National Party President Peter Goodfellow, may be selling out of Sanford Ltd, the giant, family-controlled fishing company, flicking a good chunk of his holding to Japan’s biggest seafood company, according to a report in the Nikkei Asian Review on Monday.
Veteran New Zealand journalist Mike Field, who has recently published The Catch: How Fishing Companies Reinvented Slavery and Plunder the Oceans, exposing slave working conditions and fishing practices on foreign charter vessels in NZ waters, reported that Goodfellow, a scion of one of New Zealand’s wealthiest families, requested Maruha Nichiro to buy a 4.7% stake.
The $25 million deal prompted considerable curiosity because it involved an off-market purchase of shares from Sanford’s second biggest shareholder, Avalon Investment Trust, which is run by the family of Peter Goodfellow, Field wrote.
Avalon retains a 9.2% holding. The largest shareholder, Amalgamated Dairies, with around a third of the company, is also a company controlled by the Goodfellow family, which is credited with setting up the entity that today is known as Fonterra.
Also within their near billion dollars asset pile is a big chunk of formerly New Zealand, but now Australian, agro-chemicals company, Nufarm, which recently closed factories in New Zealand.
The Australian Financial Review in March reported that Nufarm was the subject of Chinese takeover speculation after the chairman of one of China’s biggest glyphosate producers, Zhang Hua, informed the Australian Securities Exchange he, and British Virgin Island companies he controls, had bought a 5% stake. The Sanford move comes just ahead of woefully belated radical changes aimed at forcing international fishing boats to end controversial employment practices, forced on a reluctant government thanks to pressure put on by academics and journalists, such as Field.
The shakeup will end foreign charter vessel fishing in our 4 million square kilometre exclusive economic zone.
Charter vessels took 42% of the national catch between 1950 and 2010 but Field says the industry is uneasy about a soon-to-be-released academic study showing that the total catch of fish over 61 years was 2.1 times greater than was reported.
“Industry insiders believe the report, compiled by experts from three major universities as part of a global study on fisheries, will lead to a radical overhaul of New Zealand’s fish quota system, including substantial cuts in the quotas awarded to fishing companies, which determine how many fish they can catch,” the Nikkei report says.
Maruha has a long record of involvement in New Zealand waters, but it had no equity stake in the domestic industry until purchasing the stake in Sanford, which has a market capitalization of $543 million.
The sale, at a small discount of $5.68 per share against the current price of $5.73, is all the more perplexing because Sanford, which has had a number of lean years due to the crazily high New Zealand dollar value, is poised to benefit from a series of “tailwinds” according to market analysts.
The prospects for the first half of this financial year and for the full year are “very positive”, according First NZ Capital’s Sanford analyst, Kar Yue Yeo.
“Buoyed by a more favourable NZD/USD and lower fuel prices, our expectation is for Sanford to deliver an earnings before interest, tax, depreciation and amortisation of $38 million.”
That would be up 12% on the 2015 year and the highest since 2009, Yeo says.
“As a major aquaculture operator and owner of fish quota in NZ, Sanford is a beneficiary of on-going growth in global demand for protein and potential increase in seafood prices.”
Maruha Nichiro told Field it had no strategic reason for taking a Sanford shareholding and said it had no intention to increase its stake and “no political motives, such as expanding fishing rights” in taking a share.
Sanford said that while the company had enjoyed a “business relationship … with Maruha Nichiro over many years” the request for the Japanese company to buy shares “came from a shareholder” and not from Sanford. The Goodfellow family did not respond to a request for comment.
Glenn Simmon, a research fellow at Auckland University’s New Zealand/Asia Institute who is an expert on New Zealand’s fishing industry, said it was difficult to know what objectives Sanford and Maruha were pursuing. “The ownership of the fishing industry is hugely complex and nothing is as it seems,” he said. “We can only wait and see what happens.”
Sanford in its annual report said it had 49 vessels and 210 aquaculture farms for mussels and salmon. It holds 23% of the total New Zealand fishing quota.
Field’s book, published in 2014, was the result of years of study documenting the “slaves” who work in inhumane conditions for virtually no money for companies that send them out in re-named, re-flagged rust-buckets to, as the subtitle puts it, to “plunder the oceans”.
New Zealand was shown in the book to have been a major enabler of slavery at sea by allowing foreign vessels that didn’t have to comply with our labour and safety laws to fish domestic quota.
The complicity of the government in this is similar to the current Panama Papers scandal that has exposed how New Zealand foreign trusts are allowed to base here with no obligation to pay tax on offshore earnings. Indeed it would be no surprise to find the foreign fishing companies making use of this rort as well.
(Simon Louisson formerly worked for The Wall Street Journal, NZPA, Reuters, The Jerusalem Post and was most recently a political and media adviser to the Green Party)