Timbercorp News

MIS forest managers growing wood for an undersupplied domestic market

Wednesday, 27 May 2009

In the torrent of media commentary about the recent collapse of major agribusiness managed investment scheme companies, Timbercorp and Great Southern... <read more>

Not Seeing the Wood for the Trees

Friday, 22 May 2009

Given the hysteria surrounding the collapse of Timbercorp and Great Southern I think it is important to provide some balance to the discussion of forestry managed investment schemes... <read more>

UPDATE REGARDING TIMBERCORP INVESTMENTS

THURSDAY, 21 MAY 2009
Timbercorp Loans - 2008 Financial Year

We have spent a considerable amount of time investigating any potential avenue of legal redress for our clients resulting from the Timbercorp administration. On this basis, one of our financial planning colleagues has engaged Macpherson + Kelley Lawyers (MKL) to undertake a thorough assessment of the current facts and determine whether there is any avenue of relief for our clients... <read more>

Macpherson & Kelley Lawyers (MKL) - Offer Memorandum. <attachment>

Macpherson & Kelley Lawyers (MKL) - Authority to Act. <Authority>

Select Harvests eyes Timbercorp assets

Philip Hopkins | April 27, 2009 | The Age - Business Day

Almond producer Select Harvests is pushing to buy the almond assets of its collapsed business partner Timbercorp.

The company has begun talks with Timbercorp's voluntary administrators, KordaMentha, with the initial aim to resume normal operations of the suspended horticulture operations.

Select Harvests' directors said all options were on the table, including ``the potential acquisition of Timbercorp's almond assets''.

Select Harvests shares were down 70, or 20%, to $2.80 in late afternoon trade, while Timbercorp's shares were 4.4 cents when suspended last week.

KordaMentha, which took over as administrators last Thursday, initially stopped operation of all Timbercorp's timber and horticultural operations while they assess what to do with each project. Timbercorp has 40 subsidiaries that control different projects, including 12,000 hectares of almond orchards.

The directors said the talks were at an early stage, but it was too early to forecast the financial impact of Timbercorp's collapse on Select Harvests. In the interim, the company was talking with its financiers to ensure their continuing support, particularly in relation to the bid for Timbercorp's almond assets, they said.

The two companies have had a business partnership for a decade. Select Harvests, which first planted almond orchards around Robinvale in the mid-1970s, began expanding after 1998 by developing almond orchards on behalf of external investors. Timbercorp helped provide the finance while Select managed and processed the crop.

This changed Select's income stream from crop revenue to a fee-based recurring income stream based on orchard development, farm management, harvesting, processing and marketing.

Select Harvests owns 1347 hectares (3368 acres) of its own almond orchards and manages 14,118 hectares on behalf of external investors, most of them with Timbercorp.

The company now processes 12,000 tonnes of almonds a year and aims to lift this to 40,000 tonnes by 2011 as new orchards come into full production.

Debt-ridden Timbercorp went into voluntary administration last week with a market capitalisation of $15million, net assets of $595million, current debt of $568 million and net debt of $903.1million.

Hope glimmers for investors

25 Apr 2009 | The Advertiser Metro Edition

TIMBERCORP administrator Mark Korda yesterday offered a glimmer of hope to the 18,600 embattled grower investors in the fallen farm scheme promoter.

In an emailed note last night, Mr Korda urged affected growers not to renege on myriad loan and management payments, a strong indicator that the company’s farms were likely to be continued.

The note, issued just 24 hours after Timbercorp entered voluntary administration, also advised that a joint meeting of creditors and growers would be held on May 5.

Timbercorp felled by debt

24 Apr 2009 | The Australian | Andrew Main Agribusiness

PLANTATION group Timbercorp’s collapse yesterday has thrown a major part of Australia’s rural industry into disarray, raising questions about the sustainability of urban-based schemes designed to minimise investors’ tax liability.

The group’s board has called in insolvency specialists KordaMentha as voluntary administrators, having realised that even if Timbercorp did manage to beat a deadline to repay financiers $20 million on May 1, there was still a debt of $40 million looming for payment by the end of May.

‘‘ That will put them in a better position than if the financiers called in the receivers,’’ said Jim Blackburn, head of agribusiness at Melbourne consultancy Lonsec.

The company has been hurt by the combined forces of declining asset values, tightening credit, the economic downturn and drought.

Timbercorp revealed in November that its net debt exceeded net assets at $903 million to $595 million.

Its lenders are ANZ Bank, Commonwealth Bank, Westpac Bank and Bank of Scotland. ANZ is reportedly by far the biggest, with an exposure of between $450 million and $500 million.

Timbercorp was founded in 1992 and owns or manages 120,000 hectares of forestry, olive, citrus, grape and almond plantations, many of them along the Murray River.

It has about 170 staff in Perth, Hamilton (Victoria), Penola (South Australia), Mildura and Melbourne.

It has 14,000 shareholders, who are unlikely to see any distribution once secured creditors are paid, since ordinary shareholders rank behind secured creditors unless they can prove they were misled.

The price of Timbercorp shares, which had been under pressure for months and dropped through 50c in November, fell 17 per cent on Wednesday to 4.4c, taking the decline over the past year to 96 per cent and imputing a total value to the company of $15.5 million.

Under the managed investment scheme model, Timbercorp is the responsible entity (R/E) for about 45 managed investment schemes whose 18,500 investors — or ‘‘ growers’’, as Timbercorp calls them— have a management agreement with Timbercorp, but not a direct financial one.

Mr Blackburn said it was possible that the managed investment schemes would be able to carry on operating as long as a substitute R/E was found.

‘‘ The risk to shareholders is very much greater than the risk to unitholders in the Managed Investment Schemes,’’ said Mr Blackburn, who noted that the administrators were looking to ‘‘ develop a stategy for each forestry and horticulture product, project by project’’.

He noted that after similarly structured company Australian Plantation Timber collapsed in July 2001, the management was successfully taken over by Futuris subsidiary Integrated Tree Cropping.

KordaMentha spokesman Mike Smith said last night that Timbercorp and some of its managed investment schemes had been ‘‘ hit by an almost perfect storm’’ of negative factors, not least that although Timbercorp owned a huge water extraction right from the Murray River, it had been forced to buy in water from elsewhere over the past two to three years and then bill the MIS unitholders.

He said many of the assets were ‘‘ world class’’ and that the 6500ha olive plantation at Boort in Victoria represented about 20 per cent of the Australian olive crop.

‘‘ It would be hard to imagine, even in these difficult circumstances, that these assets would be allowed to wither,’’ he said. At Boort, Timbercorp owns the land, the plantation is managed by olive company Boundary Bend and the relevant MIS unitholders own the olives harvested.

Timbercorp management had been trying to sell assets, particularly land, with an aim of raising $280 million from forestry land and $200 million from horticultural land. But as chief executive Sol Rabinowicz said last week, the bids were ‘‘ substantially below book value’’.

Safety net gives growers heart

Geoff Easdown | April 23, 2009 | Herald Sun

THE 18,000 growers caught up in Timbercorp's administration can take heart the $1.7 billion they tipped into high-risk farm projects won't be lost.

Leading managed investment schemes (MIS) analyst Shane Kelly, head of the advisory company Adviser Edge, told BusinessDaily farm managers such as Timbercorp could be replaced by "grower" investors.

"We are confident the investors are well protected by the corporations law," Mr Kelly said.

The same protection does not apply to individuals holding Timbercorp shares who could forfeit them if the stricken company is seized by its banks should it fail to meet a $20.5 million payment due on May 1.

BusinessDaily was advised yesterday that the Corporations Act allows grower investors to meet and agree to terminate a manager and appoint a replacement. While the process requires investors to act as a group and is complicated and time-consuming, it has been successful before.

With the deadline just seven days away, Timbercorp chief executive Sol Rabinowicz and his management team have asked the banks to restructure $360 million in debt.

Industry experts say one of the big challenges confronting creditors will be the inability to obtain full value for Timbercorp's eucalypt forests, olive and citrus groves, vineyards and mango and banana plantation interests as well as its investments in glasshouse tomato production.

Large parcels of the land are held by Timbercorp under leasehold and sub-leased to grower investors, who retain an interest in the land until their crops are harvested.

Analyst Mr Kelly said one of the issues confronting investor growers would be the speed at which a replacement manager could be found to take charge of their projects.

Timbercorp, which has traded under difficulty since September, has wanted to sell assets to cut debt and raise cash.

But the sale plans - a condition that the ANZ, Westpac and the Bank of Scotland International imposed before waiving banking covenants on breaches of Timbercorp's syndicated borrowings - were unrealised last week when Mr Rabinowicz told the Australian Securities Exchange that indicative offers had fallen below book value.

His ASX note flagged that Timbercorp was on its knees and unlikely to continue trading beyond May 1.

The company, formed in 1986, has benefited from tax laws that allowed investors to claim an upfront tax deduction in the year they make their investment.

Australian Plantation Timber was an example of how MIS projects can pass from one manager to another.

APT was one of the largest plantation managers in Australia before it was placed in receivership in 2001.

Another company made an offer for APT, allowing its MIS projects to continue.

Original Article from:

A message from the administrator regarding Timbercorp

Dear Grower Investors and Advisors

As you would be aware, various partners of KordaMentha have been appointed Voluntary Administrators of Timbercorp Limited (Administrators Appointed) and its 40 subsidiary companies.

Details of the appointment are posted on the Timbercorp website.

I am writing to inform you that Grower Investors will be invited to attend a meeting of creditors on 5 May 2009. Further details of the meeting will be sent to you by letter early next week.

I understand that there are many questions you will have. We will provide you with information on a regular basis by email, letter or through the websites. Due to a high number of inquiries, I urge you to read these updates in order to stay informed. If you have any specific inquiries, please email them to investorqueries@timbercorp.com.au and we will either address them directly or through frequently asked questions posted on websites.

In the meantime, growers should continue to make payments relating to their projects and/or loans.

I thank you for your patience and understanding. This is a complicated administration and proper due diligence must be applied when answering your questions.

Yours sincerely

Mark Korda
Administrator

April 24, 2009