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TransAlta takes control of EnergyDirect TransAlta Energy Corporation of Canada subsidiary TEC Utilities Ltd gained approval this month to take a further 21% shareholding in Hutt Valley electricity and gas supply company, EnergyDirect Corporation Ltd for $69,004,433. TEC at the time had “approximately 20%” of EnergyDirect. This limit was forced by company rules disallowing any one shareholder more than 20% of EnergyDirect, a cap common amongst newly privatised power supply companies to protect local control. A month earlier, in August, TransAlta was working to persuade Takapuna electricity supply company, Power New Zealand (itself 34% controlled by Utilicorp of the U.S.A.), to sell its 20% stake in EnergyDirect, and to persuade the EnergyDirect Community Trust which is a major shareholder in EnergyDirect, to vote to remove the share cap (Press, “Canadians move to raise stake in EnergyDirect”, 4/8/95, p.18). The removal of the cap was forced by the Stock Exchange which banned such caps as a condition of listing (Press, “Power company listings at risk”, 26/8/95, p.22). A 75% majority of shareholders was required to vote for the removal of the cap, but TransAlta made a conditional purchase of Power New Zealand’s 20% and Todd Electricity Securities’ 0.92% on September 12 (Press, “Wgtn power merger closer”, 13/9/95, p.28), and obtained the approval from the OIC in anticipation of that vote on September 13. TransAlta had previously used its 20% stake to prevent a merger between EnergyDirect and Power New Zealand using a absurdly hypocritical “local control” rationale; hence the readiness of Power New Zealand to sell its shares (see commentary on the November 1994 OIC decisions). Eventually TransAlta persuaded the EnergyDirect Shareholders’ Protection Association and the Community Trust to support removal of the cap, despite opposition from the lobby group, Community Power (Press, “Way cleared for TransAlta”, 20/9/95, p.27) and the vote went 39 million for and 700,000 against, a week after the OIC approved the sale (Press, “Vote waives EDirect cap”, 23/9/95, p.24). The formal sale of shares went through in early October giving Power New Zealand a handy $20 million profit (Press, “Power NZ sells EDirect”, 7/10/95, p.27). TransAlta is regarded as a “cornerstone shareholder” in EnergyDirect with 41% of the shares. In November Mike Pavey, TransAlta’s senior vice-president and chief financial officer, was appointed to EnergyDirect’s board giving TransAlta effective control through a formal agreement with the Community Trust. However the Shareholders’ Protection Association fears TransAlta’s control will mean job cuts and big rises in power prices. EnergyDirect chairman Ron Arbuckle and Community Trust chairman John Burke agreed that job cuts were possible through contracting out maintenance work, but claimed “large” increases in power bills were unlikely. (Press, “New post likely to hasten power merger”, 11/11/95, p.27.) TransAlta also has management control of the neighbouring Wellington city power company, Capital Power, through a 49% shareholding. The Wellington City Council owns the other 51%. A merger of the two companies appears inevitable. TransAlta’s control of both companies has been followed by discussions expected to lead to firm merger proposals. (Press, “Wgtn power merger closer”, 13/9/95, p.28; “New post likely to hasten power merger”, 11/11/95, p.27.) TransAlta also is one third of a consortium (with Fletcher Challenge and Auckland power company, Mercury Energy) which took over the construction of the controversial Stratford power station when Todd Petroleum and U.K. company National Power were forced to withdraw (see commentary on July 1995 OIC decisions). Changes in the Insurance industry The insurance industry features in three approvals which appear to have received little press coverage: Sun Alliance Insurance Ltd, a subsidiary of Sun Alliance Group Plc of the U.K. has approval to acquire Commercial Union General Assurance Company from its parent Commercial Union Pte of the U.K. Commercial Union has operations in Wellington and Auckland. The price has been suppressed. Hunter Premium Funding Ltd, a subsidiary of MMI Ltd, a public company from Australia is setting up in Auckland for a sum that “exceeds $10,000,000”. “It has identified New Zealand as an opportunity for expanding its Australian operation of funding commercial insurance premiums… the target markets will be the insurance pool managed by local and international insurance brokers which currently generates very little funding. The applicants claim that their entry to the market will bring significant expertise to the New Zealand insurance industry.” And the AMP Society of Australia is “rearranging the way it conducts its New Zealand business” by setting up AMP General Insurance Ltd for “in excess of $10,000,000“. “It is moving from a New Zealand subsidiary operation to a branch operation”. Wattyl takes over Taubmans architectural and decorative paint business In a decision initially almost completely suppressed but released on appeal in March 1996, Wattyl (NZ) Ltd, a subsidiary of Wattyl Ltd of Australia, has approval to “acquire the architectural and decorative paint business of the Taubmans ‘group’ in New Zealand” for $9,500,000. Taubmans is owned by Courtalds Plc of the U.K. “The acquisition will result in the rationalisation of the manufacture process of both the Taubmans and Wattyl brands. It is claimed that this will have the ability of containing costs and should result in increased competition on price amongst manufacturers and wholesalers”. Interesting grammar. Strange how reduced competition leads to increased competition in these companies’ minds. Increase in Singapore Government share in BellSouth cellphone network The Singapore Government has approval to increase its shareholding in the BellSouth cellular phone network from 20% to 35%. The price is suppressed. Singapore Technologies Pte Ltd (ultimately owned by the Singapore Government) currently has 20% share in BellSouth New Zealand Partnership, with the other 80% held by BellSouth Enterprises Incorporated of the U.S.A. The increased interest is through subsidiaries Singapore Technologies Cellular (NZ) Pte Ltd and/or ST Telecommunications Pte Ltd. “Singapore Technologies has interests in new technology ventures throughout the world and its interest in the BellSouth mobile telephone network is in keeping with its technology focus.” BellSouth is Telecom’s only current competitor in the cellphone market, claiming 90% coverage of the country but probably only 5% of the market. Its strategy is to pick the eyes out of the market: business and heavy users. It claims problems with local authorities in establishing its cellphone sites (for example local residents in Christchurch are currently fighting its sites on health grounds), but interestingly it has never applied to the OIC for purchase of such sites, though Telecom regularly does so. (Press, “Bell Sth nears 90% cover”, 19/6/95, p.32.) BellSouth is rumoured to be interested in buying part of Telecom’s main toll competitor, Clear Communications. Unilever’s Abels division sold Unilever Plc of the U.K. is selling its Abels division in Aotearoa to Aspak Foods Ltd, which is equally owned (33.3% each) by the New Zealand Dairy Board, “New Zealand based dairy companies”, and Goodman Fielder Ltd of Australia. As the OIC points out, “the acquisition will result in the Abels business reverting to majority New Zealand ownership”, though in fact Aspak is by law an overseas company, being more than 25% overseas owned. The price has been suppressed. Abels was owned by Unilever New Zealand Ltd, a subsidiary of the U.K. parent. Auckland Airport Hotel sold to Hotel Grand Central of Singapore Grand Central (NZ) Ltd, a subsidiary of Hotel Grand Central, a Singaporean public listed company, has approval to buy the Auckland Airport Hotel in Manukau City for $19,150,000. The hotel is owned by Auckland Airport Hotel Ltd. “Hotel Grand Central has experience and expertise in owning and operating hotels in New Zealand, Australia, Malaysia and Singapore … they propose to institute a refurbishment/improvement programme for the hotel.” In July 1995, they were part of a Singapore/Malaysia consortium which bought the James Cook Hotel and associated car park and commercial and retail properties in Wellington for $37,500,000. It has other properties in Auckland, Wellington and Christchurch (see the July decisions). Janz gets approval to buy Meat Board’s shares in ANZCO In a decision initially almost wholly suppressed and released only on appeal in March 1996, Janz Investments Ltd of Japan has approval to take over the 64.9% interest in ANZCO (Asian New Zealand Meat Company Ltd) owned by the New Zealand Meat Producers Board for a still suppressed amount. That amount was released in October 1996: it is $36,500,000. “The New Zealand Meat Producers Board has been seeking an opportunity for some time to divest itself of its commercial interest in ANZCO.” Janz is owned 53.25% by Itoham Foods, 17.75% by Nippon Suisan Kaisha of Japan, 17.75% by Romney No 19 of Aotearoa, and 11.25% by various employees of ANZCO. The other shares in ANZCO are owned 23.5% by Huttons Kiwi Ltd and 11.6% by ANZCO management. Tiong family of Malaysia continues to expand interests in fish and forestry The Tiong Family of Malaysia continues to extend its interests in Aotearoa. It is buying two further substantial areas of land for forestry development, and it is increasing its control of fish farming. The blocks of land, both being sold to Ernslaw One Ltd, a Tiong company, are:
The fish farming company is Regal Salmon Ltd. Before the latest approvals, it was owned 24.8% by Sheikh Suliman Olayan of Saudi Arabia and 11.29% by Oregon Forestry (NZ) Ltd, a Tiong family company. Regal owns fish farms on Stewart Island and in Marlborough. The first approval relates to an issue of a further 20,423,518 25 cent shares to Oregon for $5,105,880 which will give it 41.3% of Regal. In addition it acquired convertible notes issued in April 1995, which when converted (by March 1997) will give Oregon 47% of Regal. The second approval takes this even further: Sheikh Suliman Olayan “wishes to realise his investment” and is selling 7,107,892 shares (12.4%) to Oregon for $1,492,657, apparently giving the Tiongs an immediate 53.7% of Regal. “Apparently”, because news reports quote Regal’s (and Oregon’s) managing director Thomas Song as saying the purchase brought the Tiong’s shareholding to 35.55% of the ordinary shares, 71.35% of the partly-paid shares and all of the convertible notes. The Tiong’s 70% control of Aotearoa’s fish farming was described in our commentary on the August decisions. (Press, “Tiong nets Regal Salmon shares”, 4/10/95, p.29.) Six more blocks of land bought for forestry by Carter Holt Carter Holt Harvey Ltd, 51% owned by International Paper Products of the U.S.A. has approval to buy six blocks of land, totalling 3,050 hectares and $4,669,400, all “to enable it to establish new forest areas to provide the necessary renewable resource for its forestry related operations”:
And while on the corporates, cell phone sites are springing up all over, with Telecom Corporation of New Zealand Ltd subsidiary, Telecom Mobile Communications Ltd, buying up no less than seven small sites around the country this month. All had the price suppressed. They were:
In August 1997 the prices for three were partially released on appeal, all still having a “premium” suppressed:
In February 1998 the prices for two more were partially released on appeal, again both still having a “premium” suppressed:
And more blocks of land sold to Taiwanese investors Deborah Miller of Brookfields, Auckland is organising the sale of further blocks of North Island land for forestry development under local managers. Again they are at Broadwood, Northland and Paparangi, Wanganui, but there are some interesting twists this month:
In other rural land:
In internal restructuring,
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