Sandalwood timber manager TFS Corp will sell its $45 million managed investment scheme (MIS) grower loan book with funds flagged for either reinvestment in the business or returned to shareholders. Source: Australian Financial Review
TFS is the only remaining listed operator in the collapsed MIS industry with much larger rivals Timbercorp, Great Southern, FEA, Willmott Forests and Gunns all going under.
TFS said in a statement to the stock exchange that after consulting with advisor Moelis & Company, the board determined the loan portfolio is a non-core asset and should be divested.
“The Board believes that the capital returned will be better utilised by either reinvestment in the group’s operations or returned to shareholders,” it said.
The strategic review led by Moelis is ongoing and is expected to be finalised in the first quarter of the 2013 calendar year, which may result in a partial or full sale of the business, or sale of more assets.
TFS executive chairman and founder Frank Wilson, and other directors, have been in the firing line of unhappy investors, but survived a push to oust them at the company’s recent AGM but received its first strike against the company’s pay report.
Its biggest institutional shareholder, Regal Funds Management, is unhappy with the corporate governance and level of disclosure by the timber manager.
Regal chief investment director Phil King last month cited a falling share price, significant board turnover and poor disclosure as concerns. Over the past 24 months, the share price has fallen 60 per cent to 43.5¢.
TFS is tipped for its first commercial harvest in late 2013. TFS said it was confident that the pricing for the sale of the first harvested timber will significantly exceed the original PDS forecast prices.
“This confidence is based on a price tension that is developing between the wood and the oil markets for TFS sandalwood,” the company said.
“Strong acceptance signals from the Chinese wood market in conjunction with current and emerging oil markets are spontaneously driving this tension. Therefore growers in TFS’ first managed investment scheme can expect a positive return despite a forecast yield that is approximately 80 per cent below that of TFS’ current plantations.”
The Product Disclosure Document and ATO Product Ruling for the 2013 Indian Sandalwood MIS Project is expected to be released next week, earlier than planned.
TFS said the extended marketing time will allow it to make significantly improved MIS sales this financial year. TFS appointed Duncan Caldwell as general manager – group sales and marketing financial products. He will be responsible for TFS’ Beyond Carbon and MIS sales program.
