THE future of Forest Enterprises Australia appears to be in doubt, with the company spending the weekend locked in negotiations with its bankers in a bid to resolve issues relating to its loan facilities.
The Tasmanian forestry group revealed on Friday that it had breached two of the financial covenants relating to its performance during the previous calendar year, prompting it to provide a certificate of default to its financiers.
It requested that its shares be suspended from trading on Friday so discussions with its lenders could continue.
A spokesman for the company, which owes about $240 million to the Commonwealth Bank and ANZ, declined to comment yesterday.
Forest Enterprises, which owns a state-of-the-art $72m timber mill and woodfibre processing facility in Bell Bay, had been attempting for several months to renegotiate the financial covenants that apply to its debt. When the New Years’ Eve deadline passed with no agreement, the company received a temporary waiver.
The new deadline expired on Friday.
The company said a restructuring plan was submitted to the banks on January 29, but the plan was rejected.
Shares in the company have come under increasing pressure over recent months, partly as a result of the high-profile collapse of rival agribusiness players Great Southern and Timbercorp.
Forest Enterprises reported a $14m loss last financial year as new sales from its managed forestry investments slumped on higher than expected operating costs associated with its new sawmill. It has yet to release its results for the six months to December 31.
The company’s largest shareholders include Elders and Gunns, which recently reported a surprise 98 per cent drop in interim profit to $420,000 and announced a strategic review of its operations.
And,
On its website, Gunns says its “harvesting process seeks to… emulate the effect of fires that would normally shorten the ‘natural’ life span of a particular forest. In the case of dense forests growing in wetter climates, this often means clear-felling – emulating the hot, destructive fire which such forests are prone to in summer.”
So to get things straight, I went to Gunns and asked: what do you use on clear felled forests? Oddly enough, I was told that the best person to speak to the media was the chief executive’s PA. And she wasn’t in. At the time of going to press, there was still no comment from Gunns. Perhaps she was doing PA stuff instead.
Paul Oosting, a campaigner from The Wilderness Society, said I wasn’t the first to make the mistake about napalm being used on ancient Tasmania forests.
He claims Gunns has admitted to using “liquefied petroleum”, which confuses the issue. A French telly crew recently visited the region, he said, and got Forestry Tasmania to take them up in a helicopter to film another chopper dropping napalm on a clear-felled forest.
According to The World Book Encyclo-paedia, napalm is “jellied gasoline”. The Macquarie Dictionary has it as “a mixture of oleic, naphthenic and coconut fatty acids, mixed with petrol it forms a sticky gel”.
Frank Strie, president of the Timber Workers For Forests Inc, told me Gunns and Forestry Tasmania have “ignored and dismissed anyone [who does] not conform with their destructive approach to forestry”. He too alleged napalm use.
Environment Tasmania director Phill Pullinger said using “napalm – or liquefied petroleum – is standard practise in clear-fell logging activities of native forests in Tasmania, and occurs annually in expansive areas across the state”.
So if it walks like a duck, and talks like a duck, is it napalm?
HERE: Samantha Schelling: Burning debate fires up over forest felling
