Govt accused of trying to ‘kill’ Aorangi

Press, 25 May 1984, Page 1

Govt accused of trying to ‘kill’ Aorangi

By

MICHAEL HANNAH

in Wellington

The Leader of the Opposition, Mr Lange, yesterday alleged that the Government had undermined Aorangi Forest Industries, Ltd’s chances of raising capital, so that its competitors could take over the troubled West Coast company.

The competitors included the Auckland-based company, Henderson and Pollard, which planned a big timber processing plant for South Auckland, Mr Lange said. He believed the plant could be built in the electorates of either the Minister of Education, Mr Wellington, or the Minister of Energy, Mr Birch. The other competitor was Nelson Pine Forest, Ltd, according to the member of Parliament for the West Coast, Mr T. K. Burke. Mr Lange said the Government made Aorangi’s attempts to raise capital difficult, first by announcing that the company was in trouble, and then by requiring Aorangi to disclose its confidential trading and financial arrangements to its two competitors. In telling the country that Aorangi was in trouble, the Prime Minister, Sir Robert Muldoon, in effect had told competitors: “Hang about, this lot could go, you could pick up the pieces in a fire sale,” Mr Lange said.

The Government had then required Aorangi to have its accounts audited, and this cost the company $lOO,OOO. In return, the company was offered $30,000 through the Development Finance Corporation, and was then required to disclose all its

confidential financial information to its two competitors, if it was to receive the D.F.C. assistance.

As a result. Mr Lange alleged, Henderson and Pollard “very astutely" made an offer of $400,000 for the company, which had assets worth $5 million.

He said Aorangi had succeeded in penetrating the market share of its competitor, which wanted to buy Aorangi at a “fire sale” price.

Mr Lange accused the Government of trying “it seems, through its incompetence,” to kill Aorangi, on the grounds that the plywood industry required restructuring. “The Government has used the promise of assistance as a means of extracting the last drop of commercial information from the company and giving it to their competitors,” he said.

Disclosure of Aorangi’s commercial information to “bona fide commercial interests” was mentioned as a condition of D.F.C. support in a joint statement on Wednesday evening by the Acting Prime Minister, Mr McLay, and the Minister of Regional Development, Mr Birch. They said:

“The Government was prepared to consider asking

the D.F.C. to give favourable consideration to give A.F.I. (Aorangi) financial support. "There would have been certain conditions, including an indication from A.F.I. of its willingness to make information available to bona fide commercial interests that might have been prepared to take over the operation.” Mr Lange maintained that the Government’s decision was influenced by the fact that workers had a majority shareholding in Aorangi. “They want, I suggest, to screw this company to the ground and let their competitors take up the market,” Mr Lange said.

He also said that Aorangi’s original proposal for Government assistance would have cost the Government nothing. The company had asked the Government to act as guarantor if the company could raise $1.5 million. The Government “wouldn’t lose a cracker” if it had guaranteed Aorangi, Mr Lange said. “If they were capitalised to the extent of $1.5 million more, than every projection shows that their present profitability would continue and grow. “They have a superb log supply contract, the only one of its kind in the South-

ern Hemisphere for that product, from the Nelson area. They have made it in world markets from a position of nothing to now being a 30 per cent market penetrator, and that is why these other companies want them out of it,” he said.

Mr Lange described Aorangi as a substantial, profitable company, “An absolutely glorious small-to-medium-sized business using New Zealand resources for export earnings, the perfect formula for success in the New Zealand economy, and the Government is kicking it in the teeth.”

The company used New Zealand timber, and its 130 employees produced $26,340 a head a year in export earnings, which Mr Lange described as “a very significant record for a New Zealand industry.”

The Leader of the Social Credit Party, Mr Beetham, accused the’Government of trying to manipulate the 52 per cent worker-owned company into selling out to non-West Coast interests.

“It is crystal clear from the actions and statements of the Government that the worker-shareholding concept operating at Aorangi is in danger of being swallowed up by a big outside firm,” Mr Beetham said. He added that he had

every sympathy for the management and staff of the company, who appeared to have been badly misled and manipulated by the Government. Mr Beetham said it was Social Credit policy to support and promote workershareholding. He called on the Government to “stop playing fast and loose” with the’ economic future of the West Coasters, and to abide by its pledge to support Aorangi. Minister replies, page 4