Overseas investment decision for case 200820038 - Pacific Equity Partners Fund II/III

1. 3.5321 hectares situated at Flanagan Road and Tegal Road, Papakura being CTs NA42A/874, NA42C/1168, NA42C/344, and NA127A/327 (North Auckland Registry);
2. 89.9728 hectares situated at Wortley Road, Lepperton, 585 Manutahi Road, Waitara, 58-78 Brown Road, Waitara, and 55 Hickman Road, Onaero being CTs TN121/117, TNB2/900, TN138/178, and TNH3/622 (Taranaki Registry); and
3. 13.6273 hectares situated at Hautere Cross Road, Otaki being CT WNF4/1161 (Wellington 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:
Tegel Foods Limited (Tegel) is an indirect wholly-owned subsidiary of NZ Poultry Enterprises Limited (NZPEL). 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.

Pacific Equity Partners Pty Limited and its related entities (collectively referred to as PEP) currently holds 43.13 percent of the ordinary shares in NZPEL.

Outline of the Investment:
Tegel Foods Limited (Tegel) has entered into an agreement to purchase the poultry business known as Brinks. In order to partly fund the acquisition of Brinks, NZPEL proposes to undertake an equity raising, whereby the shareholders of NZPEL will be offered an opportunity to acquire ordinary shares in NZPEL on a pro rata basis. PEP has indicated that it will subscribe for new shares in NZPE to the full extent of its entitlement. As a result of this and certain shareholders not opting to take up their entitlements, PEP will increase its percentage ordinary shareholding in NZPEL from 43.13 percent to 45.45 percent. To enable flexibility PEP seeks consent to acquire up to 100 percent of the shares in NZPEL.

Rationale for the Investment:
The acquisition of shares in NZPEL by PEP pursuant to the equity raising will provide funding to enable Tegel to complete the proposed acquisition of Brinks. PEP's investment strategy is to invest in business opportunities where PEP's management expertise, capital resources and understanding of financial structuring enables it to improve the operating performance and create value in the relevant business. PEP's strategy for Tegel is to operate the business substantially as it has been operated to date and successfully implement growth and productivity improvement strategies. 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(e) - Previous investments.