Despite the administrators of the troubled agricultural projects manager Timbercorp Ltd recommending the winding up of companies within the group, some investors and at least one company, Elders (which isn’t in the best of health itself), are sniffing around the shattered group.
That’s despite the administrators revealing that Timbercorp and its various schemes needs over to $400 million in the next year to keep the various plantations in good order and either producing or growing.
"It is our opinion that it would be in creditors’ interests for each company within the group to be wound up," administrators KordaMentha said in their second report to creditors, which was released on Friday.
"No DOCA (deed of company arrangement) has been proposed, and it is not in creditors’ interests to bring the administrations to an end."
They said that if a deed was proposed before the meeting today week in Melbourne of creditors (the second meeting), then endeavours would be made to analyse it and bring that information to the meeting.
KordMentha said the companies are insolvent and that ending the Administration would return the companies to the directors and the state they were in when the administrators were appointed.
The group "has little to no cash" to maintain the schemes or to continue to trade as a going concern.
They detailed how the company needs a total of $252.5 million in the 2010 financial year to pay for plantation maintenance, lease rentals, land and equipment and capital expenditure for the company’s almond plantations alone.
A further $135 million would be needed for the same reasons for the company’s mango, avocado, table grapes and olives ($66 million for this group alone).
Close to $39 million would be needed at a minimum to keep the company’s forestry plantations in operation for the 2010 year. Lease payments start accruing on July 1 (Wednesday week) at a daily cost of $90,000.
This figure excludes all head off administration, IT spending and costs associated with keeping track of investors. To keep that going at a minimum will cost at least $1 million a month, and possibly more. That’s more than $12 million.
Head office has all the information on the various schemes, investors and corporate details of the businesses. If it was to close, the whole group would shut down, the administrators said.
The administrators’ cash considerable doubt on the major asset of the group, $753 million of intercompany receivables.
They said that as all the companies in the group were in administration, "the collectability of these intercompany assets is highly doubtful."
If these assets were uncollectable, the net asset position of the company would collapse from $783 million to around $30 million.
The various schemes and agricultural businesses have little or no insurance at the moment.
Many investors have fallen behind in paying their contributions, as the company’s woes have become public. That started last October-November.
Timbercorp was placed in administration in April, with liabilities estimated at the time of $930 million. It consisted of the public company and 40 subsidiaries.
The group operated 33 managed investment schemes and three private offer schemes in relation to forestry and horticulture assets, including about 100 million blue gum trees, nearly three million almond trees and more than two million olive trees.
KordaMentha said it was not in a position yet to comment on the estimated return to creditors from a winding-up of the companies in the group, or the likely timing of a return.
That would be for a liquidator, if appointed.
KordaMentha said the companies within the group could not meet their debts and were insolvent.
But on the weekend a representative of Timbercorp investors says moves to wind up the group do not change its plans to keep Timbercorp’s farming projects going.
He claimed that does not necessarily mean the underlying managed investment scheme projects such as forestry and almond plantations are insolvent.
Chris Rylands a member of the committee of Timbercorp creditors, says the committee wants new responsible entities to replace the insolvent entities before the next creditors’ meeting at the end of the month.
He told the ABC News that "We’re talking to three temporary responsible entities, had a meeting today with one of them."
"We’ll still be pushing for new temporary REs to be put in place and when those new temporary REs are in place we can conduct the independent viability assumptions.
" I think (they) will find that many of the projects are in fact viable when they’re under the appropriate structure."
But cash will be needed to continue the operations. The leases are paid up until the end of this month, according to the administrators.
The ABC report also quoted Elders CEO, Malcolm Jackman as expressing interest in buying the assets of the failed agribusinesses Timbercorp and Great Southern.
Elders has 180-thousand hectares of tree plantations in Western Australia and Victoria.
"And obviously we’ve got the forestry management team there to be able to manage the plantations," he said
"The issue is about what is the ownership structure going to look like in the future and that’s part of the work and we’re trying to talk to all the various parties.&
