Gunns to take over forestry asset rights

Woodchipper Gunns Ltd has agreed to take over as the responsible entity for some of
the Great Southern forestry schemes.
Gunns said on Friday it had signed a conditional agreement to become the responsible
entity of the 1998-2006 forestry managed investment schemes (Pulpwood Schemes).
Gunns is also investigating the 2007 Pulpwood scheme with a view to becoming its
responsible entity and has "substantially agreed" to buy some of the Great Southern
assets for $8.7 million.
Gunns chief executive Greg L'Estrange said the proposal for the 1998-2006 schemes
was a compelling offer that would provide certainty to Great Southern
grower-investors.
"Our proposal will cause minimal disruption to the operation of the schemes,
supported by Gunns' strong financial position and experience in the management and
operation of plantations under managed investment schemes," he said in a statement.
Under the deal, Gunns would receive a percentage of the 1998 -2006 Pulpwood Schemes
net harvest proceeds when the timber is harvested.
The percentage varies by scheme and ranges between 4.5 per cent and 55 per cent.
Gunns said the increased charges were needed to properly manage the plantations
through to harvest.
The proposal is subject to various conditions, including approval of resolutions by
grower-investors, with meetings likely to be held on December 23, and appropriate
court directions.
The announcement came as no surprise, after Great Southern receiver McGrathNicol
announced on Thursday it expected to enter into an agreement with Gunns.
Gunns will replace Great Southern Managers Australia Ltd (GSMAL), which was placed
in liquidation on Thursday and is also in receivership.
Two other parties were vying to become the responsible entity for the Great Southern
forestry schemes, including Pulpwood Plantations, which is a group established by
West Australian industrialist Gordon Martin.
Pulpwood Plantations chairman Gordon Martin said it appeared Gunns had "done a deal"
with the receiver that he believed would trade away significant value for
grower-investors.
He said Gunns may have surrendered second-rotation rights, which is the right to
grow another crop after the first crop is harvested.
Mr Martin said the surrender of the second-rotation rights would favour Great
Southern's bankers, which appointed McGrathNicol as receivers to recover money that
Great Southern owed to them.
Debt-laden Great Southern went into administration on May 16. McGrathNicol was
appointed receiver on May 18.
On Thursday, at a second meeting of creditors convened by administrator Ferrier
Hodgson, creditors voted in favour of 27 of the 35 companies in the Great Southern
group being placed in liquidation.
The Great Southern group comprised a parent company and 34 subsidiaries and employed
more than 400 people nationally.
The group had raised more than $2.2 billion in managed investment scheme (MIS) sales
and managed MIS assets for more than 52,000 investors who are also referred to as
growers.
The administrator said in a report this week that the decline of Great Southern was
linked to a big fall in annual MIS sales resulting from a range of regulatory and
economic factors.