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Electricorp sells maintenance subsidiary, Powermark, to GEC Alsthom A little publicised privatisation features this month. The Electricity Corporation has sold its maintenance and power subsidiary, Powermark to two huge European firms. Powermark has been ECNZ’s installation and maintenance contractor, employing 850 people and making an after tax profit of $5.5 million in the year to 31/3/94. It is now owned by GEC Alsthom New Zealand Ltd, itself owned 50% by The General Electric Company Plc of the U.K. and 50% by Alcatel Alsthom SA of France. GEC Alsthom internationally has 73,000 staff in 23 countries and is involved “in all aspects of electricity distribution and generation engineering, including turn-key construction of power stations” including combined-cycle gas-fired stations like that proposed for Stratford by ECNZ. The price paid has not been released but is understood to be $18 million. ECNZ said in selling Powermark that it “was now closely associated with national grid operator Trans Power and no longer fitted with the corporation’s core business of generating and wholesaling electricity”. GEC Alsthom “states that it values the skills and experience of Powermark in transmission systems operation and maintenance, an area in which it does not consider itself strong, and which will complement its own expertise in other areas of power system engineering.” Arguably then, this is technology transfer in reverse: to the European companies. It leaves our electricity system without its own engineering expertise. GEC Alsthom Australia said when the sale was announced that “it was intended to give the company a ‘springboard’ into the New Zealand electricity market”, so further developments may follow – possibly facilitating the building of private generating stations if that is allowed. They would also “take the company offshore”, into Australia (where it is already operating) and then “hopefully” South-East Asia. (Ref: Press, “Powermark’s new owners eye Asia”, 11/3/95, p.28.) ICI buys chemical distributor Chemical Cleaning Ltd from Burns Philp ICI New Zealand Ltd, subsidiary of ICI Australia Ltd, is buying Chemical Cleaning Ltd from Burns Philp and Company Ltd of Australia for a price that was initially suppressed but was released in October 1996: “approximately $20,000,000“. Chemical Cleaning imports, blends and distributes bulk chemicals. The purchase includes approximately 2 hectares of land at Tauranga. AFFCO offers shares to overseas owned institutions Freezing works owner, AFFCO Holdings Ltd is issuing 100 million new shares, plus 27,400,000 convertible notes to a number of overseas owned institutions which are AFFCO creditors. It is asking for OIC approval because, though unlikely, the conversion of the notes to shares may make it overseas owned (“an overseas person”). “AFFCO state that the issue is most unlikely to make it an overseas person. At the same time as the public issue, various parties who are overseas persons and are presently creditors of AFFCO, will take up mandatory convertible notes which are convertible into shares of AFFCO at the option of the holder at any time. AFFCO advise that such conversion may result in it becoming an overseas person. Accordingly, they have sought consent to provide holders of mandatory convertible notes with certainty that those mandatory convertible notes can be converted to shares.” The companies are: Bank of New Zealand, ANZ Banking Group (NZ) Ltd, National Bank of New Zealand, Westpac Banking Corporation, Barclays Bank Plc, South Australian Asset Management Corporation, BNZ Finance Ltd, and NZIB Investments Ltd. According to press reports, AFFCO, formerly a farmer co-operative, wants to raise $50 million to repay debt. After the issue of shares and the conversion of the notes (which could happen any time within five years), its ownership will be: Toocooya Holdings (associated with AFFCO director, Peter Spencer, “one of New Zealand’s biggest farmers”, 10.2%), Dairy Meats Association (a group of dairy farmers that controls the processing and marketing of North Island bobby calves through Dairy Meats New Zealand, 10.2%), reserved shares and preferential entitlement shares (15.3%), AFFCO Farmers Investments (representing farmer-shareholders), former AFFCO A, B, and C shareholders (2.9%), a Fletcher Challenge subsidiary (Sharnlee Holdings, 17.3%), Primary Resources (owned by the Meat Board, 11.1%), the syndicate of the above banks plus Fletcher Challenge Financial Services (14.7%) (Press, “AFFCO Holdings to have two cornerstone shareholdings”, 10/3/95, p.30). Singapore company takes over Renaissance Software A Singaporean company is taking control of one of the country’s leading computer suppliers, Renaissance Software. Renaissance is owned by Triumph Industries Ltd, itself a listed computer distributor selling Apple products. Triumph is in turn owned 54.8% by Electronic Mail International Ltd (EMIL) which is controlled by Acma Ltd of Singapore through its 51% shareholding. The other owners of EMIL are Mal R. Thompson, Triumph’s managing director (39%) and Trevor A. Grey (10%), managing director of Renaissance. The reorganisation of ownership follows the voluntary liquidation of Triumph’s former 73.8% shareholder, Electronic Mail (NZ) Ltd. Acma has a capitalisation of about $650 million. According to the OIC, it “operates a wide range of industries, including the computer industry and other areas, such as communications.” According to press reports, Acma’s shareholding is via a subsidiary, Kelman (Press, “Singapore interest for Triumph”, 29/3/95, p.29). Triumph’s other subsidiaries include CED Distributors, an Apple wholesaler, and Computer Distributors, an Apple retailer (Press, “Triumph Industries prospers after switch”, 13/6/95, p.36). The price was $14 million, being $7,012,500 in cash and 4.9 million fully paid shares issued at $1.40 each. Tiong controlled Ascot Management takes over Force Cinemas The Tiong family controlled company, Ascot Management Corporation New Zealand Ltd is taking over Force Cinemas Ltd and Force Corporation Ltd for $20,600,000 paid by issuing 99,575,667 shares in Ascot, though paradoxically it puts Ascot back into Aotearoa ownership. The Tiong family of Singapore owns a number of companies in Aotearoa including one of the largest forestry companies, Ernslaw One, Oregon Forestry (NZ) Ltd, and Neil Construction Ltd. The Tiongs’ 75.8% shareholding in Ascot is through Oregon which also fully owns Himley Enterprises No 6 Ltd, the holding company for the Neil Group of companies “which carries on the business of residential, commercial and industrial land subdivision and development”. In August 1994, Ascot wanted to buy Himley for $17 million by issuing up to 140 million ordinary shares for “up to $28 million”, which Oregon would underwrite. In the event, Ascot decided against this acquisition, and was then reported to be still looking for something to buy (see commentary on August 1994 decisions). According to the OIC, explaining the rationale for the present transaction, “Ascot, which has not undertaken any business activity since 1992, views the acquisition as an ideal investment opportunity.” Significantly, “the proposal will result in Ascot reverting to New Zealand ownership, as the issue of the shares in consideration will dilute the Tiong family’s shareholding to approximately 12%”. In effect it is a “reverse takeover” in that Force shareholders (the principal one being Peter Francis) will own about 86% of the merged company. The two Force companies own 50% of a joint venture with Village Roadshow of Australia owning eight North Island multiplex cinemas, and various property interests. It has total assets assessed at $51.6 million and the proposal has been public since at least last December. (Ref: Press, “Ascot moves to buy Force Group”, 17/12/94, p.43; and “Ascot reissues forfeit shares”, 21/3/95, p.34.) See under rural land below for another Ernslaw One acquisition. Pacific Group of Singapore in Christchurch and Queenstown developments The development of two adjacent buildings in Cathedral Square, Christchurch, are connected to a development in Queenstown. The Christchurch buildings are Carucca House (formerly the headquarters of the Christchurch Transport Board) and the Old Government Building, which has a Historic Places Trust Category 1 classification. The Queenstown development is at Fernhill and is to be known as Greenstone Lodge. A joint venture of Singapore and Aotearoa interests plans to develop both sites into a serviced apartment/hotel complexes. The Singaporean companies are Pacific Citylife (Christchurch) Ltd and Pacific Resorts (Queenstown) Ltd respectively, both of which are ultimately owned by the Pacific Development Trust, “the beneficiaries of which are associated with Messrs Tan, Sy, Tang and Pang of Singapore and Mr Horsburgh of New Zealand”. “Mr Tan” is presumably Stanley or Freddie Tan who have been associated with George Horsburgh in a number of property companies, including the Pacific Group Ltd, The Habitat Group, Firle Holdings Ltd, and New Zealand Land Ltd (see April 1994 commentary for more detail). “Mr Tang” is probably one of the family which controls the Singaporean hotel operator, Dynasty Hotels International, and who is associated, along with the Pacific Group, with a new company, Pacific Hotel Management (Press, “Pacific Hotel Management targets Asian tourists”, 22/3/95, p.36). The local partner is the Symphony Group Ltd which is controlled by Colin Reynolds and family. Reynolds ran the Chase group, one of the most spectacular failures in the 1987 sharemarket crash. It has developed a number of apartment projects in Auckland and in January took over the Greenstone Lodge suite and apartment complex development in Queenstown from the part Taiwanese-owned Woodland Group (Press, “Queenstown apartment development”, 14/1/95, p.29). Pacific Hotel Management is planning to have 1,000 beds under its management by early 1997 as part of a national chain targeting the Asian market. In March it was appointed to operate two unnamed new apartment-style hotels in Christchurch and Queenstown (Press, “Pacific Hotel Management targets Asian tourists”, 22/3/95, p.36) – most likely the Government Building and the Greenstone Lodge developments. According to the Press, (“Randolph charts bold new waters”, 8/3/95, p.49) the new Christchurch development will be called the “Christchurch Randolph” and will cost $26 million according to the OIC’s information. Carucca House will become a 148 bed hotel and the Government Building’s ground floor will become a restaurant and retail area. On other floors, apartments will be priced from $155,000 to $350,000, with two penthouses priced “much higher”. There will be a swimming pool, spa pool, sauna and gymnasium, and a four-storey carpark behind Carucca House. The Queenstown development is valued at $27 million in the OIC’s decision. The associated company, New Zealand Land Ltd, which is ultimately owned by the same Pacific Development Trust, has undertaken to purchase the “Waterfall Block” of the complex after construction, and has also entered into an option to acquire the “Central Lodge” block. The value of purchasing these blocks is put only at “over $10 million”. Rifgac and Yandina of Australia acquire 45% of partnership with financiers In a somewhat mysterious arrangement, two Australian companies, Rifgac Seventeen Ltd and Yandina Investments Ltd are setting up in business here with a capital of $11 million to acquire “an equitable interest in a 45% share in an existing partnership between several banks and financiers in New Zealand.” Rifgac is owned by Messrs Greenberg and Mekertichian, and Yandina by Mr Khoo, all of Australia. Apple Fields reorganises ownership of land to unroll tax avoidance scheme Renegade of the apple orchards, Apple Fields Ltd (see commentary on January 1995 decisions) is reorganising its ownership of land in Canterbury, currently owned by its controversial Rural Super Bonds superannuation scheme. One subsidiary, Paxwell Holdings Ltd, is buying a Rural Super Bonds subsidiary, Plaskett Holdings Ltd, which owns 146 hectares of land, for $1,124,200. Another company, Honar Holdings No 1 Ltd, “a nominee for the purposes of the Overseas Investment Regulations 1985 of Apple Fields Ltd” is buying Prenland Holdings Ltd and Runsham Holdings Ltd (of which more below) which own 181 hectares of land in Canterbury, for $2,310,000. The Commission’s “rationale” explains:
Accordingly, approval is given for another Apple Fields subsidiary, Deanville Holdings Ltd to lease 181 hectares of land from Prenland Holdings Ltd and Runsham Holdings Ltd for $184,800 per annum until 31 December 1997. What the Commission does not mention is that it was this kind of conveniently loose land-owning arrangement with Rural Super Bonds that landed Apple Fields in trouble with the Securities Commission last year. It is a method of tax-avoidance and was used by Apple Fields to artificially increase its apparent profitability. In a separate but similar transaction, another Apple Fields subsidiary, Harbridge Holdings Ltd is buying out the 50% Apple Fields doesn’t already own of Johns Road Orchard partnership No 1 and Cathron Orchards Ltd (for a “nominal” amount) each of which owns exactly 5.6473 hectares of land in Canterbury. In each case the 50% being purchased was owned by the same four individuals and the sale “will allow retiring partners to be released from future liabilities in the partnership” and “allow Apple Fields Ltd to exercise complete control over the partnership, thereby creating the potential to increase efficiency”. The price of the Johns Road Orchard transaction was initially suppressed, but released on appeal in August as: “$110,045 by way of assumption of the liabilities of the retiring partners.” Also interesting is the fact that Apple Fields is now regarded as an overseas company: it is 28.6% owned by T/A Pacific Select Investments, a Cayman Islands Limited Partnership owned in the U.S.A. A further 13.21% is owned “by various other overseas parties.” T/A has OIC approval to own up to 29.99% of Apple Fields. As at September 1994, Apple Fields owned 660 hectares of apple orchards, plus 33 dairy farms.
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