Brierley may keep Sealord investment

By LIBBY MIDDLEBROOK and VANESSA BIDOIS

Brierley Investments may retain its 50 per cent stake in Sealord, the country's largest fishing company, after the Government rejected all overseas bids for Brierley's holding in the Nelson company.

The Government says it turned down the foreign bids for Brierley's holding because it was not in the public interest.

The offices of Finance Minister Michael Cullen and Fisheries Minister Pete Hodgson are understood to have notified the bidding parties two hours before final offers were due in last Friday.

Singapore-based Brierley chief executive Greg Terry said that the company was in no hurry to sell out to the remaining New Zealand bidding parties, despite investing thousands in the sale process during the past two months.

He said the company's Sealord investment was arguably its best performing asset, generating a 20 per cent rate-of-return on its seven-year-old investment.

"This is an asset we can easily afford to keep. If at the end of the day we can't get a fair price for the stake, we'll keep it. As things stand it's already meeting our earnings criteria and the thresholds we've set ourselves.

"It's arguably our best performing asset so we're not in any real hurry."

Earlier this year, Brierley said it wanted to sell its holding in Sealord, estimated to be worth $200 million, as part of a strategic review of all non-core assets.

The Waitangi Fisheries Commission, which holds 23 per cent of the national fishing quota, owns the remaining 50 per cent.

Meanwhile, the commission is under pressure to snap up Brierley's half share. It has a pre-emptive right to the stake.

Ngapuhi principal negotiator Dick Dargaville yesterday warned of further legal action if the commission failed to capitalise on the opportunity.

A barrage of litigation has already bogged down the commission's contentious allocation model for the $700 million asset base.

Mr Dargaville - who will meet negotiators from Tainui, Ngai Tahu, Muriwhenua and the Maori Council this week - said the original brokers of the fisheries settlement had always intended that Maoridom would own the Sealord company.

He said the commission would be commercially negligent if it reneged on that commitment.

Several foreign investors are understood to have taken part in the due diligence process during the past few weeks through Deutsche Bank, which is handling the sale process on behalf of Brierley.

Sanford and Nelson-based Amatal have also made a joint bid for the 50 per cent stake.

Mr Terry said the Government's decision to reject foreign bids for Brierley's half-share had obviously affected the number of qualified bidders. Brierley would consider its options during the next few weeks, which include selling a smaller share of its Sealord holding to an overseas party.

Overseas investors can buy up to 24.9 per cent of a New Zealand quota-holding fishing firm but need Government approval to buy more.

Mr Terry said none of the New Zealand parties had reduced their bids in light of the Government announcement. Some of the foreign parties had not been able to file their bids on Friday because of the Love Bug computer virus.

"[The Government decision] doesn't have any effect on the value of the company or its profitability, so it shouldn't affect the offer price.

"We may or may not sell, we have to see what's possible in light of the announcement, what sort of figures are on offer and then we'll decide where we go from here."

Meanwhile, market players were left reeling from the Government's announcement. One senior industry leader said it had diminished competition and would have an effect on the value of Brierley's stake in Sealord.

"It must knock the value off, clearly it has to."

Another industry leader said a portion of Brierley's holding in Sealord should be sold to an overseas investor in order to expand its international business.

And he said the Government's last-minute decision to knock out foreign bidding parties had harmed New Zealand's reputation overseas.

"The Government's totally irresponsible to let everyone go through the due diligence process and then pull the rug two hours before the close of bids. It doesn't send a good signal around the world.

"It makes us look like a banana republic when you invite people into a process of due diligence, which is not likely to run you much less than quarter of a million dollars, and then pull out the rug from under them."

The Waitangi Fisheries Commission holds a pre-emptive right over the sale of Brierley's 50 per cent stake in Sealord.

The commission is understood to be divided over whether to make a bid following the Government's decision to block out overseas investors.