Projects } TBK Capital

Manuka Oil Production – Third Plantation

Tairawhiti Pharmaceuticals Limited has been processing manuka oil on the East Cape of New Zealand for the last 15 years. The oil has powerful anti-bacterial properties, and the research conducted into the effectiveness and properties of the oil have become more widely recognised. It is used in the treatment of MRSA and in other natural skin care products.


Tairawhiti Pharmaceuticals Limited has been processing manuka oil on the East Cape of New Zealand for the last 15 years. The oil has powerful anti-bacterial properties, and the research conducted into the effectiveness and properties of the oil have become more widely recognised. It is used in the treatment of MRSA and in other natural skin care products.
 
Tairawhiti’s production so far has been from manuka harvested from the wild. The demand for Manuka oil is now well in excess of supply so the company intends to develop 300 ha of plantations over the next five years to replace its current wild harvest source.
 
Land for the plantations has been acquired and will be secured by a 25-year Forestry Right so no land needs to be purchased. The development of the plantation will be completed and managed under a fixed contract to Tairawhiti.
 
Production of leaf commences in the second year and Tairawhiti Pharmaceuticals Limited undertakes to purchase all production at a price fixed for the first five years and then fixed by a formula annually after that. The Capital Raising below is for the third plantation on that land.
 
Limited Partnership
 
Tairawhiti Pharmaceuticals is seeking equity partners to share in the production of the Manuka oil from a 50 ha site. The investment will be structured as a Limited Partnership.
 
This structure provides New Zealand based tax residents with an opportunity to personally attribute non-taxable capital gains and offset partnership losses against income from other sources. The tax losses arise from the incentives provided by legislation, and from losses incurred in the early years of the business.
 
The Limited Partnership is managed by the General Partner which will manage the plantation on behalf of the Limited Partners. The structure of the investment provides limited liability protection to investors similar to a limited liability company.
 
The taxation rules around forestry rights allow the money expended by the Limited Partnership (other than non-deductible formation and promotion expenses) to be written off in the year of expenditure. The initial write off is limited to the capital invested, however losses in excess of capital can be carried forward against future income. In all the deductible expenditure is estimated to be 99% of total expenditure.
 
Capital Raising
 
The East Cape Manuka Plantations LP limited partnership is seeking $900,000 to develop the 50ha plantation.
 
Based on the limited partnership’s projected income and cash flow, and assuming a personal investment at a tax rate of 33%, the investor can expect a post-tax Internal Rate of Return of 27%. This is equivalent to a pre-tax return of 18% per annum.
 
Exit Strategy
 
The term of the Limited Partnership is for 10 years unless extended unanimously by the partners. There is a requirement - if the partners wish - for the manager of the partnership to purchase the Forestry rights from the partnership based on a revenue multiple at the end of the 10 year term.
 
This purchase obligation is guaranteed by Tairawhiti Pharmaceuticals and Manuka Headquarters Limited, the joint managers and promoters of the development. Investors have the choice of accepting shares in Manuka Headquarters Limited at the end of the 10 year term if they wish.

Want to Know More?
If you’d like to know more about the this Offer and receive a copy of the Information Memorandum, email or give me a call on +64 21 902 901 or +64 9 307 3257.

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The above investment is not an offer of financial products that requires disclosure under the Financial Markets Conduct Act 2013 (Act) and is available only to wholesale investors as defined by that Act. It is intended for distribution only to selected people to whom, under the relevant laws, it can be lawfully distributed. It cannot be distributed in any other jurisdiction, or to any other people. It is not an offer or solicitations in any jurisdiction in which such offers or solicitations are not authorised, or in which the person making such offers or solicitations are not qualified to do so, or to any person to whom it is unlawful to make such offers or solicitations. Any representation to the contrary would be unlawful. No action has been taken by any person that would permit a public offering in any jurisdiction where action for that purpose would be required.

Cheers



John Paine B.Sc., Dip BIA
TBK Capital Limited
Level 10,120 Albert Street
Auckland 1010, New Zealand
Phone +64 9 307 3257
Mobile +64 21 902 901
Email john.paine@tbkcapital.co.nz
 

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