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Utilicorp transfers its shares in WEL between subsidiaries The U.S. 33.3% owner of WEL Energy Group Ltd, Utilicorp NZ Inc, is transferring its shareholding to Utilicorp South Pacific Inc. Both companies are owned by Utilicorp United Inc of the U.S.A. so this gives no change in beneficial ownership. The approval of the original acquisition of that 33.3%, which occurred in August 1992, was released by the OIC only in July 1994. WEL, the former Waikato Electricity Authority in Hamilton was privatised last year, but not until the process had been challenged in the High Court by the Hamilton City Council. The Authority’s privatisation plan, which cost $2.5 million, put half the new company’s shares into a community trust, half to customers – and then issued enough new shares to enable Utilicorp to own 33.3%. In June 1993, the City Council asked the Court to rule that the plan went beyond the Authority’s legal powers. The case was lost, and Utilicorp paid 650 cents each for its shares – a total of $39 million. WEL listed on the stock exchange in December 1993 after a share tender amongst large investors and a share give-away to 56,000 customers of 105 shares each. Bidding by the large investors set a price of 750 cents per share, so Utilicorp got a bargain and effective control. A Hamilton finance company, Medici Financial Services offered 762 cents per share to customers immediately after the issue took place. WEL’s chairman is Brian Corban, an Auckland lawyer and former chairman of TVNZ. (Sources: Press, “New chairman for WEL Energy Group”, 12/6/93; “City challenges WEL privatisation”, 24/6/93; “Share issue, partnership separate issues”, 30/6/94; “Three electricity stocks by Christmas”, 9/8/93; “Power boards move on listing”, 1/9/93; “‘Hectic’ trading in WEL”, 24/11/93; and NZ Herald, “Challenge to power plan fails”, 17/8/93. Guiness Peat subsidiary buys Medic Aid from Manchester Unity In a transnational squabble over a health insurance company that shows how the new health system (or rather, its failure) is making health insurance an attractive investment, Guinness Peat Group PLC subsidiary, Parsifal New Zealand Ltd has approval to buy First Medical Corporation Ltd from Manchester Unity Friendly Society for $4,000,000. Guinness Peat, Ron Brierley’s retirement hobby since he parted company with Brierley Investments Ltd (which itself recently bought 50% of health insurer Aetna Health (NZ) from its giant U.S. owner, Aetna International – see Press, “Brierley joins health insurance venture”, 12/1/94), is buying Parsifal for $400,000 through its subsidiary Ithaca Investments Ltd. Assuming First Medical is in fact Medic Aid, Aotearoa’s second largest health insurer with 80,000 policies for between 180,000 and 200,000 people and 15% of the health insurance market, the purchase was the subject of one of the more interesting corporate fallouts, and examples of corporate double-dealing and greed, in recent years. In December 1993, Manchester Unity announced it had sold Medic Aid for an undisclosed amount to undisclosed new owners. (No decisions relating to this have been released by the OIC.) Not until February-March was it revealed that the new owners were U.S. Community Health Plan (CHP, 40%), Parsifal, representing a group of private investors, including a Medic Aid director, David Simpson (20%), Hawaiian property developer Harold Spector (10%), retired Auckland engineer Eric Smith (10%), former publisher Michael Wall (10%) and Maori interests represented by Dr Ralph Love (10%). CHP is the 21st largest multi-state medical insurer in the U.S. with income of NZ$1 billion, 34 hospitals, a network of 2,800 specialist and primary physicians, and a reinsurance subsidiary in tax haven Bermuda. It was also disclosed (and confirmed in the present decision sheet) that the sale price was $4 million. However two aspects of the sale set the cat among the pigeons. Firstly the outgoing directors (four non-executive and three executive) received a “golden handshake” of a total of $1,286,000, plus tax. Medic Aid’s founder and chief executive, Robin Flannagan was paid $428,144. Secondly the Serious Fraud Office began investigating the sale. The sale had apparently been initially to Parsifal alone, the other partners brought in only in February. The Serious Fraud Office apparently suspected that Parsifal was planning to use Medic Aid’s own money to pay for the purchase. By March the scene had descended into wonderful and unprecedented confusion. On 28 March, Manchester Unity announced it had taken back Medic Aid from the buyers, saying that “sale conditions had not been completed to the satisfaction of the society” and that all the golden handshakes would be repaid except for the one to Flannagan, which had been paid by the new owners. It had obtained a High Court interim injunction on 24 March overturning the sale on the basis that, by using Medic Aid’s money to pay the final $3 million instalment for the purchase, it breached the Companies Act’s prohibition on a company buying its own shares. They also paid it one day late. The new owners apparently gave up the sale as a bad job at this point, and Brierley saw an opportunity. On 9 April Guinness Peat (GPG) took control of Parsifal (note that they received permission for the purchase from the OIC only on 26 April). GPG pursued the ensuing court actions with apparent relish, claiming that Manchester Unity had shown itself to be “unfit” to run Medic Aid and that contracts entered into by Manchester Unity to pay employees and directors of Medic Aid were “excessive”. In May the High Court ruled in Parsifal’s favour. Parsifal took control of Medic Aid on payment of $3 million plus interest, and subject to a number of other conditions. GPG then demanded the return of the golden handshakes paid to Medic Aid’s non-executive directors James White (Manchester Unity Chief Executive, $152,000), Richard Jenkins ($124,000) and Russell Robinson ($62,000). An out-of-court settlement was reached on 17 May, with details not made public. (Ref: Dominion, “New owners of Medic Aid named”, 10/2/94; Press, “US health group has 40% of Medic Aid”, 11/3/94; Dominion, “Medic Aid sale denied; confusion reigns”, 29/3/94; New Zealand Herald, “American comfortable on Medic Aid”, 19/3/94; Press, “Serious Fraud Office probes Medic Aid sale”, 9/4/94; “Medic Aid sale to court”, 2/5/94, p.28; “Court returns Medic Aid shares to Parsifal”, 7/5/94, p.31; “Medic Aid wants ‘golden parachutes’ repaid”, 11/5/94, p.28; “Deal reached on Medic Aid sale”, 18/5/94.) Griffins Foods of France buys Best Corporation Griffins Foods, until March 1990 a U.S. company, now owned by BSN S.A. of France, is completing a takeover of Best Corporation Ltd. Best, which became 20.01% owned by BSN in June 1993 (see OIC decisions for that month) at 325c a share, is a smallgoods manufacturer formerly owned by the Huljich brothers, Paul, Christopher and Michael. The price paid for Best by BSN is $135,966,000 according to the OIC. BSN offered 400c cash per share in March, which compared with the going price of 300c prior to the takeover bid. At that stage BSN said it was seeking 67% of Best, which it would acquire by taking 100% and then selling back up to 33% to the Huljich brothers, who will remain as directors, at 400c per share. Acceptance for 90% of shares was reported in May. BSN is said to be the sixth largest food multinational in the world and is based in Paris. (Press, “Griffins makes bid for Best”, 31/3/94; “Griffins intends to delist Best”, 2/4/94; “Independent Best directors say sell”, 13/4/94; “Best offer unconditional”, 12/5/94, p.33.) CDL Hotels buys Kingsgate International Corporation Kingsgate International Corporation Ltd, whose main assets are two “tourist related property investments in Australia” is being acquired by CDL Hotels New Zealand Ltd of Singapore. CDL is now the biggest hotel owner in Aotearoa (Press, “CDL tips hotel room rates to rise”, 5/5/94, p.50) with 19 hotels including the former Aotearoa Kingsgate chain. This purchase gives CDL an entry into Australia costing $86,140,789 for 85.34% of the shares. Kingsgate was owned by Mr Ho Whye Chung and Mr Ho Sim Guan of Singapore. According to news reports, CDL in fact acquired only 50.35% of Kingsgate in May (for $50.8 million) from Jit King Investments Pte (presumably a Ho family company) but granted Tai Tak Holdings Pte, also representing the Ho family, a put option (an undertaking to buy from Tai Tak) on their remaining 34.99% of the shares, at the same price per share (Press, “CDL completes Kingsgate acquisition”, 19/5/94, p.24). In June it was announced that Tai Tak would hold onto its shares (Press, “Tai Tak keeps Kingsgate stake”, 2/6/94, p.27). The Australian assets thus acquired are both in Sydney: the 400-room Hyatt Kingsgate Hotel and shopping centre, and the Birkenhead Point waterfront warehouse and marina. CDL Hotels New Zealand is 68% owned by CDL Hotels International Ltd, which in turn is 52.8% owned by City Developments Ltd of Singapore, 37.8% by “offshore institutional investors” and 9.4% by Hong Leong Parties of Singapore. SEABIL buys Fletcher properties $218 million has purchased various Fletcher Challenge Group properties by various subsidiaries of the SEA Holdings Ltd of Hong Kong and Brierley Investments Ltd 60/40 joint venture. The properties (with the relevant purchasing SEABIL subsidiary) are as follows: Penrose Complex, Great South Road, Penrose, Auckland (Charmain Properties Ltd); Prudential Plaza, corner of Lake Road and the Strand, Takapuna, Auckland (Phoebus Properties Ltd); Levels 4-15 and carparks of the ASB Bank Centre, Albert St, Auckland (Octaria Properties Ltd); Ministry of Commerce Building (and carparks), Mowbray St, Wellington; Morrison Morpeth House, 105-109 The Terrace, Wellington (Polonius Properties Ltd). Penrose Complex is FCL’s headquarters. After this consent was given by the OIC, ASB took up pre-emptive rights to buy Fletcher’s 40% stake in the ASB Bank Centre, so SEABIL is not now planning to include that building (Independent, “SEABIL pulls advertising”, 10/6/94, p.26). SEABIL, now the largest commercial property owner in Aotearoa, is at present raising $119 million in a public share issue to raise money for these purchases. The lavish advertising preceding the float included a series of double-page advertisements in the daily papers featuring photos of Jesse Lu, SEA’s managing director. It shouted in 60 point capitals: “Why would a two billion dollar international property company want to invest in New Zealand? The market has turned the corner, now is the right time to be investing in a New Zealand property company.” (e.g. Press, 1/6/94, p.33). (What will be the right place next year?) However it was forced by the Securities Commission to pull out its ads after only one of the two weeks it had planned because the Securities Commission was concerned that they contravened the Securities Act by advertising for funds without a prospectus (Independent, “SEABIL pulls advertising”, 10/6/94, p.26). SEABIL plans to list both here and in Australia. Then 40% will be owned by the public and 60% by SEABIL Pacific, a 70/30 joint venture between SEA Holdings (70%) and BIL (30%). G.E. Crane of Australia buys Mico Wakefield Australian metal and plumbing supplies distributor, G E Crane NZ Ltd, a wholly owned subsidiary of G E Crane Holdings Ltd of Australia, is taking over the Mico Wakefield group, which was in the same business, for $54,250,000. Members of the group sold are: Mico Wakefield Ltd, Mico Wakefield North Ltd, Mico Wakefield South Island Ltd, Metal Import Group Holdings Ltd, and Wakefield Metal Group Holdings Ltd. Air Express of the U.S.A. buys Banner International Air Express International Ltd, owned by Air Express International Corporation of the U.S.A., is buying Banner International (NZ) Ltd for an amount undisclosed even after appeal. This will merge two freight forwarding businesses in Aotearoa. The amount was revealed in October 1996 after a second appeal as $7,500,000. Pacific Group of Singapore buys out Singaporean 55% of The Habitat Group The Singaporean owned Pacific Group Ltd is buying out the Singaporean 54.8% owner of The Habitat Group for $4,018,000. Both are commercial property developers. The Pacific Group is 93% owned by Firle Holdings Ltd, in turn 33.3% owned each by Stanley Tan (Tan Poh Leng) and Freddie Tan of Singapore and George Horsburgh of Aotearoa. The 54.8% share in Habitat was owned by Panoramic Island Ltd, controlled by Messrs Mohan Mulani and H. Dhalomal of Singapore. Habitat and the Pacific Group had close links previously, with Habitat planning a shareholding in Pacific following a share issue (Press, “Property Link proposes 4:1 cash issue”, 3/2/94). It was previously called Property Link Holding which “began returning to the black in its 1991-92 year, having reported a string of losses since being listed in 1986.” (Press, “Property Link springs to life ahead of cash issue”, 12/2/94.) It went back into the red for the six months ended 31 December 1993 (Press, “PropLink back into the red”, 2/3/94). Also closely associated is New Zealand Land, which is controlled by the Pacific Group and has Horsburgh as director (see September and October 1993 decisions). Stanley Tan is no small fry: he publishes The Peak magazine, an “upmarket lifestyle magazine, the Asian equivalent of North and South” and other “lifestyle” magazines in Singapore, as well as being a commercial property owner and having interests in food and paper products. Horsburgh was in foreign affairs for over 20 years, including Aotearoa High Commissioner to Singapore in the mid 1980s. He set up merchant bank Pacific Suisse in 1989, specialising in Singaporean investment in Aotearoa. (Sunday Times, “New Zealand Land rides wave of rising property values”, 13/2/94.) Mohan Mulani took a controlling 75% stake in independent Canterbury Roller Flour Mills in March – a deal too small to need OIC approval. Possibly the smallest company on the Stock Exchange, Mulani clearly took over the company to get a listed company which he intends to “transform into a broader business in the food industry”. In early April Canterbury Roller announced it had sold all its flour-milling assets to Associated Milling, a subsidiary of River Mill Bakeries of Huntly. This leaves River Mill probably Aotearoa’s largest independent bakery, and one of very few independent bakeries that does not depend on one of the giant millers for its supplies. Mulani holds his interest in Canterbury Roller through Transco Asia Pte. It previously had anonymously acquired a total of 13.2% of the company through Rabobank Asia. (Press, “Canty Roller stake”, 5/2/94; “Singapore bid for Canty Roller”, 18/2/94; “Transco increases bid for CanRoller”, 1/3/94; “Canterbury Roller sells fixed flour-milling assets”, 2/4/94; “Flour mill boost planned”, 23/4/94). Prudential Assurance of the U.K. to redevelop Riccarton Mall, Christchurch Prudential Assurance Company Ltd of the U.K. has approval for its subsidiary, Prudential No 5 Fund Nominees Ltd, to redevelop Riccarton Mall, Christchurch, which it owns, for $30 million. Pacific Dunlop of Australia takes over Tyree Power from Swedish owner Pacific Dunlop Holdings (NZ) Ltd, a subsidiary of Pacific Dunlop Ltd of Australia, is taking over Swedish transnational, Asea Brown Boveri Ltd subsidiary, Tyree Power Construction Ltd for “$20-30 million”. “Tyree is currently disposing of its non-core activities world-wide, part of which is the electrical wholesaling business.” Agroforestry Development sells 75% of shares to Chinese government A Singaporean company, Agroforestry Development (NZ) Ltd is selling 75% of its shares to a company owned by the Provincial (the OIC has put “Provisional” but we assume that is a temporary oversight) Government of Gwang Dong of the People’s Republic of China called most inappropriately Fortknox Investments Ltd for $5,855,000. Before the transaction, Agroforestry, and its subsidiary transferred two pieces of rural land they own to Cambridge Nursery Ltd, set up for the purpose and owned by Messrs W.C.S. Chua and K. G. Lee of Singapore, the former owners of Agroforestry. The land is a 57.58 hectare block at Awanui, Northland, owned by Sweetwater Nurseries (NZ) Ltd (formerly an Agroforestry subsidiary, now a Cambridge Nursery subsidiary), sold for nil, and a 95.25 hectare block in Maungatautari Road, Cambridge for $1,500,000. Agroforestry is left with a 557 hectare property at Mangamuka, Northland. (See July 1994 for further developments.) In October 1993, Sweetwater Nurseries (NZ) Ltd acquired a 29.7646 hectare rural property at Awanui, Northland, for “approximately” $160,000. The property was a “former forestry development nursery which is currently owned by the New Zealand Forestry Corporation”, although it “has not been used as a nursery for some years and is in need of redevelopment”. The property “is being acquired to establish a nursery for propagating forestry trees, which will be used principally to plant, and where appropriate, replant forestries recently acquired in Northland”. In July 1993, Messrs Chua and Lee got permission to buy the Mangamuka property for approximately $4 million. “They propose to selectively log the 380 hectares currently planted in Pine and also propose to plant the rest of the property as well as replanting the areas logged.” The vendor was Whangarei Hotel Ltd. In March 1992, Agroforestry was given approval to buy a piece of Crown land being sold “in terms of the Government’s policy to sell non-forest properties which are surplus to requirements”. The land was a 95.2529 hectare rural property on Maungatautari Road, Cambridge, sold for $925,000. Agroforestry said it intended to use it for growing “chestnut products”, paulownia (tree crop) for timber, and herbs, all for export. At that stage Mr Chua was described as a Singaporean resident who “currently spends long periods of each year in New Zealand.” ITT Rayonier has approval to buy forestry on Matakana Island Local subsidiary of ITT Rayonier, Inc (U.S.A.), which has changed its name to Rayonier New Zealand Ltd (perhaps to disguise its link with the infamous ITT), has permission to acquire forestry assets on Matakana Island, including a forestry right over approximately 51.6 hectares of land. They are being bought from Caldora Holdings Ltd for $900,000. ITT’s, and Ernslaw One’s, ownership of forest rights and land on Matakana Island have been the subject of vociferous and effective protests, including a barricade, by Matakana Maori. The results of this and a court case to establish their right to the land are a story in their own right (see March decisions). MRGC (U.S.A.) buys 85 year forestry right over 37 hectares in the Wairarapa In a decision, most of which was initially deleted, a U.S.A. company was given approval to acquire the standing timber and a Forestry Right over a piece of afforested land in the Wairarapa. The name of the company, the term of the right, the area of the land and the price were all suppressed. An earlier decision, in June 1993, where the U.S. company was given approval to acquire the company leasing the land, had not been released either. Appeal initially revealed that the purchaser was MRGC Company which is 50% owned by Merill and Ring Inc of the U.S.A. and 50% owned by Green Crow Corporation of the U.S.A. In June 1993 it was given approval to buy Wairarapa Forest Developments Ltd for a still undisclosed sum. The assets of Wairarapa Forest Developments were not revealed. Further details of the April 1994 decision released in July 1994 showed the June 1993 decision was varied to instead acquire the standing timber and a Forest Right over the land. The term of the Right, the number of hectares, and the consideration were still suppressed. These were released in October 1996: the term of the right is “approximately 85 years“, over 37 hectares, for “approximately $675,000“. Fletchers and RII of the U.S.A. buy 524 hectares in Nelson A U.S.A./Fletcher joint venture is buying 524 hectares of land on the Top House-Korere Road for both farming and forestry for $485,170. Tasman Forestry (Nelson) Ltd, owned by Tasman Forestry Ltd and Fletcher Challenge Ltd, and RII New Zealand Forests I Inc (owned by pension finds and non profitable charitable institutions in the U.S.) are the partners. Ernslaw One buys 1,665 ha. in Manawatu, 1,500 ha. forestry right in Southland Ernslaw One Ltd, of Malaysia, is buying further land in the Manawatu for forestry: 1,665 hectares for $11,200,000. It is also acquiring a forestry right over part of 1509 hectares of land at Slopedown District, Longridge, Southland for $10 (!). “In May 1993 the Commission granted consent to Ernslaw acquiring 1,300 hectares of land at Slopedown District, Longridge from Longridge Ltd. The Commission is advised that incorporated in that contract was the granting of a forestry right to Ernslaw over some of the land which was retained by Longridge. The terms of the forestry rights have now been finalised.” This May 1993 decision was released by the OIC only on appeal, in May 1994, after it was referred to in a March 1994 decision. The price paid for the property was still not revealed. Ernslaw intends to plant Douglas Fir on the property to take advantage of falling production in the Pacific Northwest.
BNZ Capital Issue issues shares to BNZ Bank of New Zealand, subsidiary of National Australia Bank Ltd, is being issued $US119 million of shares by its subsidiary, BNZ Capital Issue Ltd to “enable it to redeem US$119 million preference shares currently on issue to Japanese investors.”
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