By Gareth Vaughan
The receiver of South Canterbury Finance (SCF) says interest from both property developers and the government in 64 hectares of land the failed finance company controls on the northern outskirts of Christchurch has increased since a devastating earthquake hit the city on February 22.
McGrathNicol managing partner and SCF receiver, Kerryn Downey, told interest.co.nz the land in East Belfast would definitely be sold although no sales process was yet underway. SCF controls the 64 hectares, which the Christchurch City Council recently rezoned from "Rural 3" to "Living G" to allow mixed density residential development along with small areas of commercial and industrial land, through subsidiaries Belfast Park Ltd and Tyrone Estates Ltd.
"That zoning approval and so forth has really added quite significant value and that was obviously prior to the earthquake," Downey said. "And (after) the earthquake, as unfortunate an incident as it is, the land would appear to be of greater interest."
This interest was coming from a number of property developers and government.
"We're working with these various parties and are just at the very early stages of discussions, really, around the ideal uses of the property and the development capabilities of the property. But we haven't commenced an active sales process yet."
Asked whether he may come under pressure from government interest in the land given as SCF receiver he is acting on behalf of the taxpayer who is facing a huge bill following the earthquake, Downey said his job was to get the best price for the land no matter who it was from.
"My prime objective, and my responsibility under the Receiverships Act, is to get the highest value reasonably obtainable at the time," said Downey. "Whether there be an offer through a government agency, through an SOE or (from) private enterprise, it doesn't matter as long as I get best value. As long as I follow a process that ensures I've got best value, I'm not selective as to who I sell (to) or what deal I make at the end of the day."
Downey said to "the best of our knowledge" there's no liquefaction at the site, with the land largely alluvial . He wouldn't say what he thought the land might be worth, but said McGrathNicol would be getting value assessments on both a developed and undeveloped basis.
'No particular discussions on Belfast Park' - English
Meanwhile, Finance Minister Bill English said he had not held any particular discussions about Belfast Park.
"The government agencies have been doing a stock-take of what land is available, and there are a number of owners there, including the South Canterbury receiver, but we haven’t had any particular discussions about that (Belfast Park) site," English said.
"There’s also a lot of other private sector activity going on at the moment with various developers and businesses looking for land as well."
Asked whether the government could direct Downey as SCF receiver to not sell the 64 hectare site, English said government had "kept pretty arms length from the receiver."
"They’re making decisions about asset disposals. We simply haven’t considered this issue in detail," English said.
McGrathNicol was appointed SCF receiver on August 31 last year when a waiver to a breach of the company’s trust deed expired and it failed to secure up to NZ$300 million of much needed fresh equity.
The receivership triggered a NZ$1.6 billion payout to 35,000 SCF investors under the Crown retail deposit guarantee scheme and a NZ$175 million Crown loan to McGrathNicol so it could repay SCF's prior charge holders including the George Kerr chaired Pyne Gould Corporation subsidiary Torchlight.
SCF staff physically okay, Scales House sale halted by earthquake
Downey, who was in Christchurch when the earthquake struck, said it was a "very sobering" experience. Fortunately all of SCF's staff had survived, he said, although one staff member had lost his wife.
Meanwhile, the 80% SCF owned Scales Corporation had suffered a collapsed cool store roof in one of its leased buildings, which a business interruption insurance claim would be filed for. Downey said, however, this wouldn't be for "mega dollars." Scales is the country’s biggest apple grower and exporter and also has shipping logistics and pet food ingredients businesses, cool stores, industrial parks, bulk liquid storage and processing, and insurance operations.
Downey has Scales plus other SCF assets - Helicopters NZ, Face Finance and a 33.5% stake in New Zealand's biggest dairy farming group Dairy Holdings - on the block. He doesn't expect the earthquake to delay the sales processes significantly. However, he said the earthquake had stopped, at least for now, the proposed sale of Scales House which would have fetched "more than several million dollars."
"Scales House can't be occupied for a year," Downey said.
"There's engineering work to be done and earthquake strengthening work to be done. Regrettably that building was the subject of an offer which was due to be considered by the board on the day of the earthquake so that offer has gone away, which is obviously regrettable."
*Additional reporting by Alex Tarrant.
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