24/09/2009 - 00:00

Jostling over tree change

24/09/2009 - 00:00

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AT the end of the month, the remaining sales and marketing staff at failed agribusiness provider Great Southern will be made redundant; but the battle for control of its assets is just getting started.

Jostling over tree change

AT the end of the month, the remaining sales and marketing staff at failed agribusiness provider Great Southern will be made redundant; but the battle for control of its assets is just getting started.

Interested parties have pumped hundreds of thousands of dollars into due diligence and are unlikely to walk away, even if receiver McGrathNicol decides to nominate its preference as a result of the submission process that was slated to close mid-week.

There are 21 parties carrying out due diligence on Great Southern's lucrative forestry projects, representing the interests of about 35,000 investors. It is understood the bulk of those parties are simply seeking the assets, rather than wanting to become the entity that takes control of the management of the trees.

Far fewer parties have expressed interest in Great Southern's smaller operations, which include almond, olive and high-quality timber plantations.

There is no love lost between the two groups to have emerged thus far vying for the forestry assets - the Gordon Martin-backed Pulpwood Plantations and Bunning family and Azure Capital-backed Black Tree Proprietary - which have taken very different approaches to the process.

Pulpwood was first to the market, and has essentially laid out its proposal, including the names of its backers and sources of funding. There is a feeling in the market that Pulpwood had adopted a confrontational approach with receivers rather than going through the submissions process.

"We're talking with the receivers, you'd be mad not to," Mr Martin told WA Business News.

He said the group's rival, Black Tree, had "misrepresented" Pulpwood's proposal by exaggerating its potential cut of proceeds, and had yet to make its own proposal public.

"We're saying put it on the table," the Coogee Chemicals chairman and outgoing chancellor at Curtin University said. "The figure they are attributing to us is ... nowhere near."

US investment firm Och-Ziff Capital Management Group has given in-principle agreement to acquire 50 per cent of Pulpwood, which could be an important source of funding.

Early estimates put the figure needed to manage all 11 timber plantations to production at $160 million, while it would take a total of $500 million to also buy the land from the banks.

Pulpwood has proposed a package for six plantations, but could ultimately bid for all 11.

Rival Black Tree has adopted a very different strategy. It is seen in the market as having worked closely with the receivers, but has refused to make public all of its backers, proposed sources of funding or any element of the package, other than it is bidding for all 11 plantations.

"When it's the appropriate time we'll come out with the details of the bid," a Black Tree spokesman said.

The names linked to Black Tree, which include Azure Capital's John Poynton, the Bunning family and former Integrated Tree Cropping chief Tony Jack, are some of the backers to be made public, but not necessarily those with the biggest stakes.

The jostling may end up in a beauty parade, where the rival groups vie for investor support. It is understood the receiver will make a recommendation if there is an offer that is clearly superior.

The receiver has notified the remaining Great Southern sales, marketing and the majority of investor relations staff that September 30 will be their last day at work. It also marks the last day the banks are scheduled to keep funding the schemes, causing further angst for out-of-pocket Great Southern investors.

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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