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Alterra closes in on carbon demerger

WA agribusiness player Alterra is another step closer to demerging its carbon forestry business after receiving proxy votes that favour the demerger.

More than 69% of the proxy votes received, which make up more than two thirds of the company’s issued shares, voted in favour of the demerger.

The company is seeking shareholder approval at Thursday’s extraordinary meeting for the demerger, which will place its carbon arm and a solid stream of income into the hands of individual Alterra shareholders.

Under the demerger, which appears to take a page out of the recent Coles/Wesfarmers demerger, Alterra will distribute 85% of shares in Carbon Conscious Investments directly to its shareholders, with the ASX-listed entity retaining a 15% stake in the carbon credit generating forestry business.

Alterra will continue to manage the carbon business under contract.

The carbon forestry business is expected to generate revenue of approximately $21 million between 1 January 2019 and 30 September 2027.

Carbon Conscious Investments will look to distribute 90% of its net profit after tax to shareholders, making it simply a cash-generating, dividend paying vehicle.

Alterra was an early mover in the race to get ahead of the expected carbon Emissions Trading Scheme that never fully eventuated due to political uncertainty.

The company was successful in landing two quite lucrative long term contracts to grow trees, mostly on unproductive farming land, for conversion to carbon credits into the hands of Origin Energy and BP.

After the demerger, Alterra will still hold a quality patch of freehold farming land north of Perth and a $2.4m in cash., ,

The company is pushing ahead with its demerger plans in order to focus on developing its other agribusiness opportunities.

These include the development of WA’s first “system 5” dairy on its Dambadgee Springs property near Dandaragan, a dairy business in Queensland and other horticulture ventures.

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