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GOVT SHOULDER TAPPED FIRM FOR $14 MILLION INTEREST-FREE LOAN(New Zealand Press Association Via Thomson Dialog NewsEdge) Wellington, Oct 18 NZPA - The Government sought out and shoulder tapped a computer graphics company it eventually granted a $14 million interest-free loan. Economic Development Minister Trevor Mallard today said 3D graphics company, Right Hemisphere, which was granted the loan last month, had not approached the Government for the money. ``Right Hemisphere did not initiate the approach to Government,'' Mr Mallard said in answers to parliamentary questions from National MP Katherine Rich. ``The Ministry of Economic Development brought the Right Hemisphere opportunity to my attention at the end of February 2006. ``As a result of a briefing from MED officials and subsequent meetings with Right Hemisphere representatives, I invited Right Hemisphere to make a formal proposal.'' Mrs Rich said Right Hemisphere had been the subject of Government favouritism. ``Government officials and ministers shouldn't be searching the country for opportunities to give away taxpayer money, interest free to companies,'' she said. ``Many thousands of other Kiwi companies would be delighted to receive a special Government shoulder tap, but aren't so fortunate.'' She said the Government had ignored Treasury advice that the loan, which will cost $3.5 million in forgone interest over its three-year term, had a ``low probability of resulting in net benefit to NZ''. When Prime Minister Helen Clark announced the loan last month, she said it was to keep the major part of Right Hemisphere's operation in New Zealand. The company, which has 55 staff in Auckland and 45 in the United States, develops software to convert highly technical 3D images into graphics for such things as maintenance and training manuals, and marketing publications. It is touted as a world leader and last year reported 90 percent growth. Its aim is to capture 10 percent of a $US10 billion ($NZ15.6b) global market. Miss Clark said the loan meant ``New Zealand brains, talent, and market experience stay in New Zealand''. Included in the loan terms was Right Hemisphere contributing to a three-year programme of research projects involving New Zealand universities. Its US backers -- Sequoia Capital Partners and Sutter Hill Ventures -- would also be required to review at least five local tech-firm business plans a year for three years in a bid to get a cluster of companies off the ground. If the company breaks the terms of the loan it must then pay interest. The Government expected Right Hemisphere staying in New Zealand would also create spillover benefits for other companies needed to provide support for them. NZPA PAR gf kn Copyright 2006 New Zealand Press Association. Source: Financial Times Information Limited. |