01/12/2008 - 09:07

Great Southern posts loss, sells asset

01/12/2008 - 09:07

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Agribusiness Great Southern has signed a conditional agreement to sell its Queensland asset for a discounted $23 million as it posts an annual loss of over $64 million.

Great Southern posts loss, sells asset

Agribusiness Great Southern has signed a conditional agreement to sell its Queensland asset for a discounted $23 million as it posts an annual loss of over $64 million.

In an annual update for the year ending September 30, Great Southern said that before a goodwill impairment charge of $30 million before tax, the operating loss was $33.8 million.

It said the impairment charge reflected current market conditions and uncertainty associated with the short-term outlook for the acquisitions of RFM and Sylvatech.

The overall loss for the period reached $63.8 million.

"The loss includes allowance for doubtful debts of $56.9 million before tax (FY07 $5.6 million) which includes a specific provision of $37.2 million previously announced in March 2008, and further provisioning reflecting the worsening overall economic environment and the expected impact of this on the performance of the loan book," Great Southern said.

The loss was also impacted by lower than expects total sales of the company's managed investment scheme products, which fell by 24 per cent to $314 million.

Forestry MIS sales accounted for 67 per cent of total sales, Great Southern said.

Corporate expenses were reduced by 26.3 per cent while at the end of the year the company had $91.4 million in cash.

Meantime, Great Southern said it had signed a deal to sell its 26,000 hectare land, of which contains 10,900ha of plantations, to an unnamed international investment timber fund

Under the deal the land will be sold to the international entity and will be leased back to Great Southern for free until completion of the original planned harvest of the relevant plantations.

Great Southern said the value of the land is around a 10 per cent discount to the the company's book value of its non core assets.

The Queensland estate represents 3 per cent of the current value of Great Southern's forestry land holdings.

The sale follows announcements made by Great Southern last week to delay investor and shareholder briefings regarding the proposed restructure of the company.

In October, Great Southern revealed a revised restructure plan which included the buy-out of interest of managed investment scheme investors in eight projects in exchange for shares.

Today, Great Southern said the investor meeting will be adjourned to January 19 next year and the shareholders meeting until January 22.

Managing director Cameron Rhodes said today that the company has received proxy votes showing that the majority of individual investors in five of the eight projects support the company's proposals.
He added that Great Southern has also received a strong yes vote for the two cattle projects.

However Mr Rhodes did add that less than 50 per cent of project investors had voted, making it a "little premature to draw any conclusions from the proxy numbers".

"Whilst the numbers are still subject to change, the company would, based on the individual acceptances received to date, issue approximately 121 million new shares for the acquisition of approximately $60 million of assets," Mr Rhodes said.

"If the two cattle projects were also to be successful, this would increase to approximately 260 million new shares for the acquisition of approximately $130 million of additional assets."

Shares in Great Southern last traded at 19.5c at 12:18 AEDT.

 

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