Auckland, 26 July 2007 - Lion Nathan Limited (Lion Nathan) today announced it has entered into an agreement to sell its current Auckland Brewery site.
AMP Capital Investors has purchased the site for NZ$162m, subject to New Zealand Overseas Investment Office approval, and intends to develop the property for high-end residential, retail and office use. NZ$50 million of the sale price will be realised in this financial year with the balance payable when Lion exits the site. The sale arrangement means that Lion Nathan expects to continue to operate from the Newmarket site for around 4 years while a new facility is built. The sale process was managed by CBRE and the outcome represents a strong sales result in the current property market.
Explaining the decision to re-locate, Lion Nathan New Zealand Managing Director Peter Kean said: “A once in 50 year investment was needed if we were to remain at our current site. Over the years Newmarket has changed into a light commercial, retail and residential area. As a manufacturing site the property is now landlocked, making access and expansion increasingly difficult. The long-term benefits we can achieve by establishing a new facility elsewhere in Auckland are simply too positive to pass up. ”
“Building a brand new manufacturing and warehousing facility in Auckland is a significant investment that positions our New Zealand business for the long-term. The new facility will allow us to better align our production and supply chain with the needs of the marketplace, further improve the environment for our people, improve customer responsiveness, optimise productivity and create new opportunities to improve our environmental performance, for instance our energy and water efficiency.”
Mr Kean added: “We are deeply committed to maintaining an Auckland brewery presence and we recognise that as time passes and Auckland develops, the number of quality alternative Auckland sites is diminishing. In acting now, we are securing our manufacturing future in Auckland”.
Lion Nathan confirmed that it has secured options on a number of alternative Auckland sites. As evaluations are ongoing, the Company declined to elaborate on those options until a decision is made – most likely before the end of November 2007. Lion Nathan indicated that a manufacturing and warehousing facility would require land, plant and equipment expenditure of around NZ$250 million. The alternative of staying at the existing brewery would have required an investment of around $NZ50 million triggered by a decision to commit for the long term to the existing site. The net investment based on these estimates stands at approximately $NZ40 million. This investment will yield a solid return in EBITDA benefits of NZ$10-15 million per annum after completion.