Fulton Hogan has received Overseas Investment Office approval to sell forestry estates in Otago, New Zealand. The Christchurch-based company said it was looking to sell-off non-core assets in a bid to strengthen its balance sheet. Source: TVNZ
Fulton Hogan sold 3013 hectares of forestry land to Forestry Fund 9 NZ, a subsidiary of global investment manager GMO, after completing a sale and purchase agreement in June.
The Overseas Investment Office (OIO) granted approval on October 18 for an undisclosed sum, according to a decision summary.
Fulton Hogan told shareholders in its annual review the contract was completed after “a lengthy period of due diligence” and was conditional on OIO approval. That sign off and settlement of the purchase price was expected in December.
The company said it was selling non-core assets to bolster its balance sheet and repay debt after buying out its partner in Victoria-based Road Pioneer Services and buying back 37% of shares held by Shell New Zealand.
“We’ve done a review of non-core activities in Fulton Hogan, and in the report you will note that we have divested our forestry business, which we determined is not core,” said managing director Nick Miller.
“We’re taking advantage of a strong market in that sector, and have concluded a sale.”
The privately held construction firm is also selling land that it has built up over the past 80 years, which will also go toward strengthening its books.
“We’ve divested some of that surplus land in NZ and certainly two or three blocks in Oz that’s surplus to our needs that we intend to divest over the coming year,” Miller said.
Last year, the GMO fund bought 1149 hectares near Taupo to plant pinus radiata. As a condition of the purchase, Forestry Fund 9 entered into a nitrogen management deed with Lake Taupo Protection Trust so that is has a nitrogen discharge allowance of 5kg, or less, of nitrogen per hectare per annum for the land for 999 years. The pine forest is expected to meet that requirement.
