THE ‘for sale’ sign will be swiftly put up on Great Southern’s substantial land holdings as the receiver seeks to recoup money for the bank creditors
THE ‘for sale’ sign will be swiftly put up on Great Southern’s substantial land holdings as the receiver seeks to recoup money for the bank creditors.
The move to sell property comes as forestry company Gunns opts against resurrecting Great Southern’s 2007 timber scheme – a scheme with 4,000 investors who deposited $122 million – after having already taken control of nine other schemes.
Tony McGrath, of receiver McGrathNicol, told investors at a meeting late last year that the sale of the land was how the receiver would make a return to financiers.
“We’ll be moving fairly swiftly to a sale of the underlying real estate,” Mr McGrath said.
In its 2008 annual report, Great Southern records owning about 179,000 hectares of freehold forestry land which had an unencumbered value (the value of land with no assets on it) of approximately $1.2 billion.
Great Southern also operated cattle and horticultural schemes, however most of its money was in forestry. Most of the flagship pulpwood plantations are located in southern Western Australia, Victoria and Tasmania.
McGrathNicol came under criticism during the wind-up of Great Southern with accusations that it favoured strategies that wound up schemes, leaving land unencumbered, over those that brought schemes to harvest.
Land that is unencumbered – property with no assets that must be brought to harvest – is worth more than land with contractual obligations, and therefore there is a potential incentive to wind projects up.
Most of the horticultural schemes were wound up, with the receiver citing a lack of interest from third parties.
Gunns was the receiver’s preferred candidate to take over the flagship timber schemes, and it sold a right for growers to re-plant trees on the land after harvest in exchange for a reduction of fees, thereby reducing the encumbrance on the land.
Gunns ultimately won investor support to take over nine flagship schemes (from 1998 to 2006 inclusive), but WA Business News understands it does not intend to take over the 2007 scheme, which would therefore result in another wind-up.
The decision would suit the receiver, which could then sell the land unencumbered.
Gunns chief executive Greg L’Estrange told WA Business News that at this time it did not make economic sense to take over the 2007 scheme, but he said that there was a notice period it had to make a final decision.
“It’s not over until the fat lady sings,” Mr L’Estrange said.
The notice period runs for about another three weeks.
Several banks that brought in McGrathNicol to look after their interests are creditors to the tune of $575 million.
Great Southern operated schemes on behalf of more than 40,000 investors before it was felled by a mountain of debt mid last year.
