Futuris, Timbercorp plan shelved

PLANTATION player Timbercorp has ended talks with Futuris Corp over a planned joint venture to manage 167,000 hectares of mainly blue gum forests in Western Australia and Victoria.

The companies said a heads of agreement signed in May had reached a scheduled deadline without overcoming several unresolved issues.

The failure to seal the deal also ends an arrangement whereby Futuris was to end up with a 15 per cent interest in listed Timbercorp, via a 50 per cent stake in Timbercorp WA, an investment vehicle owned by two Timbercorp directors.

Timbercorp executive director operations John Vaughan said the shelving of the forestry operations negotiations did not mean a merger had been abandoned altogether.

Mr Vaughan said a separate joint venture involving woodchip marketing and port facilities operation between Timbercorp and Futuris’ 50 per cent-owned ITC was performing well.

The joint venture was currently finalising the engineering and financing of a $20 million facility at Albany.

However, he said talks had been shelved to allow the groups to focus on marketing their respective Managed Investment Scheme products ahead of the main selling season between March and June.

“I think at this stage it is fair enough to say we have stopped talking,” Mr Vaughan said.

“We did a lot of work, both parties, and it was all very amicable but at end of the day we agreed to disagree on where it was heading. There were issues that needed to be resolved.”

Mr Vaughan would not be drawn on what the unresolved issues were that caused the merger failure, but it is understood that some negotiations had focused on marketing MIS schemes where both Timbercorp and ITC’s operations compete vigorously.

ITC managing director Tony Jack said the relationship with Timbercorp had started after ITC bought into Australian Planation Timber following its collapse.

Mr Jack said Japanese buyers had shown a lot more interest in sourcing wood chips from the bigger operations created by the link between ITC and APT.

He said the benefits of scale had been even more evident when ITC and Timbercorp representatives visited Japan together and the current operating joint venture had grown from that.

The two groups are set to harvest a combined 400,000 tonnes this financial year, rising to more than 3 million tonnes a year over the next decade.