Michael Alp, the acting investment manager at CRH, said his organisation was hoping to release its annual report next month, “but this is dependent on final sign off by auditors”.
The earlier CRH report, to June 2023, had already identified issues with Whakatōhea Mussels Ōpōtiki Limited (WMOL) in particular, with notes stating significant losses caused by “adverse weather patterns as well as significant increase in costs of doing business” led it to impair its $19.8m stake in the company by 15%.
This impairment came before WMOL reported its 2024 results – disclosing ongoing covenant breaches and annual losses widening to $12.5m – and also before Cabinet last year agreed to invest up to $16.5m more in the company.
Overall in 2023, CRH reported impairing $23m of its loans and equity investments, equivalent to more than 5% of its total investment book of $416m. In 2022, impairments totalled $9.4m.
Investments above $20m made by the CRH, and previously the PGF, require Cabinet approval. Decisions on investments below this threshold are delegated to the Regional Development Minister.
The Crown’s first contribution to WMOL, in 2018 by then-Regional Development Minister Shane Jones, was for a mix of equity investment and grants that totalled $19.8m.
The Herald reported that Cabinet agreed in September to tip a further $16.5m into WMOL, despite years of going concern flags by auditors and widening losses, contingent on an unspecified contribution from private sector shareholders.
Shane Jones, again finding himself Regional Development Minister, last year defended the additional government investment: “Trying to establish a large-scale employer enterprise in this part of New Zealand is not for the faint-hearted. But you know, you can do one of two things: You can step aside and let the animal spirits of capitalism do their thing; or you can take a stand and say, ‘We really do want to see the mussel industry prosper’.”
Alp, the CRH investment manager, said he was unable to provide details of the public-private split in the capital raise.
“Private investment has been matched in accordance with the Crown’s agreed terms with WMOL. We cannot provide any further details as they are commercially sensitive,” he said.
An independent report prepared on WMOL’s 2024 capital raise by Simmons Corporate Finance suggests the Crown’s share of the planned $42m raise was 40%, and noted significant minority shareholders could be argued to be associated with CRH, given public funds were also being provided for investments in the company.
Shareholding changes filed to the companies office since the recent Cabinet decision indicate that while the Crown has so far tipped in $8m of fresh cash, non-CRH parties to the raise have largely contributed debt-for-equity swaps that were themselves underpinned by a significant amount of public funding.
The most significant new issue, outside that made to CRH, is for $4m worth of shares to Te Huata 1 LP. This entity, a subsidiary of Bay of Plenty iwi Te Whānau-ā-Apanui’s Te Huata Charitable Trust, in 2023 received $6m in CRH investment funding to develop a mussel spat hatchery.
The general partner of TH1LP is now recorded as being 42.75% owned by CRH.
Alp said he was aware of the TH1LP share issue and confirmed it was a debt-for-equity swap.
Another iwi vehicle, the Whakatōhea Māori Trust Board (WMTB), said in its 2024 annual report that it too had received CRH funding and recorded its receipt of $3.8m in interest-free loans to finance WMOL share purchases.
The Companies Office records that CRH holds 40.09% of WMOL shares, WMTB 7.38%, and TH1LP 4.85%. Despite significant financial contributions to the latter two entities to finance their share purchases, the Crown appears to exercise no control over voting rights and is effectively a minority shareholder in WMOL.
Peter Simmons, of Simmons Corporate Finance, said that while he had considered WMTB as an arguable associate of CRH when preparing his report, he was unaware Te Huata was also a possible shareholder.
WMOL managing director Peter Vitasovich did not respond to a request for comment on the public-private split or progress with the capital raise, or the company’s current and future prospects.
Te Huata director Haydn Read, despite agreeing to talk and requesting that questions be put in writing, also ultimately did not respond to the Herald.
Te Huata Charitable Trust has not filed annual reports to the Charities Register since 2023.
Matt Nippert is an Auckland-based investigations reporter covering white-collar and transnational crimes and the intersection of politics and business. He has won more than a dozen awards for his journalism – including twice being named Reporter of the Year – and joined the Herald in 2014 after having spent the decade prior reporting from business newspapers and national magazines.
