09/09/2009 - 15:33

US fund backs Great Southern rescue

09/09/2009 - 15:33

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Perth businessman Gordon Martin's bid to bankroll a rescue package for Great Southern's timber plantations has gained traction amongst growers while a US investment fund has given its financial support for the move.

Perth businessman Gordon Martin's bid to bankroll a rescue package for Great Southern's timber plantations has gained traction amongst growers while a US investment fund has given its financial support for the move.

Last month, Mr Martin put forward a $20 million proposal, through private company Pulpwood Plantations, to receivers of Great Southern for the six collapsed timber schemes.

Under the proposal, Pulpwood is offering to invest working capital in the six timber schemes through to harvest in return for a share of harvest proceeds.

Mr Martin today said the company had written to growers about the proposal, which included appointing Primary Securities as the new responsible entity of the timber schemes.

'The response from growers has been immediate and overwhelmingly positive," Mr Martin said.

"We are asking them to return a power of attorney document so that Primary Securities can call the meeting on their behalf.

"Once this is done, growers will be only four weeks away from a meeting at which they can vote for change, either in person or by proxy."

Meantime, US investment firm Och-Ziff Capital Management Group has given in-principle agreement to acquire 50 per cent of Pulpwood Plantations.

Mr Martin said the agreement will increase Pulpwood's financial capacity and overall aim to extend its offer to all 11 Great Southern plantation projects.

Great Southern operated 45 forestry, horticulture and cattle managed investment schemes on behalf of 43,000 investors, and was placed in administration and receivership in May after its cashflow dried up and it was unable to draw more support from its bankers.

Great Southern had liabilities of $996.4 million, including loans and borrowings of $833.9 million at April 30, 2009.

Earlier this week, receivers McGrathNicol called for expressions of interest from third parties to acquire all or part of the Great Southern business.

 

 

The announcement is below:

 

 

Pulpwood Plantations Pty Limited (PPPL), the group established by WA industrialist Gordon Martin to invest in six Great Southern schemes, has received an overwhelmingly positive response from growers to its proposal. PPPL wrote to growers on 21 August proposing that Great Southern Managers Australia Limited be replaced by a new, independent Responsible Entity, Primary Securities Ltd. PPPL is offering to invest working capital to see the six schemes, from 1998 - 2003, through to harvesting in return for a share of harvest proceeds. Since writing to growers, over 2,000 have responded by registering support for a growers meeting. The responses received to date are well in excess of the 5% for each project required to call a meeting at which changes can be voted in.

Gordon Martin, Chairman of Pulpwood Plantations says: 'The response from growers has been immediate and overwhelmingly positive. We are asking them to return a power of attorney document so that Primary Securities can call the meeting on their behalf. Once this is done, growers will be only four weeks away from a meeting at which they can vote for change, either in person or by proxy.'

'I am also pleased to report that we have signed an in principle Heads of Agreement with major US investment firm Och-Ziff, which wishes for its affiliated funds to acquire a 50% stake in our company. This acquisition would enhance our ability to deliver a total solution to growers and underpins our commitment to building a long term, sustainable forestry business.'

The proposed investment by Och-Ziff's affiliated funds will increase Pulpwood Plantation's financial capacity and the company's resolve to extend its offer to all 11 Great Southern plantation projects. Pulpwood Plantations looks forward to receiving the information it has requested from the Receiver on the other five schemes as a matter of urgency.

Och-Ziff Capital Management Group LLC is a leading, global institutional alternative asset management firm and is listed on the New York Stock Exchange (NYSE: OZM).

It is one of the largest alternative asset managers in the world, with approximately $21.7 billion of assets under management as of September 1, 2009. The investment in PPPL by Och-Ziff's managed investment funds is subject to final investment committee approval.

On 7 September 2009 the receiver and manager of Great Southern wrote to growers in all pulpwood schemes as follows:

"We expect to have sufficient short term funding but are unable to confirm that funding will be available beyond 30 September 2009. After that date the Pulpwood Schemes will be unfunded. Accordingly, if a potential replacement RE has not been identified by that date for the relevant scheme we may need to transition to the process of winding up of the scheme, unless investors are in a position to fund the ongoing requirements of that scheme. "

Commenting on the receiver's statement, Mr Martin said "Whilst the receiver suggests that it will be running a process to identify other proposals to our own, the receiver has not made clear the timeframe in which it proposes to run that process or how that timeframe fits within the 3 weeks before confirmed funding runs out". Mr Martin went on to note that despite PPPL's requests for information the receiver had to date not made any information available and was now indicating that growers had 3 weeks before confirmed funding ran out.

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