard operator. [Decision number 200310060.] · Jan Marten Kingma of the Netherlands has approval to acquire 256 hectares at Slope Point Road, Otara, Southland for $1,125,000 from BP and MC McLay of Aotearoa. “The Applicant, who is experienced in the dairy industry in the Netherlands, proposes to acquire the subject property which is currently a traditional sheep fattening property. The Applicant proposes to establish a commercial breeding and rearing enterprise producing high quality Friesian Holstein breeding bulls and heifers. It is likely that an increase in dairy production will result through the introduction of European genetics combined with New Zealand grass conditions. Initially the Applicant will establish a facility to import and propagate European genetics into the New Zealand dairy industry. An intensive commercial breeding and rearing enterprise will be established to offer contract mating facilities for dairy farmers.” [Decision number 200310046.] Summary statisticsAll investments The value of investment approved so far this year has taken a leap of $2.4 billion and is considerably higher than for the previous year. Though the crucial values have been suppressed by the OIC, the leap is likely to be mainly due to two sales by AMP Bank: the New Zealand residential mortgage portfolio and retail deposit portfolio (to The Hongkong and Shanghai Banking Corporation Limited) and a portfolio of New Zealand loan receivables and securities (to GE Capital Finance Australasia Pty Limited). By far the greatest part of the value of the approvals is for sale from one overseas investor to another, but the net investment is over $330 million more than last month.
Investment involving land Gross sales of land approved by the OIC during the year to April has increased substantially in area from last month, though not last year, almost all through net sales (i.e. from a New Zealand owner to an overseas one). Refusals (above) have fallen in number, area and value, from last year – though the first one this year occurred this month – and are still a tiny proportion of the total.
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Compiled by: Campaign Against Foreign Control of Aotearoa,
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