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Growers call meeting to try and save value for growers in the Great Southern 2007 and 2008 pulpwood projects

Working closely with the growers group, Save My Trees, Black Tree and Primary Securities said that a growers meeting had been called for 8th October to vote on a proposal that aims to both restore and retain growers’ assets in the Great Southern Plantations Project 2007 and Great Southern 2008 Renewable Fibre projects.

“The growers in these two projects own a valuable forestry investment and Black Tree is intent on assisting growers to maximise the full value of their assets,” Black Tree executive chairman Tony Jack said.

He confirmed that “the proposal from Black Tree and Primary is the only alternative now available to these growers”, who will be given the opportunity to consider its adoption at the growers’ meetings, notices for which have now been mailed to all growers. The growers will be asked to vote on appointing Primary RE Ltd, a member of the experienced Primary Securities group, as the Responsible Entity for each project. It is proposed that Black Tree will be appointed as forest manager.

Mr Jack urged all growers in the two schemes to support the proposal, noting that a majority of the growers were required to vote in favour of the proposals in order for them to be adopted – “Black Tree has completed extensive consultations with stakeholders in preparing the proposal. The alternative is stark.”

Key Benefits of Black Tree / Primary proposal are:

• Economics – getting the best out of the plantations for growers. The proposal is the only alternative to the schemes being wound up, which will result in a total loss to all the growers in these two projects. Black Tree will be responsible for all operations required to deliver the plantations to harvest.

• Working with the growers, not against them. Earlier this year Black Tree was approached by representatives of growers with interests in both the 2007 and 2008 projects to help formulate a restructuring proposal. This followed Gunns’ decision in late 2009 to exclude these projects when it took over the management of all the other Great Southern hardwood schemes. This proposal has been developed with the support of Save My Trees.

• Equity – looking after all growers. The proposal provides a solution for all growers in both projects. Growers who hold subleases on properties where the head lease cannot be reinstated for whatever reason will not lose their interest in the project assuming they can be reallocated to another area. All growers who support the rescue with funding for each scheme will be treated equally and will share in the outcome of all retained plantations in their project.

• Experienced and independent management team. The Black Tree management team provides highly experienced pulpwood plantation management experience with a track record of looking after growers interests. Mr Jack, who is the former CEO of Integrated Tree Cropping Limited (ITC, now owned by Elders) led the only previous successful rescue of an insolvent MIS forestry scheme in Australia (Australian Plantation Timber), returning an estimated $350 million to growers. He is assisted by a board and management team that possesses significant corporate forestry and direct forestry management and investment experience.

“The team’s experience ranges from rescuing previously failed MIS projects to substantial on-the-ground plantation management and investment,” Mr Jack said. “Black Tree possesses the optimal combination of skills and experience to maximise returns on these valuable assets.”

• Preserving the growers assets. Most of the leases over properties on which the 2007 and 2008 projects are located have purportedly been terminated by the Receivers appointed to the Great Southern group of companies.

This leaves many growers with effectively no asset at all. If the proposal is adopted, action will immediately be taken through the Courts to reinstate selected leases purportedly terminated by the Receivers in order to preserve the Growers’ valuable forestry interests.

Key features of the proposal are :

• All growers who support and fund the proposal will be treated equally, regardless of sublease status.

• Upfront and ongoing management fees will be payable by growers.

• Primary RE Ltd will immediately seek to reinstate all economically viable head leases through court action funded by the upfront management fee paid by growers. If this is not successful, the projects will be wound up and any component of the upfront management fee not utilised will be returned to growers.

• Growers who don’t meet the upfront management fee will lose entitlement to any future revenue – their interest will be returned to the pool for the benefit of paying growers.

• Growers who don’t pay annual ongoing management fees will forego one third of their entitlement for each year of missed payment and any foregone interest will be returned to the general pool.

• Black Tree will manage the projects at cost and underwrite any shortfall in ongoing management fee receipts. Grower’s interests are directly aligned with Black Tree as Black Tree only gets its profit upon successful harvest.

Full details of the Black Tree / Primary Securities proposal are set out in the documents mailed to Growers – they can be accessed through the Black Tree website.