Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Crown Irrigation announces first investment

EMBARGOED UNTIL 12PM WEDNESDAY 9 APRIL 2014

9 April 2014

Crown Irrigation announces first investment

Crown Irrigation Investments Limited (Crown Irrigation) has agreed the draft terms of a $6.5 million investment in the Central Plains Water scheme.

Crown Irrigation will partner with Central Plains Water Limited for a period of 5 years to provide subordinated debt finance. This investment will enable excess capacity in the headrace to be built during Stage 1 construction that is needed for later stages of the scheme.

Crown Irrigation’s Chief Executive Officer, Murray Gribben, said today he is pleased to be part of the scheme, which will distribute reliable water to approximately 60,000 hectares of land on the Canterbury Plains once all three construction stages are complete.

“Consistent with our requirements for investment, this is off-farm infrastructure of a regional scale that will contribute to the region’s economic growth by unlocking the productivity gains that come from irrigation.”

“This scheme would not be developed to the scale required for the long-term without our short-term financial support. Crown Irrigation is looking forward to a prosperous relationship with Central Plains Water Limited, and will consider the potential to fund overcapacity in stages 2 and 3 of the scheme, when the time comes.”

Crown Irrigation has been established to help harness the potential of irrigation to accelerate New Zealand’s economic development by making targeted, bridging investments in larger, regional scale irrigation schemes. The government has signalled its willingness to invest up to $400 million through Crown Irrigation to achieve this goal.

Crown Irrigation will look to invest in irrigation schemes to assist in mitigating demand shortfall in the early stages of scheme development. Before Crown Irrigation can consider investing in schemes they need to satisfy a series of investment requirements. This includes having demonstrated technical feasibility, having consents in place, established water pricing that is fair, and having sound governance and management structures are in place.

Crown Irrigation’s Board Chair, Dame Alison Paterson, said that the decision to invest in the Central Plains Water scheme is consistent with Crown Irrigation’s investment objective of supporting irrigation development through to financial viability, where investment from other sources of capital has been exhausted. “This first investment by Crown Irrigation will allow the Central Plains Water scheme to be optimally sized for the long term, providing increased returns to agricultural producers on the Canterbury Plains.”

Financial close for the investment is expected to be reached before mid-2014. This allows for comprehensive due diligence to be carried out by Crown Irrigation and conditions precedent to be satisfied, prior to final approval of a loan agreement.

ENDS


Q&A’s

Why does Crown Irrigation consider it appropriate to invest in the Central Plains Water scheme?

The government has set up Crown Irrigation to invest in schemes that meet explicit requirements. Crown Irrigation has assessed the viability of the Central Plains Water scheme and determined that an investment is consistent with its mandate on the basis that:

• Private sources of capital for the scheme have been maximised.

• There is an opportunity for Crown Irrigation to assist the scheme by funding excess capacity in the early stages of scheme development that will unlock economic benefits in later stages.

• There is strong farmer uptake which means that expected revenues are sufficient to cover expected costs.


What will Crown Irrigation’s due diligence analysis consist of?

The conditions of the terms sheet allow Crown Irrigation to carry out comprehensive due diligence analysis on the investment proposition. The purpose of this work is to confirm the conclusions of Crown Irrigation’s initial analysis of the scheme characteristics. Crown Irrigation is aiming to reach financial close on a loan agreement with Central Plains Water before 30 June 2014.

How else will the Central Plains Water scheme be financed?

Financing for Stage 1 of the Central Plains Water scheme will be provided through famer equity (Stage 1 construction shares), senior bank debt and Crown Irrigation subordinated debt. Financing for later stages of the scheme is yet to be determined.

How will proposed reductions in the suggested nitrate allocation by Environment Canterbury impact on the CPW scheme?

Environment Canterbury is currently going through a process of receiving submissions on its Land and Water Regional Plan, which regulates nitrate leakage. CPW is actively managing, and engaging with Environment Canterbury, on this matter.

The likely impact of the plan change on CIIL’s investment will be assessed and monitored by CIIL throughout the due diligence phase.

More information on Environment Canterbury’s Land and Water Regional Plan can be found at: http://ecan.govt.nz/our-responsibilities/regional-plans/regional-plans-under-development/lwrp/Documents/lwrp-faqs-and-what-does-it-mean.pdf.


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Economic Update: RBNZ Says Rate Cut Seems Likely

The Reserve Bank will likely cut interest rates further as a persistently strong kiwi dollar makes it difficult for the bank to meet its inflation target, it said. The local currency fell. More>>

ALSO:

House Price Action Plan: RBNZ Signals National Lending Restrictions

The central bank wants to cap bank lending to property investors with a deposit of less than 40 percent at 5 percent and restore the 10 percent limit for owner-occupiers wanting to take out a mortgage with a deposit of less than 20 percent, according to a consultation paper released today. More>>

ALSO:

Sparks Fly: Gordon Campbell On China Steel Dumping Allegations

No doubt, officials on the China desk at MFAT have prided themselves on fashioning a niche position for New Zealand right in between the US and China – and leveraging off both of them! Well, as the Aussies would say, of MFAT: tell ‘em they’re dreaming. More>>

ALSO:

Loan Sharks: Finance Companies Found Guilty Of Breaching Fair Trading Act

Finance companies Budget Loans and Evolution Finance, run by former 1980s corporate high-flyer Allan Hawkins, have been found guilty of 106 charges of breaching the Fair Trading Act for misleading 21 borrowers while enforcing loan contracts. More>>

ALSO:

Post Panama Papers: Govt To Adopt Shewan's Foreign Trust Recommendations

The government will adopt all of the recommendations from former PwC chairman John Shewan to increase disclosure and introduce a register for foreign trusts with new legislation to be introduced next month. More>>

ALSO:

The Price Of Cheese: Cheddar At Eight-Year Low

Food prices decreased 0.5 percent in the year to June 2016, influenced by lower grocery food prices (down 2.3 percent), Statistics New Zealand said today. Compared with June 2015, cheese prices were down 9.5 percent, fresh milk was down 3.9 percent, and yoghurt was down 9.2 percent. More>>

ALSO:

Financial Advisers: New 'Customer-First' Obligations

Goldsmith plans to do away with the current adviser designations which he says have been "unsatisfactory" in that some advisers are obliged to disclose potential conflicts of interest and act in their customers' best interests, but others are not. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news