Station's foreign owners are at odds with a government
watchdog over unconsented mortgages totalling $3.9 million to
now-bankrupt developer Rod Nielsen.
However, the Overseas Investment Office still approved the
mortgages, retrospectively, and allowed them to be enforced
so the land could be sold - something likely to occur at an
auction in Queenstown today.
As reported last month, the OIO gave the station's owners
approval to enforce mortgages on two residential sections on
the station, across Lake Wakatipu from Queenstown.
The sections, which have a part share of 34ha on the
development, are part of a planned $50 million luxury lodge
and residential subdivision.
It can now be revealed
Walter Peak Station Trust (WPST), the vehicle through which
station is owned, lent Mr Nielsen's Walter Peak Developments
$3.89 million when it hit financial trouble in mid-2008.
The loan was made over the transfer of the two residential
sections to Aviation Properties NZ, another
Nielsen-associated entity, and was secured by mortgages.
Walter Peak Developments defaulted on the loan and went into
receivership in December 2008, starting a domino effect which
collapsed Strategic Finance in 2010.
WPST's application to the OIO - released to the Otago Daily
Times under the Official Information Act - argued the
decision to make the loan and mortgages was a ''prudent
commercial decision at the time'' and did not need consent
because the interest-free loan was to be repaid within six
However, an assessment report prepared by OIO team manager
David Viviers, which recommended the application be granted,
said it was the mortgages which required consent, not the
''While the mortgages may have been expected to last for six
months, they secured the loan and remain in place until it
has been repaid or the mortgages are otherwise discharged.
''As such, the OIO considers that the mortgages required
consent before they were entered into.''
The Overseas Investment Act states rural land of more than
5ha is deemed ''sensitive'', and an investment needs consent
if the interest, including mortgages, exceeds a term of three
Alexandra-based lawyer John Williamson, of Checketts McKay
Law, said in WPST's application: ''If the Walter Peak Station
Trust did not provide the loan to WPD, WPD would lose its
funding from Strategic Finance which would mean the end of
progress by WPD on the development.
''By providing the loan, WPST considered that it would
resolve the WPD funding crisis and enable the development to
proceed to completion.''
Mr Viviers' report said the OIO was satisfied that without
the loan WPD would probably have gone into receivership
earlier and been unable to complete spring plantings.
The applicants demonstrated financial commitment by making
the loan and entering the mortgages, the report said.
Since the group bought Walter Peak Station for an undisclosed
sum in 1998, $3 million has been spent on farm development
WPST's application estimated a further $530,000 would be
spent on the development over the next five years, primarily
on indigenous revegetation work - but completion of the lodge
project depends on ''whether the global economy improves and
it becomes economically viable''.
A variation has been sought for the vegetation plan to find
an ''economically viable'' alternative and after the original
plantings, thought to be one of the district's largest
revegetation projects at 309,000 plants, ''extensively
The station's current beneficial owners are Israeli
billionaire Morris Kahn, his son David, and long-time
business partner Shmuel Meitar.
Forbes magazine says self-made software investor Morris Kahn
made his fortune - estimated at $US1 billion - through his
investment in Amdocs, a customer-relationship
management-and-billing software firm for large telecom
-by David Williams