Overseas investment decision for case 200810014 - NZ Poultry Enterprises Limited

107.1367 hectares of freehold comprising:

1. 3.5321 hectares situated at 250-260-270 Flanagan Road and 89-95 Tegal Road, Papakura, Auckland being CT NA24A/874, NA42C/1168, NA42C/344 and NA127A/327 (North Auckland Registry);
2. 89.9773 hectares situated at 26 Wortley Road, Lepperton, New Plymouth, 58 - 78 Brown Road, Waitara, 585 Manutahi Road, Waitara, 55 Hickman Road, Onaero,Taranaki being CTs TN121/117, TNH3/622, TN138/178 and TNB2/900 (Taranaki Registry); and
3. 13.6273 hectares situated at 313-315 Hautere Cross Road, Otaki being CT WNF4/1161 (Wellington Registry).

48.3188 hectares of leasehold comprising:

1. 2 hectares situated at 168 Avenue Road, New Plymouth being TN129/154 (Taranaki Registry); and
2. 46.3188 hectares situated at 203-207 Dunns Crossing Road, Christchurch being CT CB772/69 (Canterbury 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:
NZ Poultry Holdings Limited (NZPHL) received consent to acquire 100 percent of Tegel Foods Limited (Tegel) on 29 March 2006 (refer A200610010/D200610036). Tegel is a fully integrated poultry producer involved in the breeding, hatching, feeding, growing, processing, and marketing of chicken and turkey in New Zealand. Tegel's products include fresh, frozen and cooked whole chickens, chicken portions, and other value added products.

Tegel's operations include three major processing facilities, a smaller value-add processing plant, and breeding and hatching facilities. Tegel also owns and operates feedmills in New Zealand. The feedmills produce feed used internally at Tegel and sold through Tegel's animal feed and animal health division, NRM. NRM is New Zealand's leading supplier of animal feed and animal health products. It provides feed to retail merchants and industrial customers.

Outline of the Investment:
NZPEL, the shareholders of which are Pacific Equity Partners (PEP) - 44 per cent Intermediate Capital Group plc (ICG) - 6 per cent, ANZ Bank managed funds -27 per cent, Tegel Management -13 per cent and Lujeta - 10 per cent, proposes to acquire (through a wholly-owned subsidiary NZ Poultry Finance Limited) up to 100 percent of the shares in NZPHL. NZPEL will then indirectly own 100 percent of the shares in Tegel.

In effect PEP and ICG, are selling down their respective stakes - PEP from 84.6 percent to 44 percent and ICG from 12.4 percent to 6 percent and Tegel Management increasing their shareholding by 10 per cent. The new investors, ANZ Bank managed funds and Lujeta are acquiring a 37 percent interest.

Rationale for the Investment:
NZPEL's intended strategy for Tegel is to operate Tegel's business substantially as it has been operated to date and to continue to support management plans for growth and productivity improvements. The individuals associated with the proposed owners of NZPEL are highly experienced directors and will continue to provide high level strategic advice to Tegel.

The proposed overseas investment is or is likely to benefit New Zealand (or any part of it or group of New Zealanders) having regard to the following factors:

Overseas Investment Act 2005:
s17(2)(b) - Indigenous vegetation/fauna;
s17(2)(c) - Trout, salmon, wildlife and game;
s17(2)(d) - Historic Heritage;
s17(2)(e) -Walking access;
s17(2)(f) - Offer to sell seabed/foreshore to the Crown.

Overseas Investment Regulations 2005
r28(b) - Key person in a key industry;
r28(c) - Adversely affect image, trade, or international relations; and
r28(e) - Previous investments.