Agribusiness Timbercorp Ltd has appointed voluntary administrators eight days after revealing it has a huge debt burden and not much chance of escaping it.
Around 18,000 investors have investments with the company and will be affected by the failure.
Administrators from KordaMentha were appointed to take charge of the company.
On April 16 the company confirmed that it had net debt of $903.1 million and net assets of $595 million.
It said that it had missed debt repayments and was taking to its financiers about " renegotiating, extending and amending its various debt facilities."
"The Company is also working with its advisers on a number of alternative funding and restructuring options aimed at raising additional cash for operations and reducing debt.
"As disclosed in the full year accounts and the Annual Report, in the absence of asset sales, the Company is reliant on the continued support of its financiers.
"Unless the Company is able to reach agreement with its financiers to restructure the existing debt facilities, or an alternative funding or restructure plan is implemented before 1 May 2009, there is significant uncertainty regarding the ability of the Company to continue as a going concern."
Those talks were obviously unsuccessful and the administrators were appointed yesterday.
Timbercorp has about 170 staff in Melbourne, Perth, Hamilton, Mildura and Penola.
In a statement the administrators said "Timbercorp is one of Australia’s largest agribusiness companies, managing approximately 120,000 hectares of large scale forestry and horticulture assets.
"Timbercorp has invested more than $2 billion in agribusiness projects on behalf of 18,500 investors since 1992.
Administrator, Mark Korda said the company had been hurt by the combined impact of declining global asset values, tightening credit, the economic downturn and drought.
Mr Korda said the administrators would implement a three point plan as follows:
- Immediate suspension of forestry and horticulture operations whilst funding options are determined
- Develop a strategy for each forestry and horticulture product, project by project, then execute
- Attend to statutory reporting, investigation, creditor and shareholder liaison
In the full year accounts issued in November 2008, Timbercorp reported current debt of $568 million, net debt of $903.1 million and net assets of $595 million.
Timbercorp has approximately 170 staff based at offices in Melbourne, Perth, Hamilton, Mildura and Penola.
The Company offered managed investment schemes based on its agribusiness estate.
The functions, powers and authorities of the administrator extend to Timbercorp acting in its capacity as responsible entity or trustee of the managed investment schemes.
The process of voluntary administration is designed to explore quickly the options for the Company.
"The voluntary administrators will be writing to all creditors to provide notice of the date of the first meeting of creditors. The first creditors’ meeting will be held within eight business days after the appointment of a Voluntary Administrator.
Timbercorp had previously announced that the Company’s business model was no longer appropriate in the current environment due to the capital intensity of the projects and was in the process of transforming the business into an integrated agribusiness company.
"Unfortunately these plans, which included asset sales, could not be executed in the timeframe to meet the company’s debt obligations.
"More information will be posted on www.timbercorp.com.au or www.kordamentha.com. A hotline has been established for investors, creditors and shareholders. Tel: 1800 628 188."
