02/12/2009 - 15:35

Tony Jack blasts Great Southern receiver

02/12/2009 - 15:35

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Local forestry veteran Tony Jack has accused receiver McGrathNicol of using his bid for the collapsed Great Southern timber schemes to find a better deal for the bank creditors at the expense of out-of-pocket investors.

Local forestry veteran Tony Jack has accused receiver McGrathNicol of using his bid for the collapsed Great Southern timber schemes to find a better deal for the bank creditors at the expense of out-of-pocket investors.

The sending of a letter to investors lambasting the receiver, signed by Mr Jack, comes less than two weeks after McGrathNicol nominated Tasmania-based timber heavyweight Gunns as its preferred bidder to assume responsibility for most of the collapsed company's plantation schemes.

The overlooked rival bids, launched by the Mr Jack-led Black Tree and Gordon Martin-led Pulpwood Plantations, will now have to resort to alternate strategies to topple Gunns - and each other - in order to stay in the race.

Black Tree worked more closely with receivers in the bidding process than Pulpwood; a strategy that now appears to have backfired on Mr Jack's proposal.

"Our faith in the [McGrathNicol] process was misguided. It is now obvious that [McGrathNicol] were simply using Black Tree to bide time to find a better solution for the Great Southern secured banks which had installed [McGrathNicol] into its position as Receiver," the letter said.

"It seems that [McGrathNicol] strung out their process (while assuring Black Tree that our proposal was the best on offer) to allow a bank friendly proposal to be completed by Gunns."

Concerns have been raised throughout the bidding process for Great Southern's timber and horticultural assets that the receiver, which was appointed in May by a group of banks owed hundreds of millions of dollars, could favour bids that benefit the creditors at the expense of investors.

A spokeswoman for McGrathNicol directed WA Business News to a recent circular for McGrathNicol's response to the letter. The receiver previously said Black Tree's proposal did not provide certainty to growers, nor proposed an immediate replacement responsible entity.

Mr Jack's letter indicated the receiver had encouraged Black Tree to pursue the proposal without an immediate replacement.

Pulpwood's Mr Martin, who is also chairman of Coogee Chemicals, recently told WA Business News that he was not surprised by McGrathNicol's decision to back Gunns.

Pulpwood is putting its proposal to investors next week via a shareholder vote, while Black Tree must rely on investors voting down the Black Tree and Gunns proposals in order to stay in proceedings.

Although there are tens of thousands of out-of-pocket investors exposed to a range of assets, most financial interest is in Great Southern's flagship timber schemes.

Pulpwood's proposal has been public for some time, it has its shareholder vote organised and it has a proposed responsible entity replacement, while Black Tree only made its proposal public in late November after McGrathNicol anointed Gunns as its preferred candidate.

The Black Tree letter said that the receiver convinced it to stay within its formal process, despite the additional time this took in making its proposal public.

The three bidders are trying to secure the support of 50 per cent of investors to take control of the schemes.

The receiver is likely to play a significant role in determining the outcome of the vote as it effectively controls up to 30 per cent of some schemes - and equivalent voting rights - that Great Southern used to control.

These votes will likely be directed to its preferred candidate, Gunns.

 

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