Narrative
Full Description
Project narrative
In 2015, China Construction Bank (New Zealand) Limited (CCB NZ) entered into a $7.2 million NZD loan agreement with Leisure Investments NZ Limited Partnership (LINZ LP) — a New Zealand-incorporated special purpose vehicle (SPV) — for the Christchurch Adventure Park Project. Christchurch City Council provided a ‘shortfall’ guarantee of up to $5 million NZD in the event of default on this loan for a period of five years, expiring in 2020. LINZ LP is a SPV and joint venture for the Christchurch Adventure Park Project that, in 2016, was owned by various New Zealanders (32.85%), Fiona Sutton of the United Kingdom, owner of Select Contracts (20%), the Christchurch City Council (14.29%), Jianping Wang of China, Chairman of Huadu International Construction Group Co., Ltd. (Huadu Group) (14.29%), various foreign individuals (8.57%), Jeremy Charles Fry of Canada (5%), and Philippa Mary Fry of Canada (5%). This project sought to construct the largest downhill mountain bike and adventure park in the Southern Hemisphere. The $20 million NZD project was located in Port Hills. It included a cafe, retail and rental outlets, 50 kilometers of mountain biking trails, a 1.8 km scenic chairlift, and zipline over 358 hectares of land. The Christchurch Adventure Park featured mountain biking facilities and services, four dual high speed zip lines, rock climbing areas, hiking and running trails, a mountain roller coaster, accommodations, and food and beverages services. In addition to the CCB loan, urban development agency Development Christchurch Ltd. (DCL), a wholly owned subsidiary of Christchurch City Holdings Ltd (CCHL), which in is a wholly owned subsidiary of Christchurch City Council, invested $2 million NZD in LINZ LP for the project. The Government of New Zealand each provided $2 million NZD for the project. Huadu International Construction Group contributed $2 million NZD to this project as an investor. The park entered into a lease and freehold agreement with McVicar Holdings Limited for 358.1248 hectares of land at 225 & 365 Worsleys Rd, Christchurch. The lease gave the park the right to purchase the land for $10 million NZD a year after the park opens for business. Select Contracts was to run park operations upon completion. Select Contracts was also involved in the park's development, completing a feasibility study, engaging the public and the local and federal government in New Zealand, conducting business and master planning, and construction management services. Port Hills Leisure Limited was the general partner of LINZ NP for the park. Select Evolution New Zealand Limited was a developer of the park. HGM Construction was responsible for construction; it provided services and construction relating to drilling and anchoring, excavation and drainage, rock breaking, sling work, track construction, zipline and adventure infrastructure, rock breaking, and concrete structures. Construction began in April 2016. The park was officially inaugurated on December 16, 2016. In February 2017, after the opening, the 2017 Port Hills fires caused significant damage to Christchurch Adventure Park, specifically to its chair lift, zip lines, and biking trails. The park was temporarily closed until December 5, 2017, when it was reopened with reduce bike trails as the other trails were still being remediated. As a result of the fire, the accompanying damage, and the maintenance costs incurred by damaged trails (as the loss of trees exposed the trails to the elements), Christchurch Adventure Park fell into grave financial straits, with a lack of cashflow by 2019. In December 2018, the park asked for its shareholders to provide $10 million NZD to help service its debts and meet operating costs. Officials recognized that the fire was putting $5 million NZD loan guarantee the Christchurch City Council had provided to CCB NZ in danger of being called. CCB NZ reportedly called in the $7.2 million NZD and gave a deadline of March 31, 2019 for repayment. In response, on April 11, 2019, the Christchurch City Council voted in secret to bail out the Christchurch Adventure Park. Through DCL, its urban development agency, the Christchurch City Council took on debt and invested $4.9 million NZD into the park; as a result, the Christchurch City Council became the majority shareholder (54.47%, previously 14.29%) of Leisure Investments NZ Limited Partnership and thus the park. Six other shareholders contributed $3.2 million NZD, and Australia and New Zealand Banking Group Limited (ANZ) loaned $2 million NZD; this $10.2 million NZD capital injection saved the park from imminent insolvency. Had the injection not going through, the park would have gone insolvent by mid-May 2019. Most of this $10.2 million NZD capital injection was intended to be used to repay the $7.2 million NZD loan from CCB NZ, with the remainder to spent on construction of new family-friendly facilities and trails at the park. As a result of the capital injection, the $5 million NZD shortfall guarantee was no longer required. Members of the council had decided that fulfilling the guarantee (which would have entailed a $4.9 million NZD payment by the Council), which would have affected rates and given the council no control over the fate of park, was more unattractive than an outright capital injection (described as ‘the lesser of two evils’ by Councillor Jamie Gough), which would give the council control over the park, not affect rates, and cost the same monetary amount.
Staff comments
1. Huadu International Construction Group is a large private Chinese development and construction company, owned by the Wang family, including Jianping Wang. It was formerly a Hebei-based former state-owned enterprise. 2. Christchurch Adventure Park has a dedicated website: https://christchurchadventurepark.com/. 3. There is disagreement between several official reports from Christchurch government agencies over the owning entity of Christchurch Adventure Park. Some claim that LINZ NP was the owner of the park, with Port Hills Leisure Limited as the general partner (see pg.207 of "Christchurch City Annual Report 2018"). Other claims that Port Hills Leisure Ltd. was the general partner, leasing the land and owning the assets developed for the park (i.e. the park itself) (see pg.23 of "Development Christchurch Ltd Annual Report 2016-2017"). For its part, Stuff New Zealand identified Ports Hill Leisure Ltd. as the owner, and that CCB called in the loan and gave it until March 31, 2019 to repay the loan, even though LINZ NP is widely reported as the borrower (see "Christchurch Adventure Park close to going bust before ratepayer bailout, reports reveal"). This issue merits further investigation. 4. The specific commitment date is unknown. It is known, however, that the $5 million NZD loan guarantee was for a period of five years and expired in 2020, implying a commitment date sometime in 2015. This financing won the "Debt Deal of the Year" award in May 2017 at the 2017 INFINZ Awards, so it must have been committed prior to that date, likely in 2015 or 2016 (see "2017 INFINZ “Oscar” Award winners"). For now, AidData has coded 2015 as the commitment date and marked the commitment_date_estimated? field as True. This issue merits further investigation.