December 1995
decisions
National Australia Bank takes control
of BNZ Finance
Having bought the Bank of New Zealand, the
biggest bank in Aotearoa, in 1992, the National
Australia Bank Ltd is tidying up the BNZ’s most
important subsidiary, BNZ Finance, which was 78.4%
owned. NAB, through its subsidiary National Australia
(1995) Ltd, is acquiring all of the remaining shares,
which were listed on the stock exchange, for $314,220,000.
In October, Ron Brierley’s Guinness Peat Group
bought a 2.8% interest in BNZ Finance, probably at about
160 cents a share. It doubtless had an eye on the
company’s unusually high cash reserves, from which
it then asked for a cash handout of 70 to 80 cents a
share. However it welcomed the NAB buyout at 197 cents,
which became unconditional in January 1996. (Ref: NZ
Herald, 21/10/95, "GPG snatches key stake in BNZ
Finance: Bid to force capital repayment"; Press,
15/11/95, "GPG lauds review of capital", p.30; Press,
14/12/95, "BNZ Finance bid approved", p.34; Press,
12/1/96, "NAB bid final", p.16.)
Helicopter Line buys Tourist Hotel
Corporation hotels from U.S. owners
Three hotels owned by the U.S.-owned former
state-owned Tourist Hotel Corporation of New Zealand
Ltd (THC) are being sold to majority New Zealand ownership
– but to a company which is still legally an
overseas one. However, they will continue to be managed
by the vendor, the South Pacific Hotel Corporation
"group" which is owned by the Pritzker
family of Chicago. The new owners are The
Helicopter Line Ltd (THL) and its 50% owned
associate, Tourism Milford Ltd (TML). The other
half of TML is owned by Trojan Holdings Ltd. The
OIC describes THL as being "a New Zealand public
listed company with slightly in excess of 25% of
its shares held by various overseas persons",
and TML only as being "of New Zealand".
Although the price was suppressed by the OIC, THL
chairman Murray Valentine was more forthcoming when the
deal was publicly announced three months before the OIC
approval. He said the transaction would involve $40-45
million including working capital. It would be funded by
debt and would be settled on 1 October: two months before
it received OIC approval.
The current transaction was structured by South
Pacific forming a subsidiary, Tourist Hotels Ltd
which owns the three hotels. A 50/50 joint venture of THL
and TML, Tourist Hotels Finance Ltd, then
purchased Tourist Hotels Ltd.
After appeal to OIC, the official price was released
in July 1996. $43,267,855 was paid by Tourist
Hotels Ltd. Then Tourist Hotels Finance Ltd paid $13,283,928
for Tourist Hotels Ltd.
The deal involves three hotels:
- the Mount Cook hotel complex, which will
be owned by TML;
- the Rotorua hotel, to be owned 50/50 by
THL and TML;
- and the Waitomo hotel and caves operation
to be owned by THL.
(Ref: Press, 2/9/95, "Helicopter Line buys
into hotels", p.24.)
The Tourist Hotel Corporation, which owned key hotels
in strategic tourist venues throughout Aotearoa was sold
to South Pacific Hotel Corporation in June 1990 for
$73.85 million. Some of the THC’s hotels were sold
shortly after purchase by Southern Pacific to other
concerns. Of some controversy was the sale of their
Wairakei golf course to Tokyo-based Japan Golf Systems.
This exposed a genuinely racist strain of opposition to
overseas ownership given it had already been sold
overseas to the Pritzkers. Apparently approving of this
reason for opposing its resale, the then Minister of
Lands, Mr Tapsell, vetoed the sale in a desperate
pre-election move. The veto was then overturned by the
incoming National government on condition that it still
be open to locals. As we commented in 1990:
"The whole episode neatly shows the
hypocrisy of both parties on issues of foreign
control:
- The golf course had already been sold into
foreign hands by the government, by the sale of
its owner, the State Owned Enterprise, the
Tourist Hotel Corporation, to a foreign (U.S.)
buyer. That made clear the government’s
objections to the sale were substantially racist
rather than principled.
- The government (and news media) made
this stand on a relatively minor piece of
property after selling billions of dollars of
essential services and strategic industries into
foreign ownership and control.
- After making vaguely concerned noises
about the increasing sales of rural land to
foreign owners while in opposition, the National
Party has acted hastily to make clear what its
practical position is: slightly worse than the
previous government."
South Pacific say that the sale "represents a
continuation of its policy to manage rather than own
hotels in New Zealand". Which raises a question
about the original privatisation: if all that is being
gained (assuming it is a gain) is better management, why
wasn’t South Pacific simply contracted to manage the
SOE’s hotels in the first place?
U.S. company takes over two vehicle
suspension spring manufacturers
A subsidiary of Tenneco Automotive Corporation
of the U.S.A., Monroe Springs (New Zealand) Ltd,
is taking over two Aotearoa-based automotive suspension
spring manufacturers. Motor Radiators (New Zealand)
Ltd was part of the National Consolidated
"Group" of Australia, and Federal
Springs Holdings Ltd was part of the Skellerup
"Group". The price was initially suppressed
but was released in July 1996 after appeal to the OIC: $12,201,182.
"The acquisition is part of a deal also
involving a similar deal in Australia and is part
of a strategy by Tenneco to expand into the
Australasian market. Tenneco believes that the
business being acquired will benefit from its
global market synergies which will improve
efficiency and access to international
markets."
And, we can predict, will eventually end manufacture
of these products in Aotearoa.
Wilson and Horton and Australian
Consolidated Press magazine joint venture
Two decisions originally suppressed show Wilson and
Horton Ltd ("approximately 45% owned by
interests associated with Independent Press Plc)
and Australian Consolidated Press Ltd (a wholly
owned subsidiary of Kerry Packer’s Publications
and Broadcasting Ltd of Australia) setting
up a 20/80 joint venture, New Zealand Consolidated
Magazines Ltd, for a still suppressed amount. The
intention was for the new company to own and run a number
of the magazines published by the two parent companies: Metro,
North and South, Women’s Day New Zealand,
More, Australian Women’s Weekly, Fashion
Quarterly, Next, New Zealand Home and
Building, Your Home, Cleo, and Pacific
Way, from ACP, and New Zealand Women’s Weekly
and The Listener from Wilson and Horton. In
December ACP received Commerce Commission clearance for
the purchase of the two Wilson and Horton magazines on
the grounds that the two "make up no more than 8% of
the advertising market and advertisers would have options
available to them if ACP refused them access or increased
its prices". It would "lead to considerable
aggregation in the weekly women’s magazine market
segment and some of the lifestyle magazine segment, but
would not lead to ACP acquiring or strengthening a
dominant position" (Press, 23/12/95,
"Commission clears ACP magazine buy", p.45).
However, neither the outright purchase nor the joint
venture appear to have proceeded. The decision was
released in July 1996 only after appeal to the OIC.
Direct Capital Partners Ltd to issue
further shares; gets retrospective consent
Direct Capital Partners Ltd, "a New
Zealand public company which is approximately 40%
owned by overseas institutional investors" (the
OIC identifies it as being predominantly owned in Australia)
has approval to issue up to a further 30,004,000
ordinary shares as part of a rights issue. Some of the
purchasers may be overseas. The total price of the shares
is $15,002,000. Direct Capital "undertakes
the business of investing in non-listed New Zealand
companies" and its first full year of business ended
on 30 June. It is a budding Brierleys whose commodity is
unlisted companies. During the six months to 31/12/95 it
bought and sold shares in Sky City (Auckland Casino
operator) at a net profit of $1.1 million, and in Blue
Star Group (office products and equipment) at a profit of
$2.2 million, contributing to a total profit of $3.446
million from an operational cash inflow of only $33,000 (Press,
8/3/96, "Direct Capital hopes for maiden div",
p.16). Direct Capital sold its 20% share of Blue Star to
U.S. Office Products, giving the billion-dollar U.S.
company 51% ownership (Press, 9/3/96, "US
Office Products expanding", p.31).
Applying for this consent obviously woke the OIC up to
past misdemeanours. "In September 1994 Direct
Capital made a public share offering which was subscribed
for by various New Zealand and overseas parties primarily
institutional investors. Consent was overlooked at the
time of the public offering." Consent has been given
retrospectively.
Australian fund floated to invest in
technology securities in the U.S.A.
Super Nova Techno Fund Ltd of Australia has
approval to issue up to 80 million $1 redeemable ordinary
shares for $80 million to persons "who may be
overseas persons" and to carry on business in
Aotearoa. "The shares are to be offered … to
investors in New Zealand and Australia. The company is
being established to invest in technology securities with
the main focus being on the West Coast of the United
States of America."
Retrospective approvals to New Zealand
Oil and Gas going back to 1981
Explorer New Zealand Oil and Gas Ltd, which is
New Zealand listed but "approximately 30% owned by
overseas persons primarily from Australia",
has been given retrospective consent for a number of
previous share issues, going back as far as June 1981:
- to issue 500,000 ordinary 50 cent shares at a
premium of 30 cents to "various Australian
residents" for $400,000. NZOG states
that "shares were issued in order to comply
with the listing requirements of the Australian
Stock Exchange." The date of the issue is
not given.
- to issue 12,500,000 ordinary 50 cent shares at a
premium of 30 cents per share to institutional
investors for $10,000,000 in order to
"raise further working capital for
NZOG’s exploration activities". The
date of the issue is not given.
- to issue 2,930,254 ordinary 50 cent shares to Otter
Exploration NL and Otminex Pty Ltd for
$1,465,127. These shares were issued
"as partial consideration for shares
acquired in Pan Pacific Petroleum NL of Australia.
The date of the issue is not given.
- to set up subsidiary Petroleum Resources Ltd
for $100. This occurred in December 1988
(!) "as part of a restructuring of
NZOG’s New Zealand activities".
- to set up subsidiary NZOG Nominees Ltd for
$100. This occurred in June 1981 (!!)
"as part of a restructuring of NZOG’s
New Zealand activities". (Note: this
decision as initially released referred in part
to Petroleum Resources and in part to NZOG
Nominees Ltd and hence clearly had typographical
errors. On querying the matter with the OIC, this
was corrected to refer to NZOG Nominees Ltd
throughout.)
(NZOG shares were selling at 38 cents in February
1996.)
In each case, "the consent of the Commission was
overlooked at the time the shares were issued."
God-like, the OIC is infinitely forgiving!
Lease of Southdown land for
TransAlta/Mercury Energy power station
Mercury Energy Ltd, the aggressive Auckland
electricity supply company, has approval to lease two
hectares of land at Southdown, Auckland to a
joint venture between it and TransAlta Energy
Corporation of Canada for $500,000 per year.
The OIC says that
"In November 1992 consent was granted for
the joint venture to build, own and operate a
power station in Southdown, Auckland. Following
feasibility studies a suitable property has been
identified on which to construct the power
station."
That OIC decision was not released at the time, but
two November 1992 decisions relevant to the matter were
released in April 1996 after pointing out to the OIC that
the whole business was public knowledge some time ago.
The 1992 decisions allow TransAlta Energy Corporation,
a wholly owned subsidiary of TransAlta Utilities
Corporation of Canada to carry on business in
Aotearoa, and to investigate, build and operate a
gas-fired combined cycle power station in a 50/50
joint venture with the then Auckland Electric
Power Board. The news media reported in 1994
that TransAlta had plans to build a 110MW gas-fired power
station at the former Southdown freezing works in south
Auckland with Mercury Energy (e.g. Press, 5/12/94,
"TransAlta clears first fence in power play",
p.37; 20/11/94, "Canadian utility eyes
Wellington", p.41).
TransAlta is based in Calgary and has over $NZ5
billion in assets world-wide. It has controlling
interests in both Wellington electricity companies,
Capital Power and EnergyDirect. It is also seeking the
right to build a gas-fired power station at Stratford,
Taranaki, with Fletcher Challenge.
Gulf Resources in joint venture to
subdivide 135 hectares on Waiheke Island
In two decisions initially almost completely
suppressed, Gulf Resources Pacific Ltd has been
given approval to set up a joint venture with an Aotearoa
property developer, Mr Burmester, to acquire and
then subdivide 135 hectares of land on Waiheke
Island into "a minimum of 38 rural/residential
lots". The land, which was bought for $5 million,
is "currently largely unimproved bare land" and
the development "will result in improved
utilisation" of it. It is being bought from Matiatia
Estate Ltd and Owhanake Estate Ltd. Mr
Burmester "has undertaken a number of similar
developments on the Coromandel and in the Tasman
Bay." Gulf Resources at the time of the decision was
91% owned by Gulf United States of America
Corporation of the U.S.A. The decision was
released in July 1996 only after appeal to the OIC.
Carter Holt Harvey buys more land,
some in joint ventures, including Shell
Carter Holt Harvey Ltd, 51% owned by International
Paper Products of the U.S.A., has approval to
buy further land and forestry rights for forestry
development. Some are in significant joint ventures:
- Carter Holt Harvey Forests Ltd, 51%
owned by International Paper Products and Te
Ahuroa Investments Ltd (ownership
unspecified) is acquiring long term forestry
rights over land in the King Country (South
Auckland): an "approximate" 33
year right over 54 hectares of land at
Oruanui near Taupo at $4,078
per year from Te Ahuroa Investments, and an
"approximate" 34 year right over
556 hectares of land near Taumarunui
at $72,000 per year from The properties
of Te Uranga B2 Block. The latter has
"difficult access and scrub
infestation" and is part of a 2,381 hectare
farm.
- Mangakahia Forest Ltd, which is 50%
owned by Shell Forestry Ltd (U.K.)
and 50% (ultimately) by Carter Holt Harvey
Ltd, already has 22,436 hectares for
afforestation in the Dargaville area in Northland.
It was given approval in principle to acquire
45,000 hectares in 1983, and has a target of
26,000 hectares in and around Dargaville. It is
acquiring a further two blocks of 291 hectares
and 134 hectares west of Kaihu for $480,000
and $280,400 respectively. The land is
currently used for arable farming but
"conditions prevailing in the sheep and beef
industry make the property uneconomic" for
this purpose.
- Carter Holt Harvey is also buying two blocks of
land in the King Country in its own right.
One is "approximately" 748 hectares,
for $1,660,000; the other is
"approximately" 489 hectares for
$1,107,500.
Telecom acquires four more cell sites
Telecom Corporation New Zealand Ltd (U.S.A.)
is adding to the many small pieces of land it owns,
leases or has easements over around the country for
cellphone transmitter sites to improve its coverage. This
month it is
- leasing 80 square metres of land at Cheviot,
Canterbury;
- buying approximately 1,225 square metres
of land with various easements at Waverley,
Wellington;
- acquiring an easement over an unstated area of
land at Wanaka, Otago;
- and buying approximately 50 square metres
of land with various easements at Murchison,
Nelson.
In all cases the amount paid was suppressed. Most are
acquired through subsidiary Telecom Mobile
Communications Ltd.
In February 1998 the price for two was released,
although a "premium" was still suppressed:
- $12,000 plus premium for the one at Waverley;
and
- $5,000 plus premium for the easement at Wanaka.
Other rural land sales
In other rural land sales:
- Gourmet Paprika Ltd, a company owned 25%
each by two residents of the Netherlands,
33.4% by a New Zealander, and 16.6% by a New
Zealander resident in the U.S.A., has approval to
buy six hectares of market gardening land at
Woodhill, Helensville, Auckland for an
initially suppressed amount. After appeal to the
OIC, in July 1996 the amount was revealed as $400,000.
The land is owned by the largest shareholder in
the company, P. Martin, who wants to put
the money back into the company. The company
"proposes to erect a three hectare
greenhouse and packing shed" on the land.
The OIC says that in "June 1994 Gourmet
Paprika Ltd received consent to establish a
pepper production business in New Zealand
utilising lease land". The company then had
1,000 shares owned by Paul Martin of Aotearoa
(334), and Adri Botman and Ton Zwetsloof of the
Netherlands (333 each).
- Inghams Enterprises New Zealand Pty Ltd of
Australia has approval to acquire 59
hectares of land for manufacturing at Waitoa,
Waikato. The price was released in July 1996
after appeal to the OIC ($2,300,000) and
the reason for the purchase: "Inghams wish
to extend their present processing plant at
Waitoa. Inghams view the expansion as a necessary
part of its investment in the poultry industry in
New Zealand in which they have expertise. Inghams
estimate that the expansion of the plant will
provide for employment of a further 30
people."
- Two large properties near Taumarunui, King
Country, South Auckland are being merged into
Hong Kong ownership. Maraekowhai
Station, which is on approximately 2,031
hectares of land, is owned 89% by Maraekowhai
Australian Unit Trust which is not
Australian, but controlled by Mr W. Peters,
a New Zealand citizen resident in Hong Kong,
10% by Mr G. Webster of Aotearoa,
and 0.5% each by two other New Zealanders.
Webster also owns Koiro Farms (1980) Ltd
which owns the nearby 1,250 hectare
property and is selling it to Maraekowhai Station
Ltd for $2,423,000. This will result in
"economies of scale" and "it is
intended to upstock the property considerably and
to introduce a more comprehensive fertiliser
programme which will result in a more productive
use of the property."
- The busy Deborah Miller of Brookfields
has organised two more land sales at Paparangi,
Wanganui to residents of Taiwan (though
they have New Zealand permanent resident status).
The first is of 20 hectares for $78,000
to Gold Tree Company Ltd and the second is
of 32 hectares for $123,240 to Verdancy
Ltd. Each of the companies is owned in
Taiwan. As usual, the land will be used for
forestry, but all expertise supplied by local
managers. See last month for the previous such
sales.
- Two U.K. residents who "have been
granted New Zealand permanent residency and
intend to reside on the property on a permanent
basis" have approval to buy six hectares of
land at Maraekakaho, Hastings, Hawkes
Bay for $200,000.
- Two citizens of South Africa who have been
granted permanent residence in Aotearoa and
"are in the process of moving" here are
buying half of a company, SRS Dairy
Developments Company Ltd, which owns
"approximately" 282 hectares of
land near Napier, for $1,225,000.
The other half is owned by two New Zealanders.
"The conversion of the property from its
present dry stock operation to that of dairying
will result in a better utilisation of the
property."
- Sang-Ryoung Yoon of Korea has
approval to buy four hectares of land at Arthurs
Point, Queenstown for $410,000
"to develop a hotel or condominium style
tourist accommodation on part of the
property". Relates the OIC:
"It is envisaged that the development
would include 30 to 40 units probably to be
utilised on a time-share style basis. Mr
Yoon’s intention is to target the marketing
of the units to Korean people and claims that the
development will enhance the rapidly growing
number of Korean visitors to New Zealand. The
Commission is further advised that it is proposed
to develop the remainder of the land into a
residential subdivision."
- The Southland Plantation Forest Company of New
Zealand Ltd which is owned by new Oji
Paper Company Ltd and Itochu Ltd both
of Japan is buying two blocks of land in Southland.
One, 259 hectares in the Otautau
District, is being purchased for $550,000,
the other, 422 hectares at Tokanui
is for $765,000. Both are for forestry
development, which will be carried out by South
Wood Export Ltd. South Wood is the manager of
a large number of forestry developments for
Southland Plantation Forest Company, but also
owns other forestry developments in its own
right. It is owned 66.6% by MK Hunt
Foundation Ltd of Aotearoa and 33.3% by C Itoh
and Company of Japan.
Internal restructurings
- Woodlot Farm Ltd, which is a Singapore/Indonesia
owned company involved in a golf course and
housing development near Queenstown, Otago,
is being taken over by one of its shareholders, Shotover
Golf Estate Ltd for $5,624,046.
Woodlot was owned 28% by P. Fong of
Singapore, 28% by D. Salman
of Indonesia, 20% by Shotover, 12%
by D. and E. Broomfield of Aotearoa, and 12%
by B. Washer of Aotearoa. Shotover is
owned 35%, 35%, 15%, 15% by the same parties. It
owns "approximately" 81 hectares
of land near Queenstown.
The shareholding has changed since we last
reported on the company in September 1993: Peter Fong
of Singapore (28 per cent), Walter Jared Frost and
David Salman of Indonesia (28 per cent), Loka Manya
Prawiro of Indonesia (20 per cent), David Benjamin
and E.H. Broomfield of Aotearoa (12 per cent), B. E.
Washer of Aotearoa (12 per cent).
In August 1992 we reported that the company had
plans to acquire various pieces of land near
Queenstown to develop a 9 hole "golf leisure
park and village" having abandoned plans for an
18 hole golf course. "It is planned to build 160
villas within the park which will be sold locally and
overseas."
- Munich Reinsurance Group of Germany
is shuffling the business of Munich
Reinsurance Company: it will now be owned by Munich
Reinsurance Company of Australia Ltd. The
Australia-based subsidiary will "acquire the
net life assets" and commence business. The
valuation was initially suppressed but was
released in July 1996 after appeal to the OIC: $2,372,390.
- Dynasty Pacific Corporation Ltd,
ultimately owned by the Tan Family Development
Trust, the Dynasty Trust, and Pang
Yoke Min, of Singapore, has approval
to take over City Life Holdings (Wellington)
Ltd for $10,014,369. City Life is
ultimately owned by the New Zealand Land Trust,
the beneficiaries of which are associated with
Messrs Tang (sic: probably a misprint for Tan),
Sy, Tang and Pong of Singapore, and George
Horsburgh of Aotearoa. It is part of a
maze of related property companies which is in
some trouble (see for example our commentary on
the June, July and September 1995 decisions). In
September, the beneficiaries of the New Zealand
Land Trust were identified as Stanley Tan Poh
Leng (otherwise known as Stanley Tan), Trustees
in the Dynasty Trust, Pang Yoke Min, David Tan,
and Johnny O Sy all of Singapore.
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