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Government U-turns in Sealord schmooze offensive

By Ray Lilley

Friday 11th August 2000

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In an apparent government backdown senior ministers are quietly promoting a 25% foreign holding in integrated fishing entity Sealord Group as effective control of the company to the three foreign fishers still in the hunt for half of Brierley Investments' 50% shareholding.

This government play has been complicated by BIL raising its price expectations and by the re-emergence of a New Zealand consortium as a potential buyer.

Ministers spread unintended dismay among international investors earlier this year with their last-minute plug-pull to prevent foreign investors buying the full half of Sealord on offer from BIL because of its national strategic importance.

Now the government is schmoozing merchant banks and agents of fishing companies Irvin & Johnson and Sea Harvest (South Africa) and Mitsui (Japan) to show how "investor-friendly" the Labour-Alliance government has become.

They are reportedly trying to convince the offshore suitors that quarter ownership is effectively the same as half when it comes to boardroom control.

"What everyone is now looking for is 50% control for 25% equity," one observer said.

Stung by strong negative international reaction to the last-minute change in Sealord purchase terms and by reaction to its rimu logging contract-busting with Timberlands West Coast, the government has rushed to promote foreign investment here as an essential element of economic policy.

Such government positioning could weaken the negotiating position of the Waitangi Fisheries Commission, committed to bringing fresh offshore investment and value-adding expertise to the Sealord Group.

Sources say potential willing seller BIL has complicated the sale issues by lifting its price for the stake to about $220 million, despite the softening of world prices for fishing company assets and the glut on world markets.

Earlier it was reported BIL was ready to sell its 50% stake in Sealord for $180-$200 million.

"Brierley have a very high expectation on price," said one analyst, noting the presence of three foreign groups may have convinced BIL it had a competitive bidding situation.

With only 25% of Sealord available, any foreign company must form a close working liaison with the Fisheries Commission, which already holds half of Sealord and is expected to buy the remaining quarter.

This has been complicated by the apparent re-entry of one New Zealand-based consortium into the bidding. Spearheaded by Talleys and Sanford, this group could take the whole BIL holding. It could also enter the fray with a foreign partner.

Sanford managing director Eric Barrett declined comment this week.

BIL's determination to drive up the bid price has apparently re-opened the door for the local suitors, whose own commodity-driven view of the fishing industry has left them holding stocks of unsold fish in their coolstores.

At the same time, Sealord is still looking for supplies of product to meet demand from its customers.

This fundamental difference in operating strategies has distanced Sealord from the other New Zealand fishing groups, despite it having joint venture operations with both Sanford and Talleys.

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