Thursday, May 26, 2005

Wachovia Corporation owns SI Grid

Paul Gorman is at it again! His investigative reporting has discovered that the South Island Grid (exlcuding I assume the Benmore/Hayward HVDC link) is owned by Wachovia Corporation. It appears that this was part of a package of cross-border lease deals that allowed Wachovia Corp to avoid over USD$3 Billion in Federal Taxes in one year. And apparently this was approved by the IRD and Historix (I'm sorry, but he doesn't deserve to be called Economix after the Bludget).

This webpage at Macquarie Australia shows that Macquarie won an award from Asset Finance International for Cross-Border Leasing Transactions in Asia in 2003.

AFI had a couple of very interesting articles that gave quite a few details...

You need to register to view, but can view them straight away. I just registered and they made some interesting reading. Allow me to summarise...

Airways Corporations deal was valued at USD$245 million, and Bank Of America provided the equity. ANZ Investment Bank was the lessee adviser and lender. John Chandler, director of leasing and structured asset finance at ANZ Bank’s office in Wellington, said there would be two tranches, with a second valued at around USD$65 million. Transpower did it's first cross-border lease in the mid-90's with First Chicago.

Telecom New Zealand has completed four deals, two on CDMA cellular equipment, and two on switching equipment. Pitney Bowes and Textron were involved and arranged by CIBC.

Apparently Contact Energy had a similar deal fall through for the Otahuhu B station in South Auckland.

And here we have some evidence of the level of jiggery-pokery require to make the deals legal apparently...

“It is very difficult to make a cross-border lease work for any equipment classed as a fixture, if the transaction is structured in a straight forward manner”

One of the key points in the Transpower deal, is that it was the first New Zealand deal that involved actual property and not just chattels.

Other deals in New Zealand have involved a European company with an NZ energy company, and even Swedish and Japanese - there is even a new Japanese Operating Lease (JOL). Air New Zealand and Qantas have apparently utilised JOL's for some of their recent plane deals.

Note that I am assuming the figures are US as it is an international magazine - they didn't clearly identify the currency for the transactions, so there may be a mixture involved here.

Is that the time? I should get back to work...


Blogger Adolf Fiinkensein said...

Might be worth doing a SILO deal on the Beehive. Don't worry about leaasing the bloody thing back though.

5/26/2005 02:43:00 PM  
Blogger Bernard Woolley said...

Problem is too many of them appear to be fixed assets currently :(

5/26/2005 02:51:00 PM  

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