Timbercorp creditors get bad news

Investors in Timbercorp’s final forestry managed investment scheme face uncertainty over their investment, it was revealed at the Timbercorp Securities’ creditor meeting yesterday.

Mark Mentha of Korda Mentha said at the meeting that none of the trees in the 2008 scheme had been planted.

However, the investors' money for this project has been released.

“The only money present in the custodial account (run by Trust Company) is the proceeds from the sale of crops,” Mentha said.

“The funds for the 2007-08 project have already been dispersed.”

It is not implied that Trust Company has acted wrongly in releasing these funds.

“If the trees have not been planted it will be part of our investigations, but we know 2008 hasn’t been planted,” he said.

But the more recent forestry investors are not the only group facing problems.

It is standard practice in managed investment schemes to insure the crop against loss.

The insurance contract for the forestry project was renewed last November and lasted for 12 months.

Mentha said Timbercorp Securities (the responsible entity for the schemes) still had $285,000 outstanding on the policy, which meant it was now void.

Timbercorp Securities has no cash, the meeting was told.

A number of investors in the meeting voiced concerns, as they had already paid their share of the premium for the insurance last November.

Investors in the horticultural schemes have fared better, as Korda Mentha paid the insurance premium on their projects last Friday.

But investors in the olive schemes are also facing problems.

This year’s olive crop is due to be picked in the next seven weeks or it will be lost.

Mentha said Timbercorp has no money to pay for the harvest, which will cost about $12 million.

“We are working with the olive scheme’s management company, Boundary Bend, to find a way of harvesting this year’s crop,” he said.

“We will be going to court (today) to see if harvesting the crop is in the best interest of the investors,” he said.

If this year’s crop is not harvested, it will reduce the yield of the 2010 crop by up to 80 per cent, Mentha warned.

However, harvesting of the older forestry schemes is proceeding, as revenue will cover the costs.

A total of 41 Timbercorp companies have been put into administration and the group has debts of $675 million, having raised $2 billion from investors over the years.

Mentha said there was no cash in the group and the banks were allowing it to continue limited trading.

There are 63 managed investment schemes with 18,500 investors.

Timbercorp has a loan book of $478 million, which funded investors buying into the schemes.

Mentha said according to Timbercorp’s books, only 3 per cent of investors are in arrears on their loans, but this figure is being treated with some suspicion as it was thought the company was lenient with some investors.