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Deloitte puts FEA on the market

Investors in the collapsed Forestry Enterprises Australia will be hoping to recoup some of the $400 million they poured into the business over several years as investment bank Gresham and receiver Deloitte officially place the plantation owner on the market. Source: The Australian

A sale of FEA’s 97,900 hectares of hardwood forests and 46,000ha of land across Australia is likely to reap at least $200m collectively for Deloitte, working on behalf of financiers.

It will take the total value of forestry properties on the market – many of which were part of failed managed investment schemes – to about $700m.

The business was placed in voluntary administration on April 14, 2010. BRI Ferrier were appointed deed administrators on behalf of growers, who collectively contributed $470m, before Tim Norman and Sal Algeri of Deloitte were appointed as receivers, with at least $200m owed to its financiers.

FEA’s assets are mainly in the prime agricultural areas of NSW, Queensland and Tasmania, with forests that are quite mature.

Receivers and administrators agreed in September to sell the assets. This month, the growers who had invested in FEA’s managed investment schemes between 1995 to 2001 agreed to make changes to the schemes’ constitution to enable the sale to take place.

Court orders have also been secured to wind up MIS schemes from 2002 to 2009 so that the sale could happen.

“This has been a long and complex process, but we have now reached an agreement with all parties to allow the FEA sale process to commence,” Norman said.

He said the sale was happening at a time of strong global demand for woodchips, particularly from China.

The FEA’s land bank was established over many years and comprises over 400 properties, with at least 1000 individual titles, which could be sold individually or in one line. The plantations have a weighted average age of approximately eight years, with a significant amount of mature trees offering immediate cashflow.

In general, the estate properties are close to established infrastructure and export facilities.

Since 1995, FEA’s managed investment schemes have had more than 14,000 investors, who have contributed at least $400m.

Initial bids are due in February with the sale process handled by Gresham.

Gresham and Deloitte are understood to have already fielded strong local and global interest for the assets.