Govt plan to aid Aorangi ‘victory for Coast’

Press, 1 June 1984, Page 1

Govt plan to aid Aorangi ‘victory for Coast’

By

MICHAEL HANNAH

in Wellington

In a move hailed as a “strategic victory for the West Coast,” the Government is considering providing substantial financial help to Aorangi Forest Industries, Ltd.

A proposal before the company and the Government also involves restructuring of the company, but ownership will remain substantially on the West Coast, according to the Minister of Regional Development, Mr Birch. ' The Government was reluctant to give details of the proposal yesterday as further discussions are expected to take place between Aorangi and other parties, including its creditors, in the next two weeks. In that time, the Government has offered to pay the wages of staff. Under the proposal, substantial assistance is offered through the Development Finance Corporation in addition to the wages bill over the next two weeks. In a previous offer, the Government had proposed paying only the two weeks wages of staff while other commercial solutions were explored. Aorangi objected to this as the wages bill would not keep the company in production, and other commercial solutions involved its competitors, Nelson Pine Forest and Henderson and Pollard. Mr Birch confirmed yesterday that these commercial proposals had lapsed, but he declined to explain why, as this was a matter for the company to explain. Mr Birch said that Nelson Pine Forest’s 25 per cent shareholding in Aorangi would have to be addressed in the discussions in the next two weeks. “I really cannot take it any further. Quite honestly

it’s a very sensitive matter,” Mr Birch said. He said he could not say how much money was involved in the proposal, as it depended on how the final proposal was structured. According to the member of Parliament for West Coast, Mr T. K. Burke, the Sosal originally involved ng $lOO,OOO from Aorangi staff, $250,000 from other West Coast interests, and $1.5 million from the Government. Mr Burke described the proposal as a major strategic victory for the West Coast and a complete outmanoeuvring of the Government. He maintained that the Government had had to abandon its previous position because of the threat of legislation sponsored by West Coast local bodies, which would have allowed the local bodies to underwrite and guarantee loans to Aorangi. “The Government had nowhere else to move,” Mr Burke said. “The Government would have been in the position of having to vote against the local bill in the House, and knock out a small business in the Year of the Small Business.” Mr Birch denied that the Government had changed its stance, however. He said it had become clear when the Government initially looked at the company’s problems that there were commerical interests. “We are a private enterprise Government and we were anxious to allow those commercial offers to proceed if they were able to

produce a remedy to the problem and maintain the Government’s objective, which was jobs on the West Coast,” he said. “It now seems that that’s not possible for a whole host of reasons and so we have endeavoured to restructure them with the company’s approval. “We see it now as being sustainable and viable and on that basis we would be prepared to support it till it gets back on its feet.” In the long-term, Mr Birch hoped that the Government could withdraw from the company’s activities. Consequently two earlier conditions on D.F.C. finance have been waived. These required Aorangi to consider alternative commercial solutions, and to give “bona fide commercial interests” access to the company’s commercial information. The proposal now under consideration was devised by Aorangi at the week-end, Mr Birch said. The Prime Minister, Sir Robert Muldoon, said that the proposal had gone to the Cabinet economic committee late on Wednesday evening, and it had appeared to be “reasonably satisfactory” to the company. “It has not been agreed yet, but they have made quite a lot of progress and it may be that we have got an approach to some kind of a solution that will enable the company to keep going,” he told a post-caucus press conference earlier in the dnv

Sir Robert had been reluctant to give any details of the proposal, saying he had mentioned it only because there were people interested in whether there had been any progress.

He had declined to comment last Tuesday on a series of questions from “The Press” relating to the Cabinet economic committee’s discussions on Aorangi. Asked how the proposal compared with an earlier offer of $30,000, Sir Robert said this had not been an offer, but only the amount needed to keep the workforce paid for two weeks. “That had little relevance to a proposal to keep the company going. But there is now a proposal that might be capable of keeping the company going,” he said. Mr Burke said that the latest proposal was a “complete victory” for the West Coast, as it ensured that the company would continue running, and that it was not going to be owned by competing companies, who might have decided at some future time to close the

factory or transfer its machinery to other parts of New Zealand. Aorangi Forest Industries will be restructured, according to the Greymouth reporter of “The Press.” Exact details of how this will be achieved could not be obtained yesterday, but the chief executive of the company, Mr D. B. StanleyJackson, and its legal adviser, Mr A. D. Ford, of the Wellington firm of Bell, Gully and Company, flew into Greymouth early yesterday afternoon, met the directors with a proposal from the Government, then addressed the staff, and flew back to Wellington immediately. A statement issued by the company after the meetings at the company’s plant at Gladstone, south of Greymouth, said that the board of Aorangi Forest Industries “today gave its unanimous approval to an outlined proposal for the restructuring of the company currently being discussed between the Government and the company’s legal advisers.” The chairman of the board, Mr A. S. G. McGeady, said that the restructuring proposal would involve D.F.C. financial

assistance, an injection of $lOO,OOO from the staff of the company, and a contribution of $250,000 from other Coast resources. The proposal still had to be discussed with the company’s creditors, but Mr McGeady said that “with the good will of everyone involved, he was confident that the mill would be able to resume production in the next week or two, the sooner the better.” The statement continued: “Commenting on the proposal, Mr Stanley-Jackson said that he felt that he would be speaking on behalf of all West Coasters when he thanked sincerely the architect of the restructuring scheme, the Minister of Regional Development, Mr Birch, for his endeavours to save the jobs of 130 employees.”

More than 100 employees of Aorangi gathered in the cafeteria of the plant at Gladstone yesterday afternoon, applauded the announcement that their jobs would continue. The announcement that the plant, the South Island’s only plywood factory, would resume production was “the

greatest tonic they could have,” the secretary of the Westland Timber Workers’ Union, Mr R. F. Beadle, told “The Press.” Mr Beadle said the staff had been “milling around” in recent days doing maintenance work such as painting and gardening and had been becoming more worried about their future each day. “They could see the situation deteriorating and yesterday was to be the day for a decision,” he said. Mr Beadle said that the $lOO,OOO which the staff members had raised through loans from friends and banks recently to provide more capital for the company was probably unique. It would be uplifted immediately from the trust funds in which it had been placed, and transferred to the company. Although details of the restructuring of the firm were not known yesterday, it is thought that there will be some changes to the board, possibly appointments of representatives of the D.F.C. to look after its interests.