Overseas investment decision for case 200810016 - Funds advised by CVC Asia Pacific Limited

3.9113 hectares of freehold comprising:

1. 0.5453 hectares situated at Unit 11, 239 Frankton Road, Queenstown being CT OT18D/1103 (Otago Registry); and
2. 3.366 hectares situated at Blue Water Resort Property, Tekapo-Twizel Road, Lake Tekapo, Canterbury being CT 169043 (Canterbury Registry).

To initially acquire a 65 percent indirect interest in Stella Holdings No. 1 Pty Limited (Stella Group). The indirect interest will result from an acquisition of 65 percent of the shares in a new special purpose vehicle Stella Group Newco (Newco) which will indirectly acquire Stella Group.

To acquire up to a 100 percent indirect interest in Stella Group. The indirect interest results from an acquisition of up to 100 percent of the shares in Newco.

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.

Stella Group's (Target) Background:
Stella Group is a hospitality and travel group with operations in Australia, New Zealand, South Africa and the United Kingdom. The Stella Group's hospitality businesses in Australasia are operated under the Breakfree, Mantra, Peppers and Saville brands and the Protea Hotels and African Pride brands in Africa. Stella Travel Services operates under the Harvey World Travel, Travelscene American Express, Holiday Shoppe, United Travel, Travel Bag and Global brand names.

MFS Limited (MFS), an Australian Stock Exchange listed company, owns Stella Group through a wholly-owned subsidiary, MFS Stella Holdings Pty Limited (MFS Stella Holdings). MFS is looking to sell a majority interest in Stella Group to funds advised by CVC Asia Pacific Limited (CVC Asia Pacific) through special purpose vehicles established for the acquisition.

The Investment:
To effect the transaction, Newco, a special purpose vehicle will be incorporated to acquire Stella Group from MFS. It is proposed that the shareholders in Newco will be funds advised by CVC Asia Pacific (up to an initial maximum of 65 percent) and MFS Stella Holdings (up to an initial maximum of 35 percent). The effect of the proposed transaction is that MFS sells down its stake in Stella Group and funds advised by CVC Asia Pacific acquire up to 65 percent of Stella Group.

Funds advised by CVC Asia Pacific also seek consent to acquire up to 100 percent of the shares in Newco to provide for any further adjustments in the shareholding including any equity injections that may be made to facilitate the development plan of Newco.

Rationale for the Investment:
CVC Asia Pacific carries out the business of advising on investments in companies that demonstrate potential to grow and deliver increased value to the CVC Asia Pacific fund investors over the medium term. CVC Asia Pacific believes that the investment in the Stella Group represents an opportunity to acquire profitable, market leading businesses with significant prospects for growth and value creation.

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 Regulations 2005:
r28(c) - Adversely affect image, trade, or international relations;
r28(e) - Previous investments; and
r28(f) - Advance significant Government policy/strategy.