Overseas investment decision for case 200520060 - Stirling McArthur Limited

422.985 hectares of freehold situated at McArthur Ridge, Springvale Road, Alexandra being part CTs 1101, 21393, 101111, 101112, 101115, 101116, 101119, 101123, 101124, 101125, 101126, 101128, 101129, 101130, 101131, 101132, and 101133 (Otago Registry);

443.1045 hectares of Memorandum of Encumbrance situated at McArthur Ridge, Springvale Road, Alexandra being part CTs 1101, 21393, 101111, 101112, 101115, 101116, 101119, 101123, 101124, 101125, 101126, 101128, 101129, 101130, 101131, 101132, and 101133 (Otago Registry).

443.1045 hectares of Profit a Prendre situated at McArthur Ridge, Springvale Road, Alexandra being part CTs 1101, 21393, 101111, 101112, 101115, 101116, 101119, 101123, 101124, 101125, 101126, 101128, 101129, 101130, 101131, 101132, and 101133 (Otago Registry).

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the Applicant has business experience and acumen relevant to and is demonstrating financial commitment towards the investment.  The Overseas Investment Office is further satisfied that the persons who exercise control over the Applicant are of good character and not the kind of persons referred to in section 7(1) of the Immigration Act 1987.

Central Otago Pinot Noir Estates Limited (COPNEL) acquired 817.694 hectares of land, near Alexandra, known as McArthur Ridge, in December 2002.  COPNEL has commenced the development of a Pinot Noir vineyard with the intention of selling the land and vineyard following a subdivision of the land into at least 60 allotments, in three stages, ranging in area from 4 to 19 hectares on which individual dwellings can be constructed.  COPNEL has reserved a total of 16 allotments (totalling 107.5 hectares) for separate sale.  The sale of 8 COPNEL allotments have settled to date.  A further four infrastructure allotments (totalling 33.798 hectares) have been created for irrigation dams and associated infrastructure.  The sale of the subdivided allotments will fund the set up and development costs incurred by COPNEL.

Consent was granted on 17 March 2005 (refer A200510013) for Remarkable Estates Limited (REL) to acquire 6 Stage 1 allotments (of which one allotment is the subject of a resource consent application to divide into two allotments) totalling 53.9175 hectares, 12 Stage 2 allotments totalling 121.971 hectares, and 12-25 Stage 3 allotments totalling 267.216 hectares, and a share in the infrastructure allotments from COPNEL.  (Since this consent was granted, the Stage 1 allotments have sold (5 to the Applicant (refer A200510131)) and 1 to GP Taggart (refer A2005100134)).

This proposal is for the Applicant to enter into a joint venture arrangement with Simon Holding (the shareholder of REL), whereby the Applicant will acquire all of the shares in REL and take over the responsibility for further development and selling down the remaining lots.  This will enable Simon Holding to concentrate on, and invest in, the vineyard management side of the development (CVL).  The acquisition of the shares and the involvement by the Applicant in the overall development is likely to provide COPNEL with the certainty required to enable the completion of the proposed development and expertise to further promote the project to investors.  In this regard the Applicant has expertise in the investment in, and sale of, land and property worldwide, and its involvement in the McArthur Ridge development is likely to better ensure the success of the development.

Pursuant to an Agreement with COPNEL, REL also proposed to purchase the vines and the vineyard assets and infrastructure, market and sell the allotments to third parties, subject to a profit a prendre in favour of REL allowing REL to harvest the grapes on the allotments, purchase the remaining lots not sold to subsequent purchasers, purchase a share in the infrastructure allotments held together with the owners of COPNEL's allotments, and take over the management responsibilities of the development via purchase of shares in the management company.  A memorandum of encumbrance will be registered against the allotments, the provisions of which are designed to ensure that the character of the development as a premium lifestyle development will be maintained.

COPNEL had entered into an agreement with McCashin Wines Limited (McCashin) pursuant to which McCashin has been contracted to manage the vineyard and to purchase the grapes from the vineyard.  This agreement has now been assigned to Central Viticulture Limited (CVL), a company owned and managed by parties associated with COPNEL and the management company established by COPNEL, McArthur Ridge Management Limited.  It is also proposed that Simon Holding will have an investment in CVL.  A site has been earmarked for a wine processing plant to process grapes from the development and other properties in the Central Otago district.