Gt Southern bid in strife with regulator

Tony Jack's bid to take control of Great Southern's timber schemes has caught the attention of the corporate regulator after projections contained in its proposal were deemed inappropriate.

It is understood the regulator contacted the Mr Jack-led group Black Tree late last week, which resulted in the removal of the group's proposal from its website.

Black Tree - headed by local forestry veteran Mr Jack and supported by several high profile names and companies including corporate advisory firm Azure Capital - is one of three groups vying to take control of Great Southern's flagship timber schemes.

The other two groups are Pulpwood Plantations, headed by local industrialist Gordon Martin, and the Tasmanian forest products company Gunns.

The bidders are seeking 50 per cent worth of votes from investors in the schemes to take over the projects, with Pulpwood's proposal due to be voted on this Thursday.

In a note to investors, Mr Jack said that in the opinion of the Australian Securities and Investment Commission the letter contained information that may have required Black Tree to hold an Australian Financial Services Licence and also may not have been consistent with ASIC policy relating to publishing forecast information.

"As a result, anyone who received or passed on the original letter should destroy it and ask those to whom it has been passed to do likewise," the letter said.

Mr Jack told investors that the proposal would be updated shortly.

The proposal in question included a comparison of the three bids that projected cash flow to be distributed to investors out to 2022, showing Black Tree's bid to be far superior to its rivals.

The projections were accompanied by a fiery letter whereby Mr Jack strongly criticised Great Southern receiver McGrathNicol after he said Black Tree was led to believe it was going to be the receiver's preferred bid.

"It seems that [McGrathNicol] strung out their process (while assuring Black Tree that our proposal was the best on offer) to allow a bank friendly proposal to be completed by Gunns," Mr Jack wrote in the letter.

McGrathNicol chose Gunns instead.

Black Tree is now attempting to get the support and paperwork together in order to call a meeting for early next year. It must rely upon the proposals by Pulpwood (to be voted on December 10) and Gunns (December 23) to be unsuccessful for it to stay in proceedings.

Gunns has a distinct advantage because the receiver is almost certain to vote its stake, which is as high as 30 per cent in some schemes, for Gunns' proposal.

The bidders requires 50 per cent of the total worth of votes to be cast in their favour, meaning investor apathy could also derail any chance to secure a result.