A last minute charge for some of the managed investment schemes of Gunns is being conducted by the Macquarie Group. Sources: Business Spectator, ABC, The Australian
Investment bank Macquarie Group is reportedly trying to secure control of nine managed investment schemes from collapsed timber company Gunns Limited, purportedly listed at $500 million.
Macquarie has called a series of investor, or grower, meetings for the 2002-08 schemes on May 28, when it will seek majority support to become the overall manager, and for the appointment of a new responsible entity (RE), W.A. Blue Gum.
Macquarie Forestry Services manages more than 21,500 hectares of forestry estate across the nation, and has been in the business since 2003.
PPB’s Daniel Bryant said the Macquarie proposals raised “serious concerns”. He said the projected return to the growers was likely to be lower than from an orderly realisation of the assets.
Also, replacement of the RE was subject to a number of conditions, including court approval on various issues. This could involve long delays and considerable cost, which would put key agreements at risk of termination, resulting in growers forfeiting their interests in the schemes.
In an explanatory memorandum for one of the scheme meetings, Macquarie is highly critical of the liquidator’s plan to sell the scheme assets.
“Other agricultural schemes that have had their assets sold by liquidators have produced very poor outcomes for growers,” the memorandum claims.
“Potential buyers are likely to perceive a liquidator’s sale to be a forced sale of the timber at a time when timber prices in real terms are trading at multi-decade lows. Macquarie is only targeting nine of the schemes after it was invited by a grower group to examine alternatives to a liquidator’s sale of the assets.
A spokesman for Gunns Growers Group, which represents a group of lawyers and financial advisers holding 15% of the investment in the 2002-08 schemes, said liquidators had a bad track record on plantation sales.
“The problem is they sell the land and the trees together and attribute most of the value to the land, which in the case of Gunns will go to the banks and hedge funds holding the Gunns debt,” he said.
There were claims that under some scenarios, where the plantations are harvested for an extended period instead of being sold, the undiscounted fee flow to Macquarie could top $100m. The Gunns Growers Group spokesman disputed this.
PPB Advisory has more than doubled the number of timber plantations it is putting on the market. It has already announced plans to sell about 100,000 hectares of plantations Gunns managed on behalf of investors.
Now, the company is seeking court approval to sell 118,000 hectares of trees formerly managed by another collapsed agribusiness, Great Southern.
Gunns took control of Great Southern’s managed investment schemes in 2009 when the Perth-based company collapsed with debts of about $700 million.
A significant number of plantations are in Western Australia but the company had interests nation-wide.
The liquidator said the proceeds of the Great Southern trees would be distributed among the schemes’ 40,000 investors.
According to the Australian newspaper, Gunns liquidator PPB Advisory will try to convince the Victorian Supreme Court to allow a change in Gunns’ constitution to allow it to start offloading the company’s plantations.
