Coogee Chemicals chairman Gordon Martin has challenged receivers of Great Southern by devising a plan to personally contribute the vast bulk of working capital, of up to $20 million, needed to enable six collapsed timber schemes to be brought to harvest.
Coogee Chemicals chairman Gordon Martin has challenged receivers of Great Southern by devising a plan to personally contribute the vast bulk of working capital, of up to $20 million, needed to enable six collapsed timber schemes to be brought to harvest.
Mr Martin told WA Business News the group behind the "rescue package" would retrieve its return on net harvest proceeds, and thereby align its interests with growers, which differed to the current proposal.
The proposal, which needs substantial grower support to proceed, is for six timber plantations from 1998 to 2003, representing hundreds of millions of dollars worth of investment deposited by 23,000 investors.
The package is expected to be one of several competing plans.
"If nothing else this will draw others out of the woodwork," Mr Martin said.
Former Great Southern executive director Phillip Butlin is among several backers of the package who have a financial interest in the proposal.
The announcement is below:
Gordon Martin, Chairman of Coogee Chemicals and a well known WA business leader, is offering a rescue package to growers in six of Great Southern Ltd's plantation projects. Mr. Martin has established Pulpwood Plantations Pty Limited (PPPL) which will initially invest $10 million, and up to $20 million if required, to provide working capital for the six schemes through to harvesting. PPPL's offer requires no further cash investment by growers.
PPPL is recommending that growers replace Great Southern Managers Australia Limited with a Responsible Entity called Primary Securities Ltd. Primary Securities is independent of Pulpwood Plantations and its role would be to protect grower interests and provide oversight of PPPL's operations.
The company, led by Managing Director Robert Garton Smith, has extensive experience as a Responsible Entity in the agricultural sector and has an ASIC licence offer for the schemes covered by PPPL's propasal. Subject to growers appointing Primary Securities as Responsible Entity, Pulpwood Plantations would be contracted to manage each project through to harvesting.
Gordon Martin says: 'The most critical aspect of our offer is that we're aligning our own financial interests with those of growers. We will invest the working capital required to see these projects through to harvesting. While we expect a return for that investment, there's no financial benefit in it for us unless growers also benefit.
After extensive due diligence, we are very confident of a favourable outcome for both growers and ourselves.'
The six plantation projects are for 1998, 1999, 2000, 2001, 2002 and 2003 schemes.
PPPL is making an offer in relation to these given the extensive information publicly available, arising from Great Southern Limited's Project Transform. PPPL is proposing its revenue is derived from increasing its share of net harvest proceeds by between 2% and 34% depending on time to harvest - and therefore working capital requirements. With growers currently facing an uncertain future, PPPL believes the offer represents a mutually beneficial outcome.
For PPPL's offer to formally proceed, the company needs 5% of growers to call a meeting, which is expected to be held by mid to late September. At that meeting 50% of votes by value of all growers would be required to vote in favour of replacing the Responsible Entity and 75% of votes at the meeting are required in favour of the revised share of harvest proceeds.
Mr Martin said that in establishing PPPL he had looked to bring together the necessary blend of skills and experience to run a substantial industrial forestry business as well as deal with the complexities of the MIS structure. PPPL's Board of Directors includes Chief Executive Officer Phillip Butlin, former Deputy CEO of Great Southern Limited, Tim Martin, an executive director of Coogee Chemicals, and Denis Sawers, former Forestry Production Advisor to Oji Paper Co Ltd of Japan, and former Deputy Chairman of the WA Government agency Great Southern Development Commission.
Forestry services are to be provided by Pulpwood International, headed by Dr Gary Inions.
