Brierley Investments
down on the
The owner of Molokai Ranch
By Russ Lynch
must consider selling it, analysts say;
Ranch executives disagree
Star-BulletinChanges at the top of a New Zealand company have financial analysts speculating that its Hawaii subsidiary, Molokai Ranch Ltd., might be put up for sale.
But Molokai Ranch said parent company Brierley Investments Ltd. views it as a long-term investment and it won't be affected by head-office changes.
Brierley bought 54,000-acre Molokai Ranch in 1988 and has been slowly converting it from a cattle operation into a tourist attraction with country walks and rides and camping facilities.
Analysts said that all of Brierley's investments, particularly nonperforming ones, will come under scrutiny after a sudden change at the top of the company.
Chairman Bob Matthew and Chief Executive Officer Paul Collins abruptly left the company last month and Sir Roger Douglas, a former New Zealand finance minister, stepped in as chairman.
Douglas promised a thorough review of the company and analysts say that all its assets, including Molokai Ranch, will be evaluated and some likely will be sold.
Will the company look for a buyer for the Molokai business?
"I think it's most likely," said John Cairns, head of research at Cavill White Securities in Wellington.
"That investment has been carried on the books for a number of years. It's never produced a return," he said. That was typical of the departed CEO Collins, "who basically refused to acknowledge a mistake and just turn around and clean it out and get on with the next thing," Cairns said.
Officials at Brierley headquarters in Wellington declined to respond to questions about Molokai Ranch, but Warren Haight, Honolulu-based chairman of Molokai Ranch Ltd., issued a statement. "Brierley Investment's internal reorganization is related to performance in areas far removed from Molokai Ranch," Haight said.
"The interim chairman and CEO, Sir Roger Douglas, was part of the original group that mapped out Molokai Ranch's future. Sir Roger and the other remaining directors are very strong supporters of the Ranch and they continue to view it as an important long-term investment," Haight's statement said.
Brierley's financial reports show Molokai Ranch had an operating loss of $10.9 million last year. But company officials say the loss was mostly money that was poured into infrastructure and other improvements.
By Ken Sakamoto Star-Bulletin
In recent years Molokai Ranch has focused more on
tourist accommodations, like Kolo Camp.
New Zealand financial columnist Brian Gaynor said Molokai Ranch rarely gets discussed when Brierley's investments come up because the big publicly held companies Brierley controls such as Air New Zealand Ltd. and Britain's Thistle Hotels Plc get the attention."I imagine one of the first things they would try to sell would be Molokai Ranch," said Gaynor, whose columns appear in his country's biggest newspaper, the New Zealand Herald.
Herald business editor Rod Oram said he has seen reports from Brierley listing Molokai Ranch as an asset worth an estimated $300 million. But his paper's summary of analysts' opinions showed no sale likely before at least the year 2000, Oram said.
The exact price that Brierley paid for Molokai Ranch is hard to estimate because Brierley bought the company by a number of separate share acquisitions at various prices over a period of time, but the amount is believed to have totaled about $40 million.
Analyst Greg Matthews, head of equities at Macquarie Investment Management in Sydney, said the real problem with Brierley is the price of its shares, which have been trading around one New Zealand dollar (55 U.S. cents).
But spinning off assets is one obvious way to get the company moving in the right direction, analysts say.
"All of the assets have got to be considered up for grabs. Some will be sold. That's the job of the new managing director" Matthews said.
But Matthews added that Brierley doesn't have money problems and doesn't need to sell anything just to get in some cash, so it can take its time.
"They don't have a debt crisis," Matthews said. "They're not forced into a fire sale of their assets by the bankers. They don't have to sell cheap and if they don't get the price they want, they may well hang on to it."
