Wakaya Island

Deuba Developers Buy

Pacific Hotels and Developments Ltd., developers of the $32 million Pacific Harbour at Deuba on Viti Levu have acquired Wakaya Island, a prime piece of Fiji real estate.

The historic island made head lines three years ago when the Fijian Affairs Board sold it to a consortium of American investors for $340,000.

Despite periodic assurances that development “beneficial to Fiji” would be carried out, nothing happened.

Rumour had it that the new price tag was $1 million (which is what US publisher Malcolm S. Forbes paid for another Fiji island, Laucala, in March) but this was very firmly denied by the new owners of Wakaya.

The price was “very much lower,” than $1 million, they said, and rumours that someone had got $90,000 commission out of the deal were nonsense. “No commission was in volved at all,” said a PHD spokes man,” but as it was a transaction between two private companies I am not at liberty to disclose the price.”

The Wakaya transaction has beaten the gun which the government is aiming at land speculators in the shape of a tax of up to 50 per cent, on land sales profits. The sale also revived the controversy which sur rounded the original relinquishing of Wakaya by the Fijians. Most vigorous opponent at the time was former par liamentarian Dr. Lindsay Verrier who went to the extent of sending a cable to the Queen, asking her to intervene and prevent sale to “foreign interests”. A court action was launched but the sale went through.

News of PHD’s Wakaya buy coin cided with widespread publicity about the financial activities of its parent company, Hong Kong-based South ern Pacific Properties Ltd., which had offered nearly SAIS million for a 50 per cent, shareholding in Travelodge Australia Ltd.

In Suva in June, Londoner Mr.

Simon Pendock, a director and founder of Southern Pacific Properties, admitted that the timing of the Wakaya purchase was “a little bit embarrassing” in the light of the Travelodge takeover bid and general sensitivity over foreign control of land and commerce. He stressed that his company had no intention of monopolising land development in the dominion.

No further land acquisitions were envisaged in Fiji by PHD, he said— “We have our hands very full with what we have”—but the parent corn

pany was looking towards other land acquisitions in other South Pacific territories.

The plans for Wakaya were for a “small, quiet, essentially residential development, with no hotels, struc tured to preserve Wakaya’s island characteristics. Development pro posals should be completed by July.”

Commenting on the implications for Fiji of the SPP-Travelodge

merger, Mr. Pendock said future operations of the Pacific Harbour project at Deuba would benefit from the availability of Travelodge manage ment expertise. An estate manage ment organisation has already been established by PHD to organise rental to visitors of company-owned villas and homes to be built by individual buyers of Pacific Harbour residential sites.

“The Travelodge know-how in the general accommodation business will greatly help the home rental opera tion and facilitate bookings on a world-wide basis,” he explained.

“During 15 years as an investment

banker involved in all manner of acquisitions, mergers and takeovers, I have seldom seen a deal that made more sense to both parties in all fundamentals,” was how Mr. Pendock summed up the merger. (The com pany prefers to call it that, although 50 per cent, will give SPP effective financial control. Travelodge manage ment will not change).

Access to sources of international finance through SPP and its eminent shareholders (the P&O shipping group, Slater Walker Securities Ltd., Jardine Matheson and Co. Ltd. of Hong Kong and I. G. Boswell Co. of California) would allow Travelodge to further consolidate its extensive accommodation plant in the South Pacific and give the hotel chain the opportunity of entering major resort complex developments, a field it has been eyeing for some time.

Later news was that SPP had acquired Trust Houses Forte’s 12.3 per cent, shareholding in Travelodge.

Supplying much of the drive for SPP’s activities is its chairman, Mr.

Peter Munk, who is also chairman of Pacific Hotels and Development.

The impending merger with Trave lodge has brought him into the Aus tralian limelight.

One Sydney Sunday newspaper referred to him as a “mystery man”.

PIM was able to give Mr. Munk’s background as long ago as June, 1970, when it reported, in connection with the Deuba development: “Mr. Peter Munk, Southern’s head, was founder of Clairtone Sound Corporation of Canada, which after making colour television sets for the competitive US market, ran into financial difficulties involving some SC2O million.”

PIM continued; “Canada’s Financial Post has quoted Mr. Munk as describing the Deuba projects as ‘the biggest single development of this kind proposed in the South Pacific’.

“Mr. Hopkins (head of a Canadian firm) said Mr. Munk had ‘had a thing’ about Fiji for about seven years. His firm was convinced Mr.

Munk would be more successful in real estate in Fiji than he had been with TV in Canada. The backing of a respected multi-million dollar cor poration such as Slater Walker proved there was ‘great faith’ in Mr.

Munk’s leadership, he said.” 9 The Hong Kong-based Pacific Mail Order System Ltd. has an nounced it intends in three months to start building a hotel, beginning with 40 bures, at Blacksands Beach, near Vila, in the New Hebrides.

Clearing work has begun.

Business briefs

• A long-awaited decision on a Norfolk Island taxation test case was handed down by Mr. Justice Gibbs, of the Australian High Court, in June, but the decision wasn’t the one that supporters of the present system hoped for. There is to be an appeal against the judgement to the Full Bench of the High Court. The case was one where Esquire Nominees Ltd. sought to test the present technique of Aus tralian firms using the Australian ter ritory of Norfolk Island as a tax haven, by paying dividends to Norfolk Island-registered dummy companies and then borrowing the money back, thus avoiding undistributed profits tax. The money in fact goes round in circles. Mr. Justice Gibbs held that the source of the money on the merry-go-round was Australia and that this remained a fact despite the procedure of passing it through various companies.

There are still other tax-saving procedures possible as a result of Norfolk Island company registration but these are not yet in legal dispute.

However, the Australian Government has made it clear that it intends to close down Norfolk Island as a tax haven, and in the last 12 months there has been a flight of Australian and overseas investment to the New Hebrides, which appears to investors to be safer. • More than 6,000 sugar cane farmers, tenants for years of the CSR, will have the Fiji Government as landlord when the government takes over 95,000 acres of CSR land next April at a cost of $3,750,000.

This is part of the deal included in the government’s takeover of the sugar industry. A cattle ranch run by the CSR will be maintained as a model ranch. Abnormally wet weather is expected to cut this year’s sugar crop by thousands of tons. • A new trust company, Pacific International Trust Co. Ltd., has been registered at Vila and opened for business on June 20.

Foundation partners are the Bank of New South Wales and Perpetual Trustees Australia and the Montreal Trust Company of Canada. Affiliated with the partners will be an inter national group of banks and trust companies. • The Shortland Development Company has suspended its timber operations in the Shortlands of the BSIP, hoping to resume next year when the Japanese market improves.

But it’s transferring its milling equip

ment to a sister company on New Britain, and some BSIP government officials are not so optimistic that, having closed down in the Solomons, it will be able to get itself going again.

Which would be bad news for the BSIP because the company has been accounting for about 10 per cent, of the protectorate’s timber exports. • South Pacific Oil Palm Development Pty. Ltd. looks like getting the go-ahead for the establishment of a 5,000-acre oil palm plantation and mill on government land in Bialla, West New Britain. It has offered to spend $5 million over the next four

years, and to give the government 20 per cent, equity and a further option of five per cent, for New Guinean shareholders. The government wants to put New Guinean smallholders on 10,000 acres of land near the pro posed mill. Although the PNG executive council has approved the scheme, it still has to be okayed by the PNG House of Assembly, « Air Micronesia made a profit in 1971 of SUSS,446 compared with $5,856 in 1970. Total receipts were up by 13.1 per cent, over the previous year but operating expenses rose by 13.8 per cent.