Great Southern says it will pursue other interested parties for the sale of a Queensland forestry estate after a private international timber fund pulled out of a $23 million deal.
Great Southern says it will pursue other interested parties for the sale of a Queensland forestry estate after a private international timber fund pulled out of a $23 million deal.
In a statement today, the agribusiness company said the prospective purchaser had today withdrawn its offer.
Last month Great Southern announced it had reached conditional agreement with the unnamed fund for the freehold land holding which contains short rotation pulpwood plantations.
Under the deal, the land was to be sold for $23 million and was to be leased back to Great Southern rent free until completion of the original planned harvest.
The estate is not part of the company's plans for a long-term pulpwood forestry business.
"The company will now pursue other parties interested in this non core asset," Great Southern said.
Meantime, shareholders in the company have today approved the issue of shares to investors in two beef cattle projects.
Earlier this week, Great Southern held an investor meeting with investors of the cattle projects and six plantation projects, seeking a minimum 75 per cent approval for the issue of Great Southern shares for interests in the projects.
The company has previously said it will allow for individual acceptances in the plantation projects with offers to remain open until the end of January.
So far, investors holding around 15 per cent of the 1998 plantation project and nearly 25 per cent of the 2003 project have accepted the offer.
The share issue was part of the company's $700 million restructure plan.
At the shareholders meeting today, chairman David Griffiths said the long process, which began in February last year, was a more difficult and challenging exercise than the board could have imagined.
"We couldn't have picked a worse time to undertake this exercise," he said.
Great Southern will issue around 300 million new shares to acquire the managed investment scheme plantation interests and the beef cattle projects.
Shares in Great Southern was down one cent to 18c at 14:41 AEDT.
The announcement is below:
Great Southern Limited (ASX Code: GTP) is pleased to announce that the two ordinary resolutions put to the Extraordinary General Meeting of Shareholders today for the issue of shares pursuant to Project Transform, were both passed. Final resolution results are annexed to this announcement.
All necessary approvals have now been received for the scheme proposals relating to the two Beef Cattle projects and the acceptance of individual offers in respect of the Plantations projects. The company has received individual acceptances in the Plantation projects ranging from approximately 15% in the 1998 Project to nearly 25% for the 2003 Project. Individual offers remain open until 29 January 2009 so these numbers can still vary.
Based on these results, and assuming no change in individual acceptances, the company will issue approximately 300 million new shares. In return the company will acquire:
- MIS plantation interests which at current wood chip prices are expected to deliver $117 million of net harvest proceeds to the company over the next 5 years; and
- Investor cattle, which, together with existing assets, provides a significant cattle business, free from MIS encumbrances, that has cattle land and cattle with a combined value of approximately $290 million (based on recent 30 September 2008 independent valuations).
While the success of the two Beef Cattle projects and level of Plantation project individual acceptances does not remove all the challenges before the company, they do provide additional balance sheet strength and greater flexibility in looking to reduce debt, to satisfy banking arrangements, to sell assets in an orderly manner and provide sustainable future cash flows.
Following project investor and Shareholder approval the estimated net tangible asset backing (based on success of the two Beef Cattle projects and current level of Plantation project individual acceptances) is approximately $1.16.
Commenting on the final Scheme Proposal Results positions, Managing Director Cameron Rhodes said "we are delighted to have achieved the necessary Shareholder approvals to issue new shares for the successful cattle projects and individual offers under the Project Transform process."
"Today marks the end of what admittedly has turned out to be a long process in respect of Great Southern's offer to exchange interests in the selected projects for shares in our company:"
"We of course cannot escape the fact that we are operating in difficult market conditions and we still have a number of challenges before us. That said, we have a strong balance sheet comprised of unique, strategic and valuable assets in the cattle, forestry and agricultural sectors. We are still a market leader in agricultural MIS and will refocus on building a sustainable agricultural funds management business and we operate in a sector with new and emerging opportunities, particularly in the carbon and energy fields."
"Although the market for MIS sales is at present a particularly challenging one, the combination of an expectation of reduced market competition this year, our restructured forestry projects and the recent success in the test case on non forestry MIS, provides Great Southern with opportunities for MIS sales even in this challenging climate."
"Our primary objective now is to look at our business and our assets and to articulate a new and clear strategic direction for the short, medium and long term - with the goals to significantly reduce our debt, to build a stronger more sustainable and more valuable company and to capitalise on our core strengths in the sectors in which we operate. Further details in this regard will be released to the market as soon as possible over the coming months."
Sale of Queensland Forestry Estate
The company advises that the prospective purchaser of the company's Queensland forestry estate has today withdrawn its offer in respect of the conditional sale agreement announced to the market on 1 December 2008.
The company will now pursue other parties interested in this non core asset.
