A SECOND company has offered regional timber plantation lessors, growers, investors and contractors a financial lifeline following the collapse of major MIS companies, Timbercorp and Great Southern Limited.
Pulpwood Plantations Pty Ltd (PPPL) was established to invest in six of Great Southern’s plantation projects, half of which are in the region.
It followed the formation of TC Growers by timber industry superannuation fund, First Super with Penola Pulp Mill, which intended to acquire all of the Timbercorp Forestry assets and interests.
TC Growers confirmed on August 6 it would engage in the sale process by liquidator KordaMentha.
This followed discussions with KordaMentha, investor grower representatives and potential partners.
“Revisions to the Timbercorp Forestry sale process now mean there will be clear information and options for investor growers that we don’t think existed before,” said TC Growers spokesperson John Roche.
Many farmers in the region leasing their land to plantation growers have still not been paid their most recent entitlements.
Some contractors are preparing to leave the industry.
PPPL would initially provide $10 million as working capital for Great Southern’s six schemes through to harvesting, but up to $20 million if required.
PPPL chairman George Martin said with growers facing an uncertain future, the members of the new company believed its offer represented a mutually beneficial outcome.
As a result, PPPL would only succeed if growers succeeded.
“The most critical aspect of our offer is that we’re aligning our own financial interests with those of the growers,” Mr Martin said.
“We will invest the working capital required to see these projects through to harvesting.
“While we expect a return for that investment, there’s no financial benefit in it for us unless growers also benefit.”
The six plantation projects are for the 1998 through to 2003 schemes covering about 53,000ha.
Growers could decide in September if PPPL’s offer will proceed, replacing Great Southern Managers Australia Ltd.
They will be asked to recommend independent Primary Securities Ltd be appointed to protect their interests and provide oversight of PPPL’s operations.
However, five per cent of growers still need to agree to hold the meeting.
PPPL is a private, unlisted company led by Mr Martin who is chairman of Coogee Chemicals and a well-known Western Australian business leader.
He said that in establishing PPPL, he had looked to bring together the necessary blend of skills and experience to run a substantial industrial forestry business.
The four-member board includes Albany-based Denis Sawers, former Oji Paper Company Ltd of Japan forestry production advisor and former Great Southern Development Commission deputy chairman.
The others are CEO Phillip Butlin (former Great Southern deputy CEO) and Tim Martin (Coogee Chemicals executive officer).
Board members have personally committed to funding the initial $10 million in the company to fund the six projects through to harvest.
Mr Martin said PPPL was proposing its revenue was derived from increasing its share of net harvest proceeds by between two per cent and 34 per cent depending on the time to harvest and working capital requirements.
Administrators were appointed in May to take over Great Southern when it collapsed financially owing more than 43,000 investors up to $4 billion.
It joined Timbercorp after increasing market uncertainty surrounded MIS sales and their funding.
Great Southern had tried for 15 months to restructure after recognising the need to diversify its earnings and cash flow, reduce its reliance on annual MIS sales, reduce its level of gearing and to derive more value from its strategic asset base.
PPPL said it wants to provide a more attractive alternative to the schemes’ winding up, which could result in little if any return to growers, require no further cash investment by growers and deliver effective alignment of financial interests.
Growers are being contacted with PPPL’s proposal.
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