Tasmanian Times

Environment

Meeting votes tell tale of two Timbercorps

AUSTRALIAN

CREDITORS voted yesterday to wind up both Timbercorp and its subsidiary, Timbercorp Securities.
The meetings in Melbourne were run by administrators KordaMentha, whose principal, Mark Korda, officially became the companies’ liquidator last night.

Mr Korda had no difficulty persuading creditors of the once-listed Timbercorp to wind it up and a total of 40 companies in the group.

He had told them the company had debts of at least $980 million, including $661m owed to secured creditors, $14m to unsecured creditors, $5m in employee entitlements and $300m in other loans and debt.

“There’s no benefit, really, in deferring the liquidation,” he said.

The later meeting of Timbercorp Securities was much more fiery, mainly because there were 18,000 grower investors, of whom only about 14,000 provided the administrators with email addresses. Their connection with the collapsed companies is less immediate, which is a major reason for the growers’ uncertainty.

It stretched to almost three hours.

Many complained of being left in ignorance about what was happening to their investment, which was managed by Timbercorp Investments in its capacity as Responsible Entity (RE). Most are anxious to see that defunct company replaced as RE as soon as possible by another solvent RE, but to date only three schemes out of about 40, two mango schemes and a mango-avocado scheme, have been able to move to that level, apparently because they are among the simplest MIS’s and have very limited downside. Read more here

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2 Comments

2 Comments

  1. Mark

    June 30, 2009 at 9:36 pm

    And so the dominoes continue to cascade…

    It was reported today Adelaide based Elders had reduced its debt from $959 million to around $800 million now. On 18 June, Elders announced it had achieved an in principle agreement to extend its short-term debt until 30 September. The debt mostly relates to its MIS forestry and automotive divisions. Elders share prices have been steadily decreasing to 28.5 cents (a rise of 1.5 cents).

    Meanwhile, Elizabeth Knight of the West Australian reported, “The Australian Securities & Investments Commission is believed to have raided the homes and offices of at least two financial planners over sales of managed investment scheme (MIS) products. The action appears to be an escalation of ASIC’s investigation of the financially troubled tax minimisation industry. During the raids – in Sydney yesterday at a former licensed adviser’s house and in Melbourne at the offices of another financial planning group – ASIC seized hard-copy tiles and computer hard drives concerning client records of investments in MIS group Forest Enterprises Australia. One party subject to the raid said he believed ASIC had responded to a complaint by Forest Enterprises that the financial planners fabricated investors to buy investments in Forest Enterprises schemes – known in the industry as ‘tombstoning’. The planner said these investors, who contributed up to $2 million, were real and that they were financed into the investment by Forest Enterprises. The chief executive of Forest Enterprises, Andrew White, did not return calls yesterday. Last Friday Forest Enterprises issued a sales downgrade to the market, saying it would achieve significantly less than the $60 million made in 2006 and 2007 and stating that “these lower than expected sales for FEA Plantation Project 2009 are attributable to external factors beyond the control of the company”. The ASIC raids are part of the new scrutiny being applied to the MIS industry as the public relations and financial fallout increasingly hits the industry’s participants. On Monday, creditors of one of the bigger MIS companies, Timbercorp, voted to wind up the 41 corporate entities and put them into liquidation, leaving shares worthless and investors in individual schemes unlikely to recover their investments. The group left net debt of more than $600 million. The collapse of two of the biggest MIS groups and several smaller ones has opened a can of worms around the practices of all constituents in this tax minimisation inspired industry. ASIC and the Australian Taxation Office have also found themselves exposed as excessive marketing fees, dubious lending practices and conflicts of interest appear to have flourished without question. And this is before even addressing the financial worthiness of these schemes. As liquidators, administrators and receivers pick over the bones of the two biggest MIS participants, Timbercorp and Great Southern, it is clear that ultimately billions of dollars in shareholder and direct investor money has evaporated.”

  2. Russell

    June 30, 2009 at 9:35 pm

    Scheme – A statement (or in this case, a business) that evades the question by cleverness or trickery.

    From the very outset, everyone was warned what would and did happen with these MISes. I have absolutely no sympathy for anyone who invested in any such “schemes.”

    The Tasmanian Labor and Liberal Parties’ unwavering support for similar “schemes” funded by tax-payers’ dollars and assets can only be viewed with absolute contempt.

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