Martin to pitch for Gt Southern

A MOVE by Perth businessman Gordon Martin to bankroll a $20 million "rescue package" for Great Southern investors is widely expected to be the first of several competing proposals to be lodged in the coming weeks.

WA Business News understands former Great Southern hierarchy has been drumming up support in the industry to take over the management of the failed group's assets, rather than leaving it to the receivers.

It is understood one proposal will be released shortly, while a couple of others are being drawn up. Some packages are expected to compete against Mr Martin's, while others will target other Great Southern schemes.

The Coogee Chemicals chairman and outgoing chancellor at Curtin University said his group would reap a financial return dependent on net harvest proceeds, and thereby align its interests with growers, which differed to the proposal offered by receivers McGrathNicol.

The package, 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 schemes represent roughly half of Great Southern's timber assets.

"I'm not sure I want to give the receivers an open cheque book," Mr Martin said.

"Under our proposal, investors will not have to put another cent in."

Receivers McGrathNicol has estimated Great Southern's forestry and horticulture assets need a cash injection of more than $40 million for maintenance. Investors are concerned that if the money doesn't come from the banks, they will be asked to contribute.

Mr Martin has established Pulpwood Plantations, headed by former Macquarie banker and former Great Southern deputy chief executive, Phillip Butlin.

It is understood other former Great Southern representatives will take part in other proposals.

Mr Martin will contribute the bulk of the working capital required for the six schemes, expected to be up to $20 million, although there are other financial stakeholders.

Michael Butler, who sits on the creditors' committee, said an answer for growers would be found in a commercial group like Pulpwood.

"I would be much more inclined to go with a professional using people within the industry than liquidators and administrators, which on the surface don't have that experience," said Mr Butler, who is head of compliance at Melbourne-based Australian Financial Services.

"There are plenty of people out there with the expertise to do it but it's going to come down to funding."

Exact details of what percentage of net proceeds Pulpwood would extract from the schemes are not yet known.

Pulpwood needs 5 per cent of growers to call a meeting. Then it requires 50 per cent of votes (by value) to replace Great Southern Managers Australia as responsible entity, and 75 per cent of votes at the meeting to implement its proposal.

Primary Securities has agreed to be nominated as the responsible entity to replace Great Southern.

Primary Securities managing director Robert Garton Smith said the group would be mandated to act in the best interest of growers, and be independent of Pulpwood.

He said the need for an RE would generally prohibit poorly conceived proposals being lodged.

A group set up to find a good commercial outcome for Great Southern growers, the Save My Trees initiative, has been involved in identifying groups that could offer a better outcome to investors than the receivers.


(existing subscribers)

The password field is case sensitive.
Request new password

Add your comment

Included in the following lists:

BNiQ Disclaimer