Tiwi CEO John Hicks says $80 million needed Oct 09

Tiwi Land Council urges backers to chip in

http://www.theaustralian.news.com.au/business/story/0,28124,26169380-36418,00.html

Lex Hall | October 06, 2009

Article from:  The Australian

TRADITIONAL owners on the Northern Territory’s Tiwi Islands are looking for new investors to support a $275 million forestry project that environmentalists say is a white elephant.

Prior to its collapse earlier this year, forestry group Great Southern Plantations ran the 30,000ha acacia forest on Melville Island, north of Darwin.

Receivers McGrath Nichol last week ended their lease agreement, handing control of the $275m asset to the Tiwi Land Trust.

The project, seen by some as a means of beating welfare dependency, is now in the hands of Tiwi landowners, who will manage the project for the next four years.

Despite the withdrawal of support from a banking consortium last month, Tiwi Land Council chief executive John Hicks said global demand for woodchips indicated the scheme was “clearly a viable operation”. “We have got it debt-free,” Mr Hicks said. “And it has a minimal rate of return of between 15 and 30 per cent.”

The plantations will be harvested on decade-long cycles and landowners now have title to all fixed assets, including the camp headquarters, sewerage farm, port infrastructure, and airstrips. The TLC estimates it will need $80m to manage the plantation to maturity in 2013 and fix the Melville Island wharf so the trees can be exported.

Mr Hicks said at least 15 private investors had indicated they were prepared to support the group in the run-up to the first harvest in 2013.

Mr Hicks said the 20 staff on the operation had been retained and that the plant had the potential to create 660 jobs in associated industries.

He said he was also hopeful of securing $500,000 a year in commonwealth funding for controlled burning and other maintenance work that needed to be carried out.

The controversial venture has already fallen victim to a cyclone and Great Southern was last year ordered to pay $4m for breaching environmental guidelines.

NT Environment Centre head Stuart Blanch questioned the viability of the project, saying it “stinks like a white elephant”. Mr Blanch said Tiwi islanders should knock down the plantation and return the land to natural bush to try to gain an income from a future carbon trading scheme and tourism.

“There are other opportunities for indigenous people to make money — and destroying the land isn’t one of them.”

The Australian Plantation Products & Paper Industry Council said the plantation had the potential to return a profit. APPPIC manager of plantation investment Alan Cummine said that despite the global slowdown there was still demand for acacia products.

“The species that’s being grown by the Tiwi islanders, acacia mangium, is the main species that’s used by the Indonesian paper and pulp industry, which actually supplies a lot of Australia’s photocopy paper.

“So it’s recognised pulpwood species for quality paper production.”

Centre for Aboriginal Economic Policy Research director Jon Altman said the Tiwi needed to explore all options for those living on the islands.

“If they have undertaken due diligence and see existing plantations as an unencumbered prospect then they should pursue it,” Professor Altman said. “But with realism, not as some silver bullet for Tiwi disadvantage.”

A spokeswoman for Indigenous Affairs Minister Jenny Macklin declined to say whether the government would contribute to the scheme.

“The Australian government believes the future of the Tiwi forests is a matter for the Tiwi Land Council to negotiate with potential alternative operators in the private sector,” the spokeswoman said.

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http://newsstore.smh.com.au/apps/previewDocument.ac?docID=GCA00995453GTP&f=pdf

..McGrathNicol… October 5th, 2009

“…The Tiwi Island operations are commercially unviable. The operating costs and capital expenditure requirements are extremely high. As we have been without funding for the Tiwi Island operations from 30 September 2009, we have commenced cessation of these operations. We also wrote to the landlords, the Tiwi Land Council, on 30 September 2009 advising that we will not be accepting any liability for the lease costs from 30 September 2009.
On 1 October 2009 the Tiwi Land Council terminated all head leases on the Tiwi Islands, relying on a clause contained in the head leases which entitled the landlord to terminate in the event of the insolvency of GSMAL. As a result of the termination of the head leases, investors with woodlots located on the Tiwi Islands will no longer have a licence or sub-lease in relation to their woodlot.
There is a high risk that the exercise of this right by the Tiwi Land Council will mean the loss of the Scheme timber on that land and any future harvest proceeds for investors.
A list of woodlots located on the Tiwi Islands has been posted on the investor portal (http://investors.great-southern.com.au). If you have not registered for the portal, please refer to the Great Southern website http://www.great-southern.com.au/investoronlineaccess.aspx) which details how to register.
Any investors with woodlots on the Tiwi Islands must carefully make their own assessment of the issues outlined in the Circular and should consider seeking independent legal advice. In particular, investors may want to obtain legal advice as to their ability to obtain a court order reinstating a terminated lease, subject to any conditions the court sees fit to impose.
Queries
Should you have any questions please refer to the Frequently Asked Questions on the Great Southern website (www.great-southern.com.au). Alternatively, specific questions may be emailed to gsp@great-southern.com.au or to fm-gs@mcgrathnicol.com or you may call the Investor Hotline on 1800 258 348…”

DAFF approval of tiwi forest project under Ian MacDonald always excessive

http://tiwiislands.files.wordpress.com/2009/09/june05daffa_contours_1.pdf

http://tiwiislands.files.wordpress.com/2009/09/bulletin_feb051.pdf

http://tiwiislands.files.wordpress.com/2009/09/daff-ian-macdonald-tiwi-approval22.pdf

http://www.daff.gov.au/__data/assets/pdf_file/0020/37604/nifs_scoping_report.pdf

Sites above contain endless company propaganda copy pasted and disseminated by Senator Ian MacDonald’s previous dept DAFF  for the failed Tiwi Forest “Project” (ie; 300sq kms of irreplaceable old growth Tiwi forests rapidly clear felled over 4 years under Ian MacDonald’s watch – for what…?)

from Tiwi Senate Hearings 2009 see site:  http://www.aph.gov.au/hansard/senate/commttee/S12232.pdf
p43
“Senator IAN MACDONALD—Senator Troeth has clarified some of the issues. As you
gentlemen would know, I was the Minister for Forestry and Conservation and I was surprised at the Darwin hearings to be told that our department had put lots of money into it and very significantly supported it, but I think you have confirmed to Senator Troeth that the department of forestry had no financial involvement in this project. Is that correct?
Mr Quinlivan—Yes, that is correct.
Senator IAN MACDONALD—I seem to recall that I actually visited it as minister for forestry, and I was very, very supportive of what I think is a great project, but there was an allegation made that:
The department of forestry put out regular newsletters extolling how fantastic the Tiwi forestry project was and how it was setting a shining, new model for forestry activities on Indigenous lands in Northern Australia and how it was producing millions of dollars of benefits for traditional owners, including through the sale of logs to Asia.
I certainly hope we did that and that we were supporting it, but my recollection is that perhaps it was in a departmental newsletter once or twice but that there was no long involvement of the department in the Tiwi Islands forestry project. Do you recall?… “

http://www.aph.gov.au/hansard/senate/commttee/S12232.pdf

Tiwi low quality Plantations Face Grim Future September 09

http://www.ntnews.com.au/article/2009/09/11/83811_ntnews.html

Future grim for Tiwi plantation

NIGEL ADLAM

September 11th, 2009

THE Tiwi forestry plantation seems doomed to collapse after a banking consortium withdrew support yesterday.

Great Southern ran the enterprise until it went bust earlier this year.

The Tiwi Land Council had hoped to find a new operator and keep the plantation going.

But the banking consortium – CBA, ANZ, Mizuho Corporate Bank and Bank of Western Australia – said it would only support the project until September 30.

Land council chairman Robert Tipungwuti accused the banks of being “cents-wise, dollar-dumb”.

He said the price of woodchips on the world market guaranteed the banks would ultimately “realise their investment”.

Mr Tipungwuti said the 30,000ha forest was now in danger of being wiped out by bushfires.

“The Tiwi forest is different to the other Great Southern projects,” Mr Tipungwuti said. “It is on Aboriginal land.

“Since the receivers were appointed, Tiwi people have worked with technical experts – formerly Great Southern employees – to maintain the environment through fire and weed control.

“This small and effective team should be left in place during the rest of the fire season and throughout the following wet season, for both environmental and financial reasons.”

The Environment Centre said the business model for the forestry was based on tax breaks and harvesting high-value eucalypts, not on woodchips.

Co-ordinator Stuart Blanch said: “Locals tell us the variety of acacia seed used was wrong, the trees haven’t been pruned enough … and there isn’t enough rainfall during the dry season to get the year-round growth needed.”

“We think there are more jobs in returning the plantation to bush than trying to keep a white elephant afloat,” he said.

Tiwi Forestry Disaster Needs Fed Govt to donate 80 MILLION!!!!???

http://www.abc.net.au/news/stories/2009/07/16/2627980.htm

ABC News
16 July 2009

$80 million needed for Tiwi plantations: council

By Jane Bardon

The Tiwi Land Council has estimated it would need $80 million to make the forestry plantations on the Tiwi Islands viable following the collapse of Great Southern Plantations.

The 30,000 hectares of acacia trees on the islands are owned by Great Southern’s investors, and administrators are now managing the collapsed company’s assets.

The land council says no other companies have shown interest in taking the plantation over, and the land council would like to manage it.

But the land council’s Cyril Kalippa says he has asked the Federal Government for help because Great Southern’s account estimates show substantial money will need to be found to keep it going.

“We need about $80 million for the next three years – that’s for the wages and the things that we need to operate the forest.

“And also we need $40 million to extend the wharf or the jetty so that 50 tonne ships can come in and pick up the chip wood.”

July 2009 GSL’s John Young Accused – Tiwi Forests Sacrificed – For What…?

http://www.abc.net.au/news/stories/2009/07/01/2613976.htm?section=business

Senate probes Great Southern collapse
Posted Wed Jul 1, 2009 4:05pm AEST
Updated Wed Jul 1, 2009 4:03pm AEST
A former board member of the defunct Great Southern Limited has told a Senate hearing that he resigned in 2005 because of serious concerns about the company’s lack of corporate disclosure.
The Perth-based company went into voluntary administration last month with $700 million of debt.
Jeff Mews resigned as a non-executive director of the rural funds manager in 2005, after a board meeting where he learnt that the company’s first plantation would not meet the predicted harvest yield.
Mr Mews also expressed concerns about director John Young’s decision to sell $32 million worth of shares before the forestry issues were disclosed to the board.
In the same letter, Mr Mews wrote that the company should disclose that it would make a loss on the first plantation harvest.
Former chairman Peter Patrikeos also resigned in 2005 because of concerns about corporate disclosure.
He told the hearing he was torn between his obligations to Great Southern shareholders and growers.

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http://www.businessspectator.com.au/bs.nsf/Article/Inquiry-hears-suggestions-of-insider-trading-at-Gr-pd20090702-TJN2X?opendocument&src=rss

3:17AM, 2 Jul 2009
Inquiry hears suggestions of insider trading at Great Southern
An inquiry into the collapse of Great Southern has brought up suggestions of insider trading against former chief executive John Young, management misleading auditors, and related-party benefits not being disclosed, according to The Australian Financial Review newspaper.
The evidence, revealed at a Senate inquiry, was given by former non-executive director Jeffrey Mews, who accused Mr Young of withholding market-sensitive information from investors and the board.
The paper said Mr Mew testified that Great Southern failed to disclose losses from its 1994 forestry project that were known to management when Mr Young sold his shares as part of a capital raising by the company.
Receivers were appointed to the timber plantation and cattle project manager in mid-May after the group’s banks declined to support its restructuring plans.
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http://www.theaustralian.news.com.au/story/0,25197,25594836-601,00.html

Director John Young in Great Southern debt deal
Adele Ferguson and Anthony Klan | June 06, 2009
Article from: The Australian

THE founder and former managing director of the failed $3billion Great Southern agribusiness empire could make millions of dollars from a deal completed weeks before the company was placed into administration.

The Weekend Australian can reveal that John Young, a current director of Great Southern, and his wife Sheila funded a $2 shelf company that purchased a book of loans with a face value of $25million from the group for $9million.

As part of its continuous disclosure obligations, Great Southern informed the ASX on April 8 that it had sold the loans, which had changed hands at a 62 per cent discount to face value.

It would have been more transparent for shareholders had the company revealed in the announcement the identity of the purchaser of the loans or the entity providing finance to the purchaser.

Documents obtained by The Weekend Australian reveal that a $2 shelf company called Javelin Asset Management Pty Ltd was assigned the loans on March 31, the day the company was registered. The directors of Javelin are Robert Charles Gould and Mark Drewett Kendrew, who hold the two $1 shares issued by the company.

On the day Javelin was registered as a company, a fixed and floating charge securing a prospective amount of $10million was lodged over its assets, in favour of a company called JSJA Holdings Pty Ltd, the shares in which are owned by Mr Young and his wife. The charge documents secure a convertible loan agreement between Javelin and JSJA. Such agreements customarily enable all or part of the loan to be converted into shares in the borrower at the option of the lender.

As revealed by The Australian, Mr Young, who founded Great Southern in 1991, was paid a $2.013million “retirement benefit” when he stood down as managing director in February last year. In the year to September, Great Southern reported a $63.8million net loss, a 15 per cent drop in revenue and a 24 per cent fall in managed investment sales to $444million.

The company was swept into receivership last month owing 43,000 mum and dad investors more than $2billion. Mr Young floated Great Southern in 1999 at about $2 a share. Those shares reached $5 in 2005.

The fortunes of Mr Young, an accountant, peaked in 2006 at $200million, according to BRW’s Rich 200 list.

Javelin’s Mr Gould refused to comment on whether his company had purchased the $9million of Great Southern debts, or who had financed the deal. Mr Gould also refused to comment on any involvement by Mr Young, or to say whether he knew Mr Young.

“I have no comment to make,” Mr Gould said. “We make no comment about the affairs of the people we deal with. We work for all sorts of people.”

Mr Gould joked that the phone calls he had been getting from journalists were reminiscent of State of Play , the new film starring Russell Crowe, who plays an investigative journalist.

“It’s a great movie,” he said.

A website indicates that Javelin Partners is a private equity company. It says Mr Gould and Mr Kendrew are chartered accountants.

“Javelin Partners conducts all engagements under strict confidentiality arrangements,” the website says.

The phone number listed on the site is disconnected.

Mr Kendrew did not return calls to his mobile phone.

Repeated attempts to contact Mr Young were unsuccessful.

Great Southern director Mervyn Peacock declined to comment when contacted by The Weekend Australian yesterday.

“I can’t comment,” Mr Peacock said. “You are going to have to direct any questions to the company.”

Deloitte confirmed that it organised the sale of the deeply discounted debts to Javelin. It is understood Deloitte was aware of the link between Great Southern director Mr Young and the purchaser of the discounted debts, Javelin.

Javelin wrote a letter to Great Southern investors on May 6, the day before Great Southern went into a trading halt, informing the agribusiness empire that it had to pay its loans to Javelin.

If the investors pay these loans in full, the scheme that involves the purchase of the loans at 38c in the dollar will result in a profit of more than $15 million to Javelin.

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http://www.thewest.com.au/default.aspx?MenuID=3&ContentID=142993

Great Southern bosses harvested nearly $44m
21st May 2009, 6:00 WST

Great Southern’s bosses have pocketed nearly $44 million since the failed company’s 1999 float.

The company’s annual reports show its top executives — initially classified as those paid more than $100,000 a year — received close to $44 million in base salary, bonuses and scrip in the 10 financial years to September 30 last year.

Aggregate executive pay for the 1998-99 year was just $550,000, but pay levels rose as the company expanded its management team and ramped up its business.

The past five years were particularly lucrative, with combined executive payments totalling $34.7 million as Great Southern sold $1.8 billion of MIS products.

The executive team, made up of executive directors and specified senior managers, peaked at 10 last year when they shared $5.7 million, down from a record $9.3 million in 2006.

One of the biggest beneficiaries of the company’s rapid-fire expansion was co-founder John Young, who established Great Southern with microbiologist Helen Sewell in 1987.

Mr Young took home less than $180,000 in 1999 but the pay packet rose to $586,099 in 2002 and then skyrocketed to $2.4 million in 2004 with the help of a $1.4 million bonus.

However, Mr Young has lost out on his 8 per cent shareholding in the company, which is worthless in the wake of Great Southern’s collapse at the weekend.

His shareholding was valued at $249 million when the group’s shares peaked in March 2005.

The company’s fall comes despite the impressive credentials of Great Southern’s seven-member board, which boasted well-known corporate players with backgrounds spanning investment banking, funds management, superannuation, taxation and law.

Mr Young stepped down as chief executive in February last year after holding the top job for 20 years but retained a non-executive directorship.

His replacement, long-time executive director Cameron Rhodes, is a former director of Pricewaterhouse-Coopers’ business services division, while Phillip Butlin — the other executive on the board — helped float Great Southern while with Macquarie Bank.

Chairman David Griffiths is also a former divisional director of Macquarie, Alice McCleary is a member of the Takeovers Panel and Merv Peacock is a former investment officer at AMP Capital and a one-time member of the Australian Stock Exchange’s corporate governance committee.

Former Freehills Perth managing partner and one-time West Australian Newspapers chairman Peter Mansell rounds out the board.

Mr Mansell is also a director of the cash-strapped base metals miner, OZ Minerals, which is being taken over by Chinese group Minmetals.

RACHEL DONKIN