Jobs go, jobs come

04/03/2014

Dunedin had some good news yesterday:

Dunedin’s Wall Street mall is to be redeveloped to cater for an expansion of Fisher & Paykel’s operation in the city, which is expected to provide about 70 jobs.

The whiteware company wants to extend its existing lease of office and laboratory space in the Dunedin City Council-owned Wall Street complex in George Street.

This is to provide the design and call centre with capacity for a total of 230 staff, enabling the continuation of a growth plan that will see a 40% increase in design staff numbers by 2018. . .

Another good news story:

Dunedin-based cancer diagnostic company Pacific Edge is to receive $4.5 million in government grants towards research and development over the next three years.

Pacific Edge’s bladder diagnostic tool Cx-bladder is marketed in New Zealand, Australia, the US and soon Europe, and the listed Dunedin company holds patents for diagnostic and prognostic tests across a range of cancers, including colorectal, gastric and melanoma.

Pacific Edge chief operations officer Jimmy Suttie said the Government’s Callaghan Innovation Fund recognised the ability of Pacific Edge to turn scientific discovery into products which brought real benefits. . . .

It also had some bad news:

A sawmill company with about 400 employees and about $100 million in annual sales has been placed in receivership.

Brendan Gibson and Michael Stiassny, of KordaMentha, were this afternoon appointed as receivers of Dunedin-headquartered Southern Cross Forest Products.

The company has four sites in Mosgiel, Milton, Balclutha and Milburn around Dunedin and another site in Thames. In 2012, the last figures available, the company generated revenue of just under $95m. . .

There’s no good time to be worried about job security but it’s not as bad if job growth is strong.

Businesses come and go and so do jobs, and at the moment there’s more coming than going.

 

Photo: More jobs, more opportunities. Under National, New Zealand is going in the right direction. http://www.national.org.nz/bga.aspx


Crafar farms sale finally settled

01/12/2012

It’s taken far longer than it ought to have, but the sale of the former Crafar farms has finally been settled.

Today, after a long and extensive process, the Receivers from KordaMentha have secured final settlement with Pengxin New Zealand Farm Group Limited for the Crafar Farms.

Pengxin New Zealand Farm Group Limited’s offer was accepted by the Receivers two years ago and has been subject to many hurdles, opposition and challenges.

Brendon Gibson of KordaMentha said “despite a long and challenging process, we are happy to have secured the sale of the Crafar farms at a very pleasing price. Following extensive local and international marketing of the farms as individual units and as a group, Pengxin’s offer was far and above the best received so we are very satisfied to secure final settlement.

“We have operated the properties for three years and the farms will be handed over as a full going concern for Pengxin and Landcorp. The farms we inherited required some hard work and investment during a volatile economic environment, the support of our appointing banks, staff and sharemilkers during these challenging three years has been exceptional. We understand the new owners and operators will continue that work and investment in the farms. . .

While I don’t think the government should be farming that is a political view about best use of public money which doesn’t reflect on Landcorp’s ability to manage farms.

The company makes a poor return on capital.

But the farms it owns and manages are generally well run and the former Crafar farms should do much betteer under Landcorp management.

 


Whole greater than sum of parts

08/03/2012

Why did the receivers of the Crafar farms not offer the properties individually rather than only attempting to sell them all as a job lot?

I’ve asked this question several times and it’s been based on a misconception because the receivers did offer the farms separately or together.

A comment from JC yesterday pointed to a column by Fran O’Sullivan who explained:

“But KordaMentha receiver Brendon Gibson confirms there was no real difference between the way the Crafar farms were marketed here and overseas.

The wording used in the advertising material in New Zealand was quite explicit in what was being offered. “There is the potential to purchase a single property, a selection of properties, or the entire portfolio,” the advertisement stated.

This was patently clear in copies of the NZ advertisements which Bayleys placed.

The firm had been instructed to market the portfolio to the widest potential buyer audience possible and secure the best possible outcome by maximising the value of its clients’ property assets.

The receivers are duty-bound to get the best price.

Given there would be a much larger market for individual farms than the whole lot as a package I’d have thought that selling them separately would have raised more money than selling them all together.

Obviously not in this case where the value of the whole is greater than that of the sum of the parts.

It could be that those interested in single properties thought they’d get a bargain and didn’t offer enough. It could be that decent offers were made for the better properties but not enough was offered for the run-down ones.

There might be other explanations, but whatever the reason, the best offer was from  Natural Dairy but was turned down by the Overseas Investment Office. The next best offer was from Shanghai Pengxin and both were for all the farms as a package.


Crafar farm bid approved

27/01/2012

Land Information Minister Maurice Williamson and Associate Finance Minister Jonathan Coleman have accepted the Overseas Investment Office recommendation to approve the sale of the 16 Crafar farms to  Milk New Zealand Holding Limited (Milk New Zealand), a subsidiary of Shanghai company Pengxin.

“It is clear that all criteria under sections 16 and 18 of the Overseas Investment Act 2005 have been met, therefore we accept the recommendation of the OIO to grant consent,” Mr Williamson said.

“We are satisfied that Milk New Zealand’s application for consent meets the criteria set out in the Act,” Mr Coleman said.

The approval follows the receivers, KordaMentha’s acceptance in late 2010 of Milk New Zealand’s bid for the farms.

Milk New Zealand’s acquisition will further support the supply of high quality dairy products into the Chinese market and help set the foundations for further economic and export opportunities with China.

Stringent conditions policed by the OIO will ensure that Milk New Zealand’s investment delivers substantial and identifiable benefits to New Zealand. These include investing more than $14m into the farms making them more economically and environmentally sustainable; protecting the Nga Herenga  and the Te Ruaki pa sites and improving walking access to the Pureora Forest Park and Te Rere falls.  An on-farm training facility for dairy farm workers will also be established.

If the application meets the Act’s criteria the ministers had little choice but to approve the bid.

But this won’t be the end of the matter:

A press release just issued by the Michael Fay backed Crafar Farms Purchase Group says the decision to approve the farm sale to Shanghai Pengxin Group was “wrong in law and, if not overturned by Judicial Review, sets up open season for any foreign buyers wanting New Zealand land.”

The Group said it is the highest New Zealand bidder ($171.5 million), offering $21.5 million more than the Government’s farming SOE, Landcorp.

The Group confirmed it would proceed with a Judicial Review launched earlier this week to try to stop the land from being sold offshore.

But the Herald puts the purchase of the farms into perspective:

The 16 Crafar farms have a combined area of approximately 7,893 hectares.

In the last two years, consent was granted for overseas persons to acquire 357,056 hectares of agricultural land.

Consents granted involving agricultural land by country of majority ownership, are:

* United States to acquire 25,306 hectares of farm land

* Germany to acquire 6,834 hectares of farm land

* Switzerland 9,727 hectares of farm land

* Australia 3,861 hectares of farm land

* United Kingdom 22,600 hectares of farm land

* Hong Kong to acquire 759 hectares of farm land

I don’t remember any fuss over any of those sales nor over the sale of a total of 650,000 to foreigners approved by Labour in the nine years it was in government.

There are very stringent conditions on the sale:

  • The individuals with control of Milk New Zealand must continue to be of good character
  • Milk New Zealand must invest a minimum of NZD $14m in the properties
  • Milk New Zealand and their associates must not acquire an ownership or control interest in milk processing facilities in New Zealand unless a 50% or more ownership or control interest in those facilities is held by non-overseas persons
  • Milk New Zealand must establish an on-farm training facility for dairy farm workers and must meet the capital cost of establishing this facility
  • Milk New Zealand must give two scholarships of not less than NZD $5,000 each year to students of the on-farm training facility with the first two scholarships to be awarded by 31 December 2013
  • Milk New Zealand must use reasonable endeavours to assist Landcorp to extend its business to, and market its products, in China
  • Milk New Zealand must provide public walking access over Benneydale Farm and Taharua Station, in consultation with the Department of Conservation  and the New Zealand Walking Access Commission
  • Milk New Zealand must take reasonable steps to protect and enhance existing areas of significant indigenous vegetation and significant habitats of indigenous fauna and flora on the properties
  • Milk New Zealand must register a heritage covenant in respect of the Te Ruaki pa site on Tiwhaiti Farm
  • If required by the Office of Treaty Settlements, the Applicant must transfer the Nga Herenga pa site (approximately 1.6ha located on Benneydale Farm) to the Crown for nil consideration.

The third point, restricting ownership or control of milk processing here to no more than a 50% share, should allay concerns about food safety and standards.

The OIO’s recommendation is here; the decision summary is here  and background information here.

The only question I’m left with is why the receivers insisted on selling the operation as a whole rather than offering up individual farms.

They say they would not have got as much that way but I find that difficult to believe. The demand for individual farms would have been much greater than it was for the whole operation and therefore the price ought to have been higher.

 


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