The Queensland government is embarking on another sale of forestry assets, through its power subsidiary Ergon Energy. Source: The Australian
Ergon will place 3700ha of hardwood forests on the market in January, with real estate firm CBRE tipped to be the adviser in a deal that could reap the state-owned enterprise as much as $20m.
Ergon Energy confirmed the sale, which will follow the state government’s sell-off of Forestry Plantations Queensland during 2010 for $603m through investment bank Rothschild.
The power supplier’s network has nearly one million poles, of which about 92% are hardwood, which would need to be replaced over the next decade, and was the reason it invested in hardwood forestry plantations.
In 2010, it had aspirations to secure up to 10,000ha of land under management across regional Queensland. However, an independent review into the company’s network costs finalised a year ago recommended its land and forests should be sold, with the proceeds reinvested into core network assets.
Market sources say Ergon’s forestry assets may appeal to the unsuccessful bidders of the collapsed Gunns forestry business that is currently on the market through insolvency firm KordaMentha and investment bank Moelis.
US-based Hancock Timber Resource Group is believed to have made approaches to receiver KordaMentha, along with three Canadian superannuation funds, including Canada Pension Plan Investment Board, Ontario Teachers Pension Plan and Alberta Investment Management Corp.
Global timberland giant Weyerhauser is also believed to have shown interest, a source said.
For sale is 200,000ha of Tasmanian land, half of which is native forest that could not be used for timber plantations as well as Gunns’ pulp mill licence.
Expressions of interest would be likely to close around Christmas time.
A move to sell about 220 properties previously controlled by Forest Enterprises Australia is also believed to be imminent through investment bank Gresham.
Real estate firm CBRE is also offloading a separate portfolio of Gunns properties worth about $50m, with the 94 properties being offloaded on behalf of McGrathNicol.
Before their collapse, both FEA and Gunns oversaw hundreds of millions of dollars worth of managed investment schemes on behalf of investors.
