Affinity gets all-clear for Tegel

Tegel chicken sits on sale at an auckland supermarket. Photo / Kenny Rodger

The private equity owners of troubled clothing company Colorado have been given the all-clear by the Overseas Investment Office (OIO) to buy Tegel Foods for a reported $600 million.

The OIO announced this week that Affinity Equity Partners had received approval to buy 100 per cent of NZ Poultry Enterprises, and therefore will indirectly acquire Tegel Foods.

OIO approval is needed when a foreign company wants to buy more than $100 million of sensitive New Zealand assets.

The investment includes a leasehold interest in 46.3 hectares of land in Canterbury, 12.8 hectares in Taranaki and a freehold interest in 21 hectares in New Plymouth.

Singapore company Claris Investment Pte applied to the OIO for approval - it is owned by three limited partnerships associated with Affinity Equity Partners.

Pacific Equity Partners owned 43 per cent of NZ Poultry Enterprises. Other major shareholders included ANZ, with 30 per cent, and Tegel Management NZ, with 14 per cent.

The OIO said Affinity Equity Partners wanted to further expand the business and the company's product range to help Tegel reach "its full potential". The buyout is expected to create and help retain jobs for the approximately 1500 people who work for Tegel, increase exports, increase processing of primary products and create additional investment for development purposes.

The OIO said the investment transaction had satisfied the criteria of the act. This is some good news for Affinity Equity Partners' Australian portfolio. Its clothing chain Colorado - which also owns Colorado Adventurewear, Williams the Shoemen, JAG, Diana Ferrari and Mathers Shoes - was placed into voluntary administration by its board this week.

The board was forced into the move after proposals to boost the company's earnings and growth were rejected by its lenders. Colorado said this week that it was likely the group's lenders - NAB, Rabobank - would appoint receivers in response to the administration.

Affinity Equity Partners bought the group in 2006 for A$430 million. The board said it was disappointed lenders had rejected the proposal as it believed the group could have remained trading if the restructuring had been given the green light.