Overseas investment decision for case 201310050, 201320029 - Elders Limited

An overseas investment in sensitive land, being the Applicant's acquisition of:

• rights or interests in 50.0% of the issued share capital of Elders Rural Holdings Limited; and
• rights or interests in 70.0% of the shares of Elderstock Limited; and
• rights or interests in 70.0% of the shares of Elderstock (SI) Limited; and
• an option for the acquisition of rights or interests in 100.0% of the shares (as defined in the share option agreement dated 21 December 2007) of Sredle Rural Services Limited (formerly Elders Rural Services Limited); and
• rights or interests in 100.0% of the Mandatory Convertible Capital Notes issued by Sredle Rural Services Limited (formerly Elders Rural Services Limited) under an application and agreement dated 8 January 2008, which convert to ordinary shares in certain circumstances.

which collectively own or control:

• a freehold interest in 11.8083 hectares of land at Wellsford Saleyards, Centennial Park Road, Wellsford; and
• a freehold interest in 3.2621 hectares of land at Hunterville Saleyards, Gordon Terrace, Hunterville; and
• a freehold interest in 4.7266 hectares of land at Te Kuiti Saleyards, Cotter Street, Te Kuiti; and
• a freehold interest in 7.7749 hectares of land at Masterton Saleyards, Norfolk Road, Masterton; and
• a freehold interest in 9.5250 hectares of land at Tuakau Saleyards, Tuakau Saleyards Road, Tuakau; and
• a freehold interest in 7.3172 hectares of land at Kaikohe Saleyards, Mangakahia Road, Kaikohe; and
• a freehold interest in 5.1047 hectares of land at Whangarei Saleyards, Saleyards Road, Whangarei; and
• a freehold interest in 1.7912 hectares of land at Dargaville Saleyards, River Road, Dargaville.

In 2005/2006, a joint venture transaction resulted in a wholly owned subsidiary Elders Global Wool Holdings Pty Limited acquiring 50% of the shares in Elders Rural Holdings Limited and 70% of the shares in Elderstock Limited and Elderstock (SI) Limited. In 2007 Sredle New Zealand Limited granted Elders Rural Services Limited an option to acquire all the shares in Sredle Rural Services Limited. In 2008 Sredle Rural Services Limited issued 12,007,277 Mandatory Convertible Capital Notes to Elders Rural Services Limited.

The rationale for the acquisition of the securities was to expand Elders' network from Australia to New Zealand.

The overseas investment transaction has satisfied the criteria in section 16 of the Overseas Investment Act 2005. The 'substantial and identifiable benefit to New Zealand' criteria were satisfied by particular reference to the following factors:

Overseas Investment Act 2005
17(2)(a)(i) – Creation of jobs
17(2)(a)(iii) – Increased export receipts
17(2)(a)(iv) – Added market competition
17(2)(a)(v) – Additional investment for development purposes

Overseas Investment Regulations 2005
28(a) – Consequential benefits
28(c) – Affect image, trade or international relations
28(j) – Oversight and participation by New Zealanders