Timbercorp unlikely to sell assets

Agribusiness investment manager Timbercorp says it is unlikely to sell its forestry assets after offers from interested parties were at prices substantially below book value.

The company is continuing the sale process but, based on the non-binding indicative offers received, it is unlikely to sell the assets within the timeframe required to satisfy the objectives of the sale program.

Timbercorp announced following the release of its 2008 full-year results in November that it would sell a range of forestry assets to reduce debt and fund future business projects.

In a statement today, the company's chief executive, Sol Rabinowicz, said the company had also received expressions of interest regarding the sales of selected horticultural assets.

"However, it is too early in the process to determine whether any formal offer for the horticultural assets will be received by the company and, if an offer is received, whether the offer will be in a form or at a price capable of acceptance," he said.

In September, the company was forced to restructure its borrowing arrangements and obtain waivers for certain bank covenants which would have otherwise been breached.

Timbercorp undertook to sell selected assets and apply a portion of the proceeds to reduce its debt.

The revised facility terms matched some of the principal repayments to the expected asset sale program.

The financial statements were prepared on the basis of the asset sale proceeding as planned, however, in the absence of asset sales, the company will be forced to enter into alternative restructuring solutions with financiers.

"Given the status of the forestry sale program, the company is now in discussions with its financiers with a view to renegotiating, extending and amending its various facilities," Mr Rabinowicz said.

Timbercorp has a syndicated loan facility with a limit of $200 million which is fully drawn.

The facility is repayable by monthly amortisation up to July 2009, with the final repayment in December 2010.

The company's financiers have agreed to extend the payment date on April 1 to May 1 2009, meaning Timbercorp is obliged to make repayments totalling $10 million on May 1.

The company also has other fully-drawn bilateral facilities with various financiers totalling $279.6 million.