Aorangi’s troubles go back to 1982

Press, 28 May 1984, Page 1

Aorangi’s troubles go back to 1982

PA Wellington The financial troubles of Aorangi Forest Industries, Ltd, date back at least as far as 1982, when it first sought Government help, according to the Minister of Regional Development, Mr Birch. That first request, for the Government to act as guarantor for a $1.5 million loan, had been turned down after “careful consideration.” Mr Birch said later requests, which sought the $1.5 million directly from the Government, had also been declined because the Government believed the request did not address the problems which had been identified at the plant. Mr Birch insisted that requests for assistance this year had been for direct financial help, and not for the Government to act as guarantor as had been claimed by the company. Mr Birch said he had decided to give a detailed

outline of the company’s approaches to the Government’s decisions, in answer to the company’s assertions that it was being pressured into negotiating with its competitors in order to get Government help. Mr Birch said he had consistently and repeatedly made it clear that the Government’s interest was only in maintaining employment on the West Coast. “The Government’s responsibility is not to protect the creditors and shareholders,” he said. Of the company’s approaches for aid this year, Mr Birch said the first was received in February and declined on March 14 after the Government had received advice from the Development Finance Corporation. On April 13, Aorangi’s chairman, Mr Athol McGeady, and its managing director, Mr Brian Stanley-Jackson, had again approached Government officials to seek the $1.5 million in direct aid. Mr Birch said that he had

told the company on May 1 that its request did not address the problems'identified. He had also made it clear at a meeting with the directors that the Government believed the company was facing severe problems because of management problems, equity difficulties and shareholders’ conflicts. Mr Birch said he had agreed at that meeting to raise the matter again with the Government, “but no commitments were given to the company to provide finance.” While the Government was again considering the request, it became known that at least two companies were considering making offers to Aorangi. “I advised Mr McGeady and Mr Stanley-Jackson by telephone that the Government was standing aside to allow those commercial approaches to proceed.” Aorangi had responded through its lawyers seeking a Government decision on the financial aid request by

4 p.m. on May 14, Mr Birch said. He had replied to the company’s lawyers on May 17, saying yet again that the Government had no responsibility to protect shareholders’ interests or the creditors but that it was concerned to maintain employment in the area. The letter had added that because of the Government’s objective of maintaining employment in the area it was prepared to consider providing minimal financial support through the Development Finance Corporation while the commercial options were being explored. He had laid down strict conditions for the offer: The aid would be given only on the understanding that it did not in any way indicate Government support for Aorangi, its shareholders or creditors; and that the company allowed reasonable access to commercial parties and give fair and reasonable consideration to any bona fide proposal.