December 1997 decisions

Man, Mackay and CSR join forces in sugar refining

E. D. and F. Man New Zealand Ltd (a subsidiary of E. D. and F. Man Group Ltd of the U.K.) and Mackay Sugar Co-operative Association Ltd each have approval to acquire 25% of Chelsea Investments Limited, which is owned by CSR Ltd of Australia. Chelsea Investments owns the Chelsea Sugar Refinery in Chelsea Bay, Birkenhead, Auckland, which includes a lease over approximately 48 hectares of land.

In August 1992 we reported that a joint venture between Man and Mackay, later to be called Mackay Refined Sugar (MRS), was setting up in competition to the Chelsea Sugar Refinery, with the intention of importing sugar. NZPA reported that advising the new entrant was Sir Roger Douglas (along with his former press secretary and business associate, Bevan Burgess) who had deregulated the sugar market in 1986. In the event not much happened until 1994, when Mckay and Man completed their new refinery in Mackay, central Queensland. War between MRS and New Zealand Sugar (CSR’s local subsidiary) was declared, focusing on large commercial sugar users such as confectionary, soft drink and beer manufacturers. At risk were the jobs of 200 employees at the Chelsea Sugar Refinery – already reduced from 240 in redundancies by CSR. MRS set up a $1.6 million sugar warehouse at the port of Timaru and planned similar facilities elsewhere, saying it would use a purpose-built 20,000 tonne sugar carrier to bring the refined sugar from Australia.

By the end of 1994, MRS was claiming more than $A50 million ($NZ60.75 million) against CSR for damages sustained in Australia and Aotearoa, alleging that CSR took "advantage of its substantial power in the refined sugar markets in order to prevent MRS entering those markets". It claimed CSR had deliberately forward-sold sugar below cost. In Aotearoa, however, the Commerce Commission found no evidence of predatory pricing, despite CSR’s 85% share of the sugar market, and it was not until this finding in March 1996 that MRS considered court action here. "When we entered the market in 1994 we found New Zealand Sugar was quick to extend unusually long contracts to large multi-national users at surprisingly low prices," its chief executive, James Proudlock, said. By that stage, MRS had put plans for a storage silo near the Port of Tauranga on hold, and had made only two voyages to Aotearoa of its bulk carrier. CSR had cut its refinery staff further, to 160, in part because it was cheaper to import some new products from Australia than produce them here. MRS started its legal action in Aotearoa in October 1996, seeking $11.3 million.

CSR and MRS had planned a joint venture back in 1993, but were over-ruled by the Australian Trade Practices Commission. Now there is "an Australasian-wide rationalisation" of their refining operations:

"Man and Mackay have negotiated with CSR Limited to form a new venture through which all three parties will operate together in the Australian refined sugar market. As part of the new venture it is proposed that Man NZ and Mackay are to take an interest in CIL’s assets through the proposed share acquisition of 25 percent respectively of CIL."

The Commerce Commission investigated the merger after its announcement in June 1997, and the companies signed a deed preventing Chelsea Investments and MRS from mixing assets. By March 1998, a joint venture deal had been all but settled, only requiring Commerce Commission approval. It involved MRS paying $34 million to CSR, reflecting the value of CSR’s Australasian business and a settlement of legal actions in both countries. The combined joint venture in Australia is called Sugar Australia and is owned 50% by CSR and 25% each by Man and Mackay Sugar Co-operative. It includes both CSR’s and MRS’s refined sugar business in Australia. A similar deal in Aotearoa has Man and MacKay Sugar Co-operative each buying 25% of CSR’s refined sugar and retail pack businesses here. The joint venture represents only 15% of CSR’s total sugar business.

However customers remained concerned. Cerebos Greggs, a major New Zealand Sugar customer, said that, while it might try to import its own sugar if necessary, that would not be easy, sugar being a low value, high volume commodity which requires special handling systems.

(Press, 13/7/94, "Trans-Tasman sugar invasion threatens Chelsea Refinery", p.29; 21/9/94, "Warehouse on schedule", p.31; 9/12/94, "Mackay’s $A50m claim confirmed", p.22; 6/3/96, "Chelsea sugar embroiled in $68m claim", p.27; 9/10/96, "NZ Sugar Corp faces legal action", p.28; 20/9/97, "Probe into sugar merger", p.27; 24/9/97, "Concern over sugar merger", p.26; 2/3/98, "CSR to get $34m in merger", p.27; Independent, 8/3/97, "Sugar price war heads into bitter court battle", p.9.)

Xena and Hercules change hands

It appears that the ownership of the two TV series, "Xena, Warrior Princess", and "Hercules: The Legendary Journeys" is being split. In three related decisions, the OIC has given approval to BNZ Investments Ltd, Universal Television Enterprises Inc, and Shooting Star Pictures Inc, each to "acquire property being the copyright and other assets associated with" the two series. BNZ Investments is paying US$58,381,837, Universal is paying $US65,679,567, and Shooting Star is paying $US65,579,567.

BNZ Investments, a subsidiary of the Bank of New Zealand Ltd, owned by National Australia Bank Ltd of Australia, is acquiring its share from Universal Television Enterprises. Universal Television Enterprises, a subsidiary of Universal Studios Inc, whose majority shareholder is The Seagram Company Ltd of the U.S.A., is acquiring its share from Screen Holdings Ltd and Iraklis Eleven Ltd, both subsidiaries of the BNZ. Shooting Star Pictures Inc is owned by Richard F. Reiner, a citizen of the U.S.A. and is acquiring its share also from Universal Television Enterprises.

In each case it is stated that "The transactions form part of Universal’s strategy to produce and distribute films and television series both within New Zealand and world-wide." The BNZ’s involvement is "to generate a return on capital, support the New Zealand film industry, and to provide further investment opportunities in the film industry". Reiner’s involvement is "to facilitate and manage the investment made by BNZ Investments Limited".

Rexel of France buys GEC (New Zealand) and 37% of NZ Electric Lamp

Rexel SA, 70.44% owned by Saprodis SA of France, has approval to acquire GEC (New Zealand) Ltd from its parent, General Electric Company Plc of the U.K. and 37% of New Zealand Electric Lamp Manufacturers Ltd for "a value in excess of the book value of the relevant companies". It is not clear what the current ownership of New Zealand Electric Lamp Manufacturers is.

"Rexel state the acquisition will enable the company to expand its world-wide network into the Australasian markets… the acquisition of the GECNZ business will provide opportunities of economies of scale within the wholesale and distribution of electrical products …"

The deal is part of an agreement to buy the activities of GEC in both Australia and Aotearoa, which together have annual sales of about $466 million, of which $99 million is in Aotearoa (Press, 10/1/98, "Rexel takes GE arms", p.23).

Goodman Fielder’s Bluebird Foods buys Burn’s Philp’s NZ Food Industries

Bluebird Foods Ltd, a subsidiary of Goodman Fielder Ltd of Australia, has approval to acquire New Zealand Food Industries Ltd from Burns Philp and Company Ltd of Australia for $677,089. The acquisition includes a 0.4446 hectare property at 60-66 Kingsford Smith St, Lyall Bay, Wellington. "The proposal represents part of the recently announced acquisition by Goodman Fielder Limited of the financially troubled Burns Philip and Company Ltd’s New Zealand and Australian consumer foods business…"

The decision represents only a small part of the total deal between Goodman Fielder and Burns Philp. Goodman Fielder bought Burns Philp’s consumer foods businesses in Australia and Aotearoa for $27.38 million. In Aotearoa this constitutes Empire Foods in Wellington and Opco Foods in Auckland. Brands include Empire herbs and spices, Top Cook salad and cooking oils, Spice Islands marinades, Lavazza Italian coffee, Paul Newman’s Own range of dressings, pasta sauces and salads, Cornwell’s, Patak’s, Song Gai, Winn’s, and Chicken Easy.

The sale was forced by Burns Philp (largest shareholder, Graeme Hart of Aotearoa) failing to sell its loss-making international herbs and spice business in September 1997, which they then proceeded to write down by $A700 million. The company owes $A1.3 billion to its banks and has breached its banking covenants as a result of the write-down. Its share price has crashed. (Press, 22/10/97, "GF adds to its brands", p.30; 2/12/97, "Burns Philp sell-off", p.29.)

Credit Suisse buys Lucrum Holdings

Credit Suisse First Boston, owned by Credit Suisse Group of Switzerland, has approval to acquire Lucrum Holdings Ltd, which is engaged in investment banking. The price has been suppressed.

At about the time of this decision, CS First Boston announced that it was buying back the 75% of sharebroking firm and investment bank, First New Zealand Capital, that it did not own. Day-to-day management would remain the same. Whether this is connected to the present OIC decision is not clear. First New Zealand Capital was built on Jarden and Co which CS First Boston bought in 1990. In mid-1995 it sold 75% to senior management. According to its chief executive, First New Zealand Capital had raised more than $2.3 billion in corporate debt and advised on more than $16 billion of mergers and acquisitions involving New Zealand companies since 1992. This advice has included a number of privatisations and related advice to government. (Press, 17/12/97, "First NZ Capital sale", p.32.)

Taiwan-based Hawera Forest Owners Association buys 668 ha. land for forestry

Members of the Hawera Forest Owners Association, consisting of "22 members, of which 17 are ‘overseas persons’", has approval to acquire a total of 668 hectares of land at Morea Valley, Hawera, Taranaki for $2,805,600 for forestry. In fact there are 18, not 17, decisions approving purchase of blocks of land by the members, and each "member" appears to be one to five people in each instance: a total of 47 individuals. All are domiciled in Taiwan. The seller of the land is in each case New Zealand Forestry Group Ltd, and the OIC states that

"In essence the proposal is a joint venture between overseas persons who are providing capital for development purposes and a New Zealand forestry company which is providing the necessary expertise to the forestry operation."

The New Zealand Forestry Group appears to specialise in these modus operandi: it gets small-holders (often overseas) to buy small blocks of a larger block of land it owns, and then contract it to manage the land for forestry. It is the same company that has been selling land in Paparangi, Wanganui and elsewhere. The blocks sold in this case vary between 18 and 53 hectares.

Ataidar Forests (U.S.A., Japan), takes Northern Pulp 435 ha. lease in Northland

Ataidar Forests Ltd, 78% owned by a Carter Holt Harvey Ltd subsidiary and 22% by two Itochu Ltd subsidiaries, has approval to acquire the lease of 435 hectares of land in the Pungaru B30J2 Block, Northland for a "nominal" consideration. The acquisition is part of the debris of the failure of Northern Pulp Ltd.

"It is stated on 22 February 1979 Northern Pulp Ltd (in receivership) took a lease over the land. Ataidar Forests Ltd (under its former name of Wood Exports Limited), in turn subleased the land from Northern Pulp Ltd and established a forestry operation on the property. The Commission is further advised that as a result of Northern Pulp Ltd being placed in receivership, discussions and arrangements have been made for Ataidar to take over the interest of Northern Pulp in the leasehold estate for a nominal consideration, but with Ataidar assuming all obligations imposed under the lease, including the accounting of the Lessor of a stumpage share of the trees. Upon such assignment the existing interest of Ataidar Forests Limited under the sublease will merge in to the head-lease given by the land owners. Ataidar Forests Limited state that they wish to acquire the head leasehold interest currently held by Northern Pulp Limited to better protect the investment that it has established in the forest many years ago under the sublease."

The land is owned by "the Trustees of the Pungaru B30J2 Block", and the block was "created by Partition Order of the Maori Land Court on 18/3/92 at Whangarei. The term of the lease is 45 years effective from 1/10/78."

We last heard of Ataidar (then spelt "Atadair") in September 1996, when we reported:

"Atadair Forests Ltd … is taking over the lease of 813.28 hectares of land from Parengarenga A Incorporation for a ‘nominal amount’. It is ‘part of the Parengarenga B3C Block created by partition order of the Maori Land Court on 5 May 1977’. The transaction is another result of the bankruptcy of Northern Pulp Ltd which had established a Triboard mill in Kaitaia, Northland, with associated forestry rights. The acquisition of the mill by Juken Nissho of Japan was highly controversial because the Muriwhenua Corporation had wanted to buy it as a development project for its people. Muriwhenua unsuccessfully challenged the OIC’s decision to approve Juken Nissho's purchase. The current transfer of the lease is a takeover of ‘the interest of Northern Pulp’. Atadair ‘intend to continue to maintain the forest they established in pinus radiata back in 1979/80’."

The formal ownership of Ataidar ("radiata" spelt backwards!) is:

  • 78% is owned by Carter Holt Harvey Forests Ltd, a wholly owned subsidiary of Carter Holt Harvey Ltd, itself approximately 51% owned by International Paper Products of the U.S.A.;
  • a further 19.9% is owned by South Wood Exports Ltd, which is 100% owned by Itochu Ltd of Japan;
  • finally, 2.1% is owned by Itochu New Zealand Ltd, another subsidiary of Itochu Ltd.

Until July 1997 (see our commentary for that month), South Wood Exports was 49% owned by the M.K. Hunt Foundation. Its main operations are owning and managing forests in Southland, largely for Southland Plantation Forest Company of New Zealand Ltd, which is ultimately owned by New Oji Paper Company Ltd and Itochu.

U.S. firm buys Waikana Timber Company in Otautau, Southland

Bright Wood NZ Ltd, whose shareholders are C.A., K.K., C.L. and D.R. Stovall, of Oregon, U.S.A., have approval to acquire the Waikana Timber Company Ltd for an originally suppressed price which was released in April 1998: $315,000. The purchase includes nine hectares of land in Eton St, Otautau, Southland.

"It is stated the acquisition will provide an additional 15 employment opportunities within the local community and will provide an increase in exportable wood products totalling approximately NZ$10 million worth of sales. In addition, it is stated Bright Wood intends to expand/enhancing the current sawmilling operations of Waikana."

Other land for forestry

  • Deborah Miller is selling blocks of land again. This time it is 129 hectares in the Far North District, to Asian Power International (NZ) Ltd of Hong Kong for $631,333.20. As usual, it is being sold by Far North Afforestation (NZ) Ltd which will continue to manage the afforestation of the land: "… in essence the proposal represents a joint venture between the overseas party who is providing risk capital and Far North Afforestation (NZ) Limited who is providing the forestry expertise." Asian Power is owned by Lau Siu Tuen Chan and Wai Tong Kelvin Chan of Hong Kong, but it is claimed that the company is "based and managed in New Zealand". Miller did a similar deal with Asian Power in March 1996 when Asian Power acquired 60 hectares of land in Humphries Road, Kohukohu, Northland (Far North District), for $285,000. In April 1996 the two shareholders bought 20 hectares at Mangamuka, Northland for $95,000 through their company Penzance Developments Ltd. Asian Power first came to our notice in June 1994 when it bought 489 hectares of afforested land in Broadwood in the Far North District for $785,000.
  • A newly form company, New Zealand Plantation Forest Company Limited, owned by "substantial Japanese companies, involved in forestry and commence within Japan" has approval to acquire forestry cutting rights over "approximately" 100 hectares of land in Tinopai, Northland for a suppressed amount. The Japanese companies are Chuetsu Pulp & Paper Co Limited (30%), Hokuetsu Paper Mills Limited (30%), Marusumi Paper Co Limited (30%), and Marubeni Corporation 10%. They are acquiring the rights from the trustees of the Richard and Elizabeth Perkins Trusts. The land is currently used for mixed farming. The forestry right will be "for a term of 22 years, for the purpose of establishing a commercial forestry operation on the property".
  • Highland Timber Plc of the U.K. has approval to acquire two blocks of land for forestry:
    • 212 hectares (gross) and 175 hectares (net) (what gross and net means in the context is unexplained) in Russell Road, Wanganui, from M.G. and M.M. Reid, for $1,850,000 plus GST;
    • 452 hectares at Te Haroto on State Highway 5 (Napier-Taupo Highway), Napier, Hawkes Bay, from Fletcher Challenge Forests Ltd for an initially suppressed price, revealed in April 1998 to be $2,000,000.
  • Mt Duncan Afforestation Co. Ltd, a subsidiary of Rayonier Inc of the U.S.A., has approval to exchange 3.02 hectares of its land for 2.83 hectares, for one dollar. The land is in Marlborough, and the land it is acquiring was owned by W.C., B.A. and A.W.C. Coleman. The exchange represents a "tidying up" of boundaries. Rayonier acquired Mt Duncan Afforestation, which owns approximately 299 hectares of land in the Lakes Water Survey District, Marlborough, in July 1997, "to gain access to the trees on the land owned by Mt Duncan and to continue with subsequent plantation forest rotations."
  • Southland Plantation Forest Company of New Zealand Ltd, owned by New Oji Paper Company Ltd and Itochu Ltd, both of Japan, has approval to acquire 348 hectares of land in Tahakopa Valley Rd, Otago. "SPFC wish to acquire the property to form part of its existing forestry plantation holdings in the Otago region."

Georges Michel, French winery business, buys Merlens Winery in Marlborough

Georges Michel Ltd, owned by Georges Michel, a citizen of France and a resident of the Island of Reunion, has approval to acquire a vineyard owned by Merlens Winery Ltd (in receivership and liquidation) for $620,000. The property is six hectares of land in Rapaura Rd, Blenheim, Marlborough, and

"The proposal represents the introduction of the Georges Michel Group, a leading winery business established in France in 1993, into the New Zealand viticultural industry. The property, which forms part of the business assets of Merlens Wines Limited (in receivership), which are to be sold as a going concern. Mr Michel states it is their intention to improve the quality and quantity of grape production on the property utilising the company’s technical and management expertise. In addition it is stated that the applicant will provide capital to further develop the viticultural operation on the property."

John Coney of Canada, owner of Morton Wines, restructures

Morton Estate Wines Ltd, trustee for the Morton Estate Wines Trust, whose principal beneficiaries are John Mark Coney and members of his family of Canada, has approval to acquire a total of 177 hectares of land from Ascross Investments Ltd in a "restructuring of John Coney’s New Zealand viticultural interests". The land, whose value is put at $10,000,000, is made up as follows:

  • 0.3556 hectares of land known as the "Katikati Property" adjacent to State Highway 2, Bay of Plenty.
  • 96 hectares of land, known as the "Riverview Property", in Hawkes Bay;
  • 16 hectares of land known as the "Mill Road Property", in Hawkes Bay;
  • 24 hectares of land, known as the "Colefield Property", in Hawkes Bay;
  • 41 hectares of land known as the "Marlborough Property" in the Central Wairau Plains, 10 kilometres north west of Blenheim; and

Other rural land sales

  • AWASSI NZ Land Holdings Ltd of Saudi Arabia and Australia, has approval to acquire further land for sheep breeding. This time it is 134 hectares in Tikokino, Hawkes Bay, on the corner of State Highway 50 and Butler Road. It is being acquired from A.R. and G.E. Eddy, G.K. Bryant, and G.R. Mansfield for $661,700. The OIC states that "… the applicant company is one of the largest importers of live sheep and cattle into Saudi Arabia, the Middle East and Gulf countries and has been operating in New Zealand since 1989." It

"has established a niche market for the export of life sheep (namely AWASSI fat-tailed sheep) to Saudi Arabia. It is stated that to date a total of $20 million has been spent in establishing the New Zealand operation to supply the niche market… The proposed further development will require the investment by the applicant of a further $10 million."

The owners of AWASSI are Hmood Al Ali Al Khalaf, a Saudi Arabian citizen and George Antonios Assaf, a citizen of Australia. In May 1997 we reported that AWASSI was given approval to acquire 70 hectares of land at Geraldine, Canterbury, for $270,000. That land was already utilised by AWASSI as a feedlot for its South Island live sheep export operation. The two had already acquired land in Hawkes Bay in June 1995 through their company, the Hmood Al Ali Al Khalaf Trading and Transportation New Zealand Ltd. That was 393 hectares of land for $2,050,000 to "establish the Awassi sheep, a middle eastern sheep … which is renowned for its milking capacity and the applicant also states a sheep milking industry can be readily established using Awassi ewes."

  • Two veterinarians, Cornelis de Vos and Belia de Vos-Kroeze of the Netherlands have approval to acquire 607 hectares of land in the Upper Wangapeka Valley, Nelson, adjoining the Kahurangi National Park for $800,000. They "propose to relocate to New Zealand and both hold New Zealand permanent residency status", and "intend to establish a practice on the property which will provide veterinary service to a number of farms located in the Wangapeka Valley area" and "expand the adventure tourism potential for the property" . They also intend to continue farming.
  • A citizen of the U.S.A., Anthony J. Mathios, has approval to acquire approximately 20 hectares of land in Glassnevon Rd, State Highway 1, Waipara, Canterbury, for $250,000. "It is proposed to develop a vineyard on the property. The development will be undertaken in conjunction with the development of two other viticultural operations on adjoining properties." We have seen no mention of Mr Mathios having acquired these other properties however.
  • Bondoak Pty Ltd, which is owned 50% by Sudi Pty Ltd and 50% by Neil Investments Pty Ltd, both of Australia, has approval to acquire 25 hectares of land in Milton Rd, no. 7 RD, Ashburton, Canterbury, for $250,000. "The applicants wish to acquire the property in order to agist and graze standard bred yearlings, weanlings, brood mares and racehorses." Sudi is owned by Frederick James and Ivorene Whyms of Australia, and Neil Investments is owned by Peter Francis and Marie Neil of Australia.
 
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