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Billion dollar Japanese investment as Hart sells down Carter Holt

One of the largest single Japanese investments in the New Zealand economy is occurring with the sale of Carter Holt Harvey's pulp and paper and packaging businesses for $1.037 billion.

Tokyo Stock Exchange-listed packaging giant Oji Holdings Corp will take a 60 percent share of CHH's PPP assets, comprising some of New Zealand's largest industrial energy and forest products users, the Tasman and Kinleith pulp and paper mills, and a large Australasian packaging enterprise. Oji already owns the Pan Pac pulp and paper mill, near Napier.

Innovation Network Corp of Japan, a government-backed innovation agency that attracts private sector investment to "promote innovation and enhance the value of businesses in Japan", makes up the remaining 40 percent joint venture vehicle that will make the investment.

The deal is subject to regulatory approvals and is expected to complete in the second half of this year.

CHH is 100 percent-owned by New Zealand's only billionaire, Graeme Hart, owner of the world's largest packaging business, US-based Reynolds Group, which is under pressure to reduce its outstanding US$18 billion issuings of junk-rated corporate bonds.

Hart had previously tried to sell the CHH PPP businesses in 2012 and was forced to refinance $1.45 billion in debt when no buyer emerged at the time.

CHH's building supplies business remains for sale after taking combined charges in 2011 and 2012 of $393.8 million in impairments on its underperforming timber and plywood businesses and falling into negative equity.

In a joint statement, Oji and local PPP chief executive Jon Ryder talked up the prospects for driving greater value from the former CHH portfolio and Oji's understanding of New Zealand conditions through investment here since 1971. Oji spent $180 million in recent forest land purchases and upgrade investments for the Pan Pac mill, which were completed in 2012.

With annual turnover of US$13 billion, Oji operates globally and has interests in Canada, China, Germany and Brazil, among others. INCJ's investment mandate gives it a total investment capacity across a range of opportunities of approximately US$20 billion.

The Oji/INCJ purchase will concentrate ownership in the sector because of Oji's interest in Pan Pac. The only major players left in the sector will be the Scandinavian companies Norske Skog, which makes pulp and paper on the Kawerau site where CHH's Tasman kraft pulp and paper mill also operates, and SCA, which makes tissue papers, also on the Tasman site.

(BusinessDesk)

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Comments and questions
15

Wouldn't it have been a better result if NZ Super Fund purchased it

Surely the price the Japanese are paying is fair so why wouldn't NZ Super buy it and then partly list it on the NZX for everyone to own - personally and via the fund.

Ah that's right NZ Super think investing 82% of our money overseas is a better idea.

Just think how positive it would be for NZ Inc if NZ Super only invested 50% offshore.

No pulp and paper is the second most destructive industry in terms of creating | destroying shareholder value. Since 1980 these assets have been owned by NZ Forest Products, Elders Resources, Carter Holt -- add in International Paper who bought into CHH and Hart. I suspect none have made money. Let the Japanese own it as comments later add perhaps they can make money from them others have not but at least they know the Iindustry and that has yo be positive.

Imagine the uproar across New Zealand if the buyer had been Chinese.

Yes, you can almost carbon-date news stories by the hysterical racial reaction (1970s: West is going to heck because Arabs buying everything; 1980s: West is going to heck because Japanese buying everything)

Drumming my fingers waiting for the usual xenophobic comments on Asian investments. Must be a slow day / night here on NBR!!

Nope - as per comment #2, the xenophobic racists only come out now when it is the Chinese.

Biggest bunch of losers NZ has ever produced - ably led by that ultimate hypocrite Winston 'NO' Peters.

Japanese are known for producing quality without trying to do something cheap around the manufacture process whereas the Chinese don't really care about quality just profits.

Bet you don't mean that when it comes to your iPhone or 50" TV. I mean those gadgets are made in Japan.

can only be good news to move from an asset stripper and seller to someone that wants to grow the company

I expect Labour and Greens to protest this sale.....

Must be good result for all to now have a well capitalised shareholder at the table.

Another New Zealand business going overseas as a result of the failed policy of our government.
It's well past time for a review of the reserve bank,prompted by government,of it's wrong interest rate policy.
As we have been saying ad nauseum the low interest rate policy (to preserve votes) has done the country a grave disservice by promoting borrowing while discouraging savings.
Now we see a strong caution from a respected economist pointing out the dangers of this policy- immediately rubbished by Minister Joyce (of course-it's election year!)
What our government apparently does not appreciate (or does not want to appreciate) is that without savings we will not build Domestic Investment Capital.
And without Domestic Investment Capital we do not have the resources to retain successful businesses in New Zealand.
And so,despite all the polls telling us how successful our economy is,our economy will continue to underperform.
What we need is a government that has the ability,and desire, to look past the next election and implement policies that will benefit us in the longer term;we live in hope!!
paleo martin

With reference to your final paragraph, I would be interested to know who you believe that government might be?

Under pressure to reduce its outstanding US$18 billion issuings of junk-rated corporate bonds.

Who were the sell side advisers?