12/11/2009 - 00:00

Bid to reclaim Gt Southern assets rejected

12/11/2009 - 00:00

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Managed investment schemes face tough times after the latest round of collapses.

Bid to reclaim Gt Southern assets rejected

GREAT Southern receiver McGrathNicol is understood to have rejected a new investor plan to retrieve control of assets located on breached third-party leases.

The emergence of the plan coincides with the release of an autopsy of the former agribusiness heavyweight – conducted by administrator Ferrier Hodgson – that shows Great Southern recorded a $352.1 million after-tax loss in the 7.5 months leading up to its collapse.

WA Business News understands the investor plan would elevate an un-named funder willing to repay the third-party landowners to a creditor status above McGrathNicol – a plan deemed unacceptable by the receiver.

The receiver was brought in to look out for the interests of the secured bank creditors, which are collectively owed about $600 million, after Great Southern succumbed to a mountain of debt in May.

The potential lifeline was understood to be directed at investors in Great Southern’s WA-based flagship timber assets, and not for assets located on the Tiwi Islands in the Northern Territory.

Save My Trees, an initiative set up to find a good commercial outcome for Great Southern investors, is taking part in the negotiations.

The funding would be an interim measure designed to keep the assets under investor control before a new manager, such as the Gordon Martin-led Pulpwood Plantations, Tony Jack-led Black Tree Proprietary, or Gunns takes over the schemes.

It is understood the receiver is still aiming for a pre-Christmas investor meeting to determine the winning bid, although the public release of bids by Black Tree and Gunns is more than three weeks overdue.

Investors with assets located on Great Southern-owned property are in a stronger position than those with projects located on leased land. McGrathNicol previously told investors with assets on leased land that the landlords might ultimately have a right to terminate the lease and take possession of the leased properties.

The administrator report into the failure of Great Southern concluded that lease rental charges increased significantly in recent years as projects expanded, resulting in a burden on the company.

Sales commissions, marketing and promotional costs also weighed down the former agribusiness heavyweight in the past three years as inflows slowed.

“These costs have averaged between 18 per cent to 20 per cent of the [managed investment scheme] sales raised over this time, effectively representing an average cost of 20 cents in every $1 raised from MIS sales activity,” the administrator wrote in a report released on Tuesday.

Ferrier Hodgson has scheduled a second creditors meeting for next week.

• See feature on pages 8-9 on agribusiness managed investment schemes.

 

 

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