Northland forest part of multi-million dollar deal
Wednesday 12 Jan 2011 6:07 p.m.
The 11,000ha Mangakahia forest near Dargaville in Northland is the main asset in a $US77 ($NZ101) million forestry deal among foreign owners reported to the Hong Kong stock exchange.
Hong Kong-listed Greenheart Group, which changed its name from Omnicorp Ltd, said it is buying MFV Ltd, which owns 13,000ha of freehold land with radiata pine plantations, the largest of which is Mangakahia, from its controlling shareholder Sino-Forest Corp for $US77m. Sino-Forest is a forest plantation owner listed on the Toronto stock exchange.
Greenheart plans to raise $US37m via a share issue to help fund the transaction. The $US40m balance will be funded through a loan either provided by or guaranteed by Sino-Forest, which has some 726,000ha of tree plantations across China.
In October last year New Zealand's Overseas Investment Office granted approval for Sino-Forest to buy the Mangakahia forest from GFP Mangakahia Forest Venture Ltd, which was associated with global forest investor Global Forest Partners. The value of that transaction was not disclosed.
At that time Sino-Forest was 30 percent owned by the Canadian public, and 6.8 percent owned by the Singapore government. US investors held 20.9 percent, Paulson & Co of the US had 16.3 percent and Davis Advisors of the US had 12.8 percent. The vendor had Saudi Arabian, US, Danish, Australian and Swiss shareholders.
Greenheart is to become a vehicle for forest asset ownership and as part of the agreement, it has the option to sell up to $US210m worth of logs, standing timber, agri-forest, timber-related and other agri-related products to Sino-Forest over the next three years.
"China's demand for New Zealand radiata pine has increased significantly with New Zealand being the second-largest exporter of softwood into China after Russia," Greenheart chief executive and Sino-Forest vice-chairman Judson Martin said.
"Bringing these New Zealand assets into our portfolio is the first major initiative of our profitable investment and sustainable growth strategy for 2011."
Sino-Forest has a controlling 59 percent in Greenheart.
Foreign ownership of New Zealand farmland has been an issue, particularly as the global financial crisis has triggered a number of transactions.
Many of the plantation forests in Northland were developed by New Zealand Forest Products, which became part of Carter Holt Harvey. Carter Holt Harvey is now owned by New Zealand billionaire Graeme Hart, who is developing a global beverage packaging business.
Carter Holt once had a 330,000ha forest estate, which has been sold. In 2005, 95,000ha of its forests were sold for $NZ441m.