24/09/2008 - 15:19

Crunch threat to Great Southern plan

24/09/2008 - 15:19

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Perth-based agricultural investment manager Great Southern Ltd may go back to the drawing board on its $438 million restructuring plans after the market meltdown slashed its share price.

Perth-based agricultural investment manager Great Southern Ltd may go back to the drawing board on its $438 million restructuring plans after the market meltdown slashed its share price.

The company said it has reviewed the major restructure of its business announced last month which involving buying out the interests of investors.

The company said in an announcement today that the volatily on global financial markets, a share price fall from $0.80 when the 'Project Transform' restructure was announced last August to $0.42 at market close today affected the project.

Great Southern also indicated that the company's largest shareholder, Ospraie Group closing its flagship hedge fund and selling down investments over three years is another reason to the review of the restructure.

Under the initially proposed restructure, Great Southern was to be divided into three business divisions - forestry, agricultural investments and cattle - to provide more regulatory certainty to shareholders.

Central to the restructure was a proposal to buy-out the interests of MIS investors in eight projects - six hardwood projects and two cattle projects - in exchange for Great Southern Ltd shares.

The proposal was expected to net the company $438 million through the issue of shares at $1.10 each.

Full announcement pasted below:

On 26 August 2008 Great Southern Limited (ASX: GTP) announced to the market a restructure
programme ("Project Transform") with the main goal of creating a more sustainable, transparent and
valuable business for all stakeholders that will become less susceptible to regulatory uncertainty. The
central component of the restructure is a series of proposed transactions whereby project investors in
Great Southern's 1998 to 2003 Plantation projects and 2006 and 2007 Beef Cattle projects will be
offered shares in the company in exchange for their MIS project interests.
Since the launch of Project Transform a number of events have occurred affecting the restructure:
Global financial markets have experienced unprecedented volatility and uncertainty;
The company's largest shareholder, Ospraie Group has publicly indicated that it is closing its
flagship hedge fund and selling down investments over 3 years; and
Great Southern Limited's share price has fallen significantly.
Given these events and taking account the feedback received on the proposed transactions from
shareholders, project investors and their advisers, the Board considers it appropriate to review the
pricing and structure of the proposed transaction.
Any changes to the proposals will need to be re-presented to the Independent Directors of the
Responsible Entity (Great Southern Managers Australia Limited) for their re-consideration. This will
mean the dispatch of the relevant Explanatory Memorandum is likely to be deferred to
October/November 2008 with approvals by shareholders and relevant project investors being deferred
to November/December 2008.
Great Southern remains strongly committed to achieving the anticipated benefits of the proposed
transactions which include increased earnings and cashflow certainty, greater balance sheet strength
and flexibility and improved positioning of Great Southern to maximise the value of its significant
agricultural land bank. Nothing has emerged that does not reinforce the boards view that sensible
changes are overwhelmingly in the interests of shareholders and MIS investors allowing Great
Southern to capitalise on its strong relationships and unique assets.
Macquarie Capital Advisers continues to act as corporate adviser to Great Southern Limited during this
period.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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