Overseas investment decision for case 200720045 - ArborGen LLC

170.4421 hectares of freehold comprising:

1. 27.1368 hectares situated at State Highway 12, Kaikohe being CTs NA49A/209, NA408/142 and NA95C/849 (North Auckland Registry);
2. 54.9177 hectares situated at 14 Iona Road/Old Taupo Road, Tokoroa and 1927 State Highway 30, Te Teko being CTs 149742, 149743 and 317587 (South Auckland Registry;
3. 48.177 hectares situated at Puha Nursery, Te Karaka, Gisborne being CTs GS5C/1232, GS6C/1271, GS5C/1233 and GS3A/1461 (Gisborne Registry);
4. 27.031 hectares situated at 2765 State Highway 63, Wairau Valley and 939 Seaview Road, Seddon, Marlborough. being CTs MB5D/28 and MB6A/589 (Marlborough Registry); and
5. 13.1796 hectares situated at Nelson Nursery, State Highway 6, Spring Grove, Nelson being CTs NL143/71 and NL12B/877 (Nelson Registry).

84.7312 hectares of leasehold comprising:

1. 71.1613 hectares situated at Old Taupo, Tokoroa, State Highway 1, Campbell Road, Wawa Road, Kinleith Road, Tokoroa being CTs SA67C/715, SA67C/716, SA64B/303, SA64B/304 and SA24B/869 (South Auckland Registry); and
2. 13.5699 hectares situated at Puha Nursery, Te Karaka, Gisborne being CTs GS3C/751, GS3B/540 and part CT GS2B/295 (Gisborne Registry).

The application has been approved as it met the criteria.

The Overseas Investment Office is satisfied that the individuals with control of the Applicant collectively have business experience and acumen relevant to the overseas investment, and that the Applicant has demonstrated financial commitment towards the overseas investment. The Overseas Investment Office is further satisfied that each individual that exercises control over the Applicant is of good character and is not an individual of the kind referred to in section 7(1) of the Immigration Act 1987.

Background to the Investment:
In March 2004, Carter Holt Harvey Limited (CHH) and Rubicon Limited (Rubicon) entered into a joint venture, merging their forestry biotechnology and treestock propagation operations (being CHH's Carter Holt Harvey Forest Genetics Limited (CHH Forest) and Rubicon's Trees & Technology (T&T)) into a new venture - Horizon2 Limited (Horizon2). Horizon2 is an incorporated partnership, with T&T and CHH Forest each holding a 50 percent interest in both the partnership and the incorporated entity. Horizon2 is a specialist forest biotechnology business and the largest producer of softwood treestocks in Australasia. Horizon2 operates from nurseries situated at Kaikohe, Te Teko, Tokoroa, Gisborne and Nelson in New Zealand and Colac in Australia.

The Investment:
T&T proposes to acquire the 50 percent of the partnership and 50 percent of the shares in Horizon 2 that are currently owned by CHH Forest, resulting in T&T owning 100 percent of Horizon2. Following completion of T&T's acquisition, it is proposed that ArborGen LLC (ArborGen) will acquire the business and assets of Horizon2 Limited from T&T and Rubicon.

Rationale for the Investment:
The three ArborGen partners (International Paper Company, MeadWestvaco Corporation and Rubicon) are combining each of their non-genetically enhanced (GE) tree improvement programmes in order to create a global business in this field. Rubicon is proposing to combine the assets and operations of Horizon2 with the other non-GE improvement programmes of the other two partners in ArborGen for this purpose.

The proposal is likely to result in the following benefits:

1. the creation of new job opportunities;
2. the introduction into New Zealand of new technology and business skills; and
3. increased efficiencies to the Horizon2 business.