Elders Limited has advised that its wholly owned subsidiary, APT Projects Ltd, has entered an agreement to sell 30,000 hectares of pulpwood standing timber plantations located in Albany, Bunbury and the Green Triangle to New Forests Asset Management on behalf of growers. Source: Elders
Standing timber in the following projects form part of this agreement:
– Australian Eucalypt Project 1999
– Australian Eucalypt Project 2000
– Australian Eucalypt Project 2001
– APT Project No. 11
Upon project entry, it was expected that timber would be mature and ready for harvest approximately 11 years after establishment. Following the sale of harvested timber, proceeds would be distributed to growers and the project would be wound up.
According to Elders since 2011, market conditions for woodchip have deteriorated significantly due to:
– The significant appreciation of the Australian dollar making Australian woodchip less competitive relative to global options.
– Declining Japanese demand following the GFC and 2011 tsunami that crossed Japan.
– Increased woodchip originating from SE Asia at lower prices than can be sold out of Australia.
– Market oversupply issues compounded by other Australian forestry managers delaying the sale of woodchip resulting in depressed woodchip sales.
Elders said that there is no clear evidence that suggests market conditions will improve in the foreseeable future. Consequently, harvest of Project standing timber has been delayed.
In light of current and foreseeable market conditions, Elders Forestry has sought to realise the value of project timber on the most favourable terms on behalf of growers.
In conjunction with Macquarie Capital Partners, a comprehensive campaign was undertaken and interest sought from potential purchasers of standing timber and other assets owned by Elders Forestry in Albany, Bunbury and the Green Triangle.
No parties, other than New Forests, offered to acquire standing timber in the abovementioned projects.
Following review of the offer presented, the responsible entity, determined that New Forests’ proposal would provide growers with the best available return on their investment within expected project timelines outlined in the original Product Disclosure Statement.
This view is supported by an Independent Expert’s Report prepared by Deloitte Corporate Finance Pty Limited.
