Far North Housing
Board Meeting Minutes
Date:
23 August 2022
Time:
9:00am – 10:30am
Location:
Miro Room, Te Kona Digital, Business & Learning Hub, Kaikohe
Attendees: Murray McCully, Sarah Petersen, Andy Nock, Bob Trautz, Kylie Cox &
Rick Palmer
1.0
Welcome
The Board Chair, Hon Murray McCully welcomed all to the meeting and thanked them
for their consideration and attendance due to the late change in venue.
2.0
Apologies
There were no apologies.
3.0
Compliance
3.1
Declarations of Interest
Declarations of Interest register was updated and accepted as submitted with
the addition of Bob Trautz. The Board acknowledged the ongoing interest of
Sarah Petersen as a Director of Tupu Tonu (“TT”), and in providing ongoing
support to the CFO/Finance team to Far North Holdings Limited (FNHL) under
contract with Soda Group Limited. To manage potential conflicts, Sarah
Petersen wil not participate in any discussions or decisions relating to TT.
3.2
Matters arising from prior meeting 15 July 2022
Director recruitment for independent directors continues with Brian Donnelly
indicating his interest, but it may take several months until he is available.
Sarah’s conflict across the TT and housing entities with regards to Kamo Road
and potential RSA transactions was discussed. Directors have had conversation
about the conflict, taken legal advice, and decided to take the following
steps, in respect of the Holdings board signing a resolution. The safest approach
is that Sarah leaves the meeting. Sarah to give notice that she is appointing
Bob Trautz as alternate, and that this appointment has been approved by the
FNHL board to fulfil the requirement of a quorum until additional Directors have
been appointed.
The Directors of Far North Housing Limited make the recommendation to the
Far North Holdings Board that the following Resolutions relating to the RSA site
in Kaikohe are approved:
To the Far North Holdings Board: Please note that these Resolutions are being
recommended by the Far North Housing Board which met this morning.
Resolutions:
1. That Holdings enter into the Development Agreement and Agreement
to Lease with HUD immediately with these documents to be executed
by two directors.
2. That the CE have approval to enter into the construction contract with
Smart Solution Homes (SSH) for a total of amount of
3. That the CE have approval to enter into, the Civil construction with
Webbs for
(includes
contingency).
4. Note: 50% of the Webbs civils contract value wil be on charged to
THOON.
5. The transfer/assignment from FNHL to Housing of the Kaikohe RSA site
land and resource consent.
6. The borrowing from FNHL by Housing of the proceeds from the FNHL BNZ
RSA loan facility of up to
to be used exclusively and solely
for the construction of community housing on the Kaikohe RSA site.
7. That the interest rate of the
borrowing by Housing from
FNHL be at the current weighted average cost of capital (“WACC”) for
FNHL plus
adjusted quarterly.
Note - All documents wil be entered into simultaneously including with Te Hau
Ora O Ngapuhi (THOON) which is providing funding under a separate
Development Agreement with Far North Holdings Ltd for the 26 x 2 and 3 bed
housing units to be owned by THOON but project managed by FNHL.
Moved:
Murray McCully
Seconded: Sarah Petersen
Kamo Road update: Sarah confirmed her participation with regards to the
creation and structuring of entities that wil provide for Holdings to divest Kamo
Road to a housing entity and ultimately divest a 50% share to a third party.
The proposal is:
• FNHL creates a limited partnership (“LP”) with a separate company
formed to act as the general partner (“GP”). FNHL wil be the only
limited partner. The name of the LP and GP is 450 Kamo Road Limited
Partnership. GP to have 4 directors, 2 from each 50% partner with Andy
Nock nominated as FNHL’s representative.
• FNHL sells its social housing portfolio to the LP for
in accordance
with the June 2022 Telfer Young registered valuation. In consideration
the LP wil owe
to FNHL (transaction one). This wil establish the
cost base in the LP for the property.
• FNHL wil pay
into the LP as capital. The LP wil use the capital to
repay/offset the debt owing for the purchase of the housing portfolio.
• 50% of FNHL’s LP interest wil be sold to TT for
(transaction two).
• The other half interest in the LP wil be sold to another FNDC group
entity Far North Housing Limited (FN Housing) for
(transaction
three).
Sarah wil likely need to see most of the paperwork as a limited partner,
including the Limited Partnership Agreement (“LPA”), constitution, and sale of
units, that doesn’t mention TT.
There was a discussion around tag along clauses, currently removed, but it is
felt that these need to be inserted back in. Party A must offer to Party B first, via
Telfer Young valuation to ensure if a third-party approach Party A direct we are
not hamstrung. We want an exit clause if partner B wants to sell, and we are
uncomfortable with the proposed new partner.
Recommendation:
1. The establishment by FNHL of a Limited Liability Partnership (“LP1”) to
acquire the Kamo Road assets. This entails incorporating a General
Partner, entering into a Placeholder Limited Partnership Agreement, and
registering LP1 in the Limited Partnership Register.
2. That FNHL sells the Kamo Rd property to LP1 for
being the
Telfer Young June 2022 market valuation of the Property.
3. The Purchase Price be paid by the Limited Partnership Agreement
(“LPA”) issuing partnership units in the LP and paid-up shares in the
General Partner (“GP”).
Moved:
Murray McCully
Seconded: Sarah Petersen
Sarah Petersen has left the meeting – Bob Trautz is now Alternate Director.
Having investigated and reviewed the LP documentation it is therefore
recommended that Holdings creates the LP, sells Kamo Road to LP for
,
then sells 50% to TT, and 50% to Housing.
Recommendation from Housing to Holdings:
1. FNHL then sells 50% of its LP units and shares in LP1 to TT for
2. FNHL sells 50% of its LP units and shares in LP1 to Housing for
3. The establishment of an intercompany loan from FNHL to Housing for
4. That the interest rate of the
borrowing by Housing from FNHL be
at the current Weighted Average Cost of Capital (“WACC”) for FNHL
plus .25% adjusted quarterly.
5. TT and Housing enter into new LPA and adopt Constitution for the GP.
Moved:
Bob Trautz
Seconded: Murray McCully
Paper to go to Holdings board including the income tax consequence, and
GST consequence
[action].
7.0
Any other Business
The CE advised that RSA wil be linked into this with TT. To make it easy for
Richard Westbury – 1 pager Heads of Agreement, same terms, same basic
documents, valuation with Telfer Young.
8.0
Next Meeting
Meeting closed at 10:20. Next meeting to be confirmed.
Action Register
No.
Action
Responsible Due
Status
08.1
Paper to go to Holdings
CFO
FNHL
In process.
board including the
October
income tax consequence,
Board
and GST consequence
Meeting
