GTP - Great Southern Plantations

[brty]

Jackob,

I agree it is a bad strategy, but the holders of millions of shares would see the same thing.

What can the large holders do in this situation??? All I can think of is that they will try to bid up the price over the next month or two, to get it over the $1.10 price and make the strategy semi viable.

What's the alternative?? Watch shares go to zero???

The offer for holders of those tree lots, paid $3300 in 2003, if the shares are only worth $1600, they are worse off than just paying the tax in the first place, and it will kill any future MIS sales.

Only real hope for future viability is a higher share price, probably around the $1.60 level mentioned earlier.

The real question to me is that this could be a fantastic opportunity to buy now, or management have stuffed up completely.

I can't believe that management is so stupid to offer such a strategy unless they know of backers (large holders of stock with deep pockets) that will support it.

I do not hold any shares in GTP, but I am thinking about getting some.

brty

 

[Jackob]

Brty,

Of cause some of the large shareholders would like to support the GTP share price, but the problem is how they could possible achieve that.

In the past as we may all know Ospraie was the one with a “deep pocket” to buy up GTP shares, from $3+ a share to begin with and to $0.50 to end up – Ouch! Tens of millions of dollars evaporated into the air and the GTP downward trend was even accelerated. Now they are having nearly 20% of GTP issued shares and have to stop buying.

Last Tuesday, the day GTP released its “strategic Review”, the supporters again pushed the sp up from ~70c to 95c, but soon they were defeated and the sp dropped to under 60c – even lower than where they started.

The problem is that under such a downward pressure, few major shareholders would continue to support it if they wouldn’t flee either. From both fundamental and technical view points, the GTP sp downward trend still has a looo...ong way to go.

 

[brty]

Hi Jackob,

In the 4 days since the announcement, there has been ~9m shares traded. Less than ~1m were in the initial push up. There has been over 7m traded between 56c and ~65c. Downward momentum is facing stiff resistance, volume for each cent of downward movement has risen, someone is supporting it/thinks its cheap.

Do you really think this strategy would have gone to market without getting some type of approval from large shareholders??? Maybe the idea came from there???

bye

 

[The Captain]

Some time ago, GTP posted a letter to growers asking them two things.
1. If they could sell their woodlot would they and
2. Would they like to be on a list in order for them to sell their interests in a project.
So I would think based on their announcement that they do have a number of growers who will take up their offer.

We must also consider that if GTP aren't doing so well and if you are a grower and consider that GTP aren't doing so well, would you hold out long term or would you take what you can get for your investment and run.
I think that the offers from GTP are so ridiculousy low for growers given the current share price and the ability to the growers only to get around 60 cents by onselling their shares that there is no way that they would consider it and will wait the further time to at least get their money back.
I do think we may see a further offer from GTP to growers in this area.

Some time ago i bought into GTP for 50 cents and soon after the shares jumped. I was going to write in this forum that I thought GTP shares would now increase based simply on the historical charts of GTP. Every time it hits 50cents the share price improved. If you look back you will see on their charts that there was 3 distinct occasions where this occured and those who bought shares did very well. A current example is Telstra where it hits $4.20 and bounces right back.
When I bought into GTP the chart was in EW currently on wave 3 down and looked to me to be ready for the up for the wave 4 peak which it has now completed. I sold for a nice little profit. But look out below I think that we may see a new low way under the 50c to 30 or 40 cents which would agree with EW theory. But there is very strong support at 50 cents.
If GTP survives the next few years I think we will see good share prices in this one again, there is a lot going on in MIS at the moment with Carbon credits and the test case just going to court now.
If there was a sensible offer to growers and the schemes were sold back to GTP not only would GTP begin to look very profitable and with Mr Young's stranglehold on the ownership of GTP gone, GTP becomes a real takeover target. But that is another story.
As usual dont buy or sell shares on my thoughts do your own research. Cheers and happy trading.

 

[Jackob]

Hi Brty,

I am just looking at the GTP Charts. In the first 3 days of trading after the release of the "strategic review", apart from the first half-hour when bulls pushed the price from 86c to 95c with 1m- shares changed hands, the price was pushed down from 95c to 59c with a huge 6m+ turnover. Thus the downward momentum was apparent. Today it’s down again to 58c.

I reckon the "Strategic Review" is just GTP's last gamble to survive, but I can't see how it can win by showing all its MIS program are craps and asking MIS investors to surrender their holdings with half of value they originally put in.

 

[brty]

This stock now looks toast.

Falling below 50 cents is disastrous for the holders of mis units. Plus there is no incentive for anyone to take up new mis schemes.

The value of a timberlot, original cost ~what $3300 less the tax benefit of $1600 is now ~$300?.

I cannot see how this can end positively for holders of the timberlots or shareholders.

My only 'interest' in this company is that it was my pick in the september competition, where I stated it would either double or was toast.

I like just a little bit of butter and lots of apricot jam.

brty

 

[Jackob]

Hi Brty,

We mustn't over-estimate the intelligence of the GTP management.

Had they enough intelligence, they would never ever have such a "strategic Review", then allow its share price drop to a low of under 30c and make themselves an absolute joke in the first place.

 

[irenebrisbane]

Has anybody as a grower or investor in GTP on this forum been approached by GTP with a proposal to surrender all woodlots in return for shares in Great Southern. Our woodlots go back to 1998 and 1999 and are due for harvest. With the current share price for GTP it is not an attractive proposition at all. GTP or GSL are very keen to have this scheme passed. Does anybody else have knowledge of this? I have read the explanatory memorandum and it seems to me that we would be disadvantaged by agreeing to the proposal. Any comments would be appreciated.

 

[drsmith]

While this is not a stock I have followed for some time I did invest in GTP shares several years ago for a substantial profit.

At that time I felt investment in the wood lots themselves represented a poor return on investment with the main theme being tax incentives. On this I assume nothing has changed. Tax minimisation is in essence taxable income minimisation which in the present economic environment wage earners are less able to engage in. I assume GTP's revenue is suffering on this front or that it will.

With regard to exchanging woodlots for shares the question that comes to my mind is that if the management company needs capital, do a capital raising like other companies have done. The most likely answer is that they can't so the next option is to raid timber lot holders for the capital needed to keep the management company solvent. At the very least it's a transfer of share market risk to the lot holders.

In short, don't do it.

 

[irenebrisbane]

Thank you, drSmith for your invaluable comments. What you have said reinforces our feelings on the proposal. Since posting on this site I have heard from another GSP grower and he is emphatic that he will vote no. He has also managed to get hold (obviously) of the names and addresses of some if not all of the other growers so hopefully there will be enough of us to cut this scheme off at the knees otherwise we will be landed with shares that will most likely be almost valueless and the loss would be even greater. My sentiments exactly that they need capital badly and are prepared to "do us out of our entitlements" by taking over our woodlots and cashing in on them. I hope we get something out of all this when this period is over.

Many thanks.

 

[doctorj]

Rest assured, the compliance committee (and auditors) will ensure the value of shares you receive under the deal is equal to or greater the amount of cash you'd receive normally.

You're right - GTP are probably having cash flow issues and see it as a handy way to preserve cash.

 

[slim pickins]

hi eveybody,

i have a substantial interest in the MIS schemes. hundreds of thousans of dollars..... i will be voting NO!

why.... essentially the way i understand it is that GTP would like to acquire MIS schemes worth $438 million for 72% of its share prce which today is worth $73 million.

so would you exchange $438 for $73.... if you would.... i would gladly do business with you

if GTP succeeds in pulling this off it will be the steal of the century. it will help the existing shareholders but i will lose a packet. there could be a run on the shares as MIS shareholders rush out of it. as if the shares arent low enough already.

please vote no via proxy as soon as possible if you are an MIS investor. i have no idea why they think they can even take this to a vote and force MIS investors to own their shares. there must be a law against it and if this vote succeeds... which i dont think it will i would be happy to start a CLASS ACTION lawsuit against GTP for this scam. if anyone has any questions please send me a message.

in case the this does nto pass and GTP goes bust the owners of the MIS scmeme will still get he benefit from thier forests, as an independent reciever will be appointed to manage it all.

cheers slim

 

[slim pickins]

regarding the company itself.... all i can say is feel sorry for the shareholders. but it was their investment decision. if this buyback is passed i do not see how it will benefit you. the MIS owners will own 72% and your holdings will be severey diluted.

the MIS owners will be left with shares in GTP..... now lets examine this comany in greater detail....

its worth $103 million as of today. looking at its annual report... what does it own?

firstly it owns a lot of debt... $800 million in debt. it has borrowed $800 milion!! they have borrowed $800 mil and they have given a loan of $800 mil to "related parties". i cant see who these related parties are in the annual report. i would love to know if these "related parties" are able to pay this money back.

they have also lent $4 million to one of the directors. thats amazing... i would not mind having a $4 million dollar loan.

the compnay spends $41 dollars on staff wages.... several directors recieve salaries of more then $1 million dollars.

im sure the company earns money too..... i would love to hear a positive spin on their annual report. the share is in a spiral... i would love to knwo how the market got it so wrong on this one.

the company is worth $100 million it has $800 million in debt which it has to pay. where are its assets..... how much could it get for those assets in the real world?

 

[drsmith]

i have no idea why they think they can even take this to a vote and force MIS investors to own their shares.

That thud was my bottom jaw hitting the floor when I read the following from page 63 of GTP's scheme proposals,

Significant issue of GSL Shares
The implementation of each of the Scheme Proposals and the Individual Offers will result in GSL issuing a significant number of GSL Shares
to project investors, including some project investors who may not have wanted to participate in the Scheme Proposals, but were bound
to do so under the terms of the Scheme Proposals. Some project investors may not wish to retain the GSL Shares issued to them and may
subsequently sell them on the ASX. If such sales are material, the additional supply of GSL Shares may have an adverse effect on the market
price of GSL Shares.

Does the original offer document for the MIS (which could be up to 10 years old) specify any circumstanses where Great Southern can forcably convert a a lot holder's equity into shares in the company ?

Also, what does ASIC have to say about this ?
Have any lot holders contacted ASIC and advised them on what is proposed and then asked for their assistance ?

 

[slim pickins]

With regard to exchanging woodlots for shares the question that comes to my mind is that if the management company needs capital, do a capital raising like other companies have done. The most likely answer is that they can't so the next option is to raid timber lot holders for the capital needed to keep the management company solvent. At the very least it's a transfer of share market risk to the lot holders.

In short, don't do it.

excellently articulated. why dont they raise capital .... firstly noone will ned to them. they have $800 million already they need to pay back. they could issue more shares... well the directors own 50 million shares or so amongst them out ouf a possible 317 million. they would not want to dilute it too much. if they raised capital through a share issue the share price would be 10 cents a share.

so the directors were walking along a trail one sunny afternoon and one said.....
"look at all these trees....... who do they belong to...."
----"the MIS investrors" says one.......

"hmmmm well, lets just take them!!! they must be worth $438 milion or so"

-----"yes lets give them $73 million worth of our shares for it. i dont want to hold onto these shares as the markets are sinking into a death spiral anyway"

"a capital idea old sport... a capital idea......do you think it will work?"

------"probably not... but its the only chance we've got, may god help us all"

 

[slim pickins]

Does the original offer document for the MIS (which could be up to 10 years old) specify any circumstanses where Great Southern can forcably convert a a lot holder's equity into shares in the company ?

Also, what does ASIC have to say about this ?
Have any lot holders contacted ASIC and advised them on what is proposed and then asked for their assistance ?

i dont think so anyone has contacted ASIC, if such a clause existed i would nto have entered intot hsi investment. these are many legal avenues otu of it even if it exists. it might not even be mentioned..... it would create a precdent.... this is indeed a precident.

i wish i could find more MIS owners and lobby them.... i only fear some of the larger MIS owners might have had kickbacks to accept this which of course is illegal.

i do not think poeple can have their assets stripped away from them like ths. spread the word spread the word....

who would have accpeted a clause that allows your investment to be acquired by a company on its own terms. how does a decision by one MIS investor force the other investor to abide by it? it simply cant .. or at least it shouldnt!

think of it as a condo. the management company that looks after the building says... i want your apartment.... the other apartent owners have agreed to transfer their ownership to us... you must too..... rubbish.... that cant work.

this will be a CLASS ACTION if the vote succeeeds. we all kow what will happen to the share price if 15,000 people get shares and try to sell them at once.

this company is doomed. the share price has already factored in the remote possibiliy that the "theft" of MIS schemes will work. but we must nto rest until people are aware of what is happening.

 

[drsmith]

The more I read the worse this is. Consider the following paragraph from the independent taxation opinion that forms annexure 2.

2.2 Disposal of a Grower’s interests in the Project
2.2.1 Grower’s interest in standing timber
A Grower will be taken to have disposed of their interest in the standing timber as a result of the Scheme Proposal. Pursuant to section 70-90 of the Income Tax Assessment Act 1997 (the 1997 Act), a Grower’s sale of standing timber to GSPH will be deemed to be a sale of trading stock outside the ordinary course of a Grower’s business. On this basis, a Grower will be required to include the market value of the standing timber in their assessable income in the year ending 30 June 2009.

While there's some complexity in the detail and examples below this statement, the bottom line is that the conversion of wood lot equity into shares will result in an income tax liability for the 2008/09 financial year at the individual investor's marginal rate. For MIS investors whose timber is harvested post 2008/09 this would represent a bringing forward of a tax liability from harvest to the 2008/09 financial year. That's a potentially nasty sting in the tail.

Out of curiosity I contacted Great Southern this morning and was advised that the offer document for this was approved by ASIC. If I was a MIS investor I would still contact ASIC to discuss the above details and seek further advice.

I also briefly looked at an offer document for a recent project and under the long list of risks I saw no reference to forced conversion of LIS wood lot equity into shares in the parent company. The financial position of the parent entity was however listed as a risk. Perhaps someone from a legal background with an interest in this might be able to comment further.

 

[Guff]

The bottom line question is what should MIS investors do.

If you boil it down, I can accept a loss -- investments sometimes lose money. I attended the infomation session held by Great Southern in Melbourne yesterday and it was a farce! They tried to deliberately concern investors that if GSL went under, a newly appointed manager may price gouge in managing the investments.

That is the crux of what people need to decide.

1. Let GSL sweat it out and die if necessary, reject the offer.

For the MIS investor we'll call in the bank guarantee and have a new manager for the MIS. What are the details of this bank guarantee? that's the important question there.

Again I can handle a higher cost and even price gouge, because the alternative is....

2. Accept the offer and get reamed for any of those investments converted to shares by GSL

Lets face it, the shares need to be 50 cents to get your money back, they are currently at 33 cents, and if the offer went ahead they would probably drop to 10 cents as people seek to dump their newly aquired stock.


If I had investments in pre 2004 projects only, I wouldn't accept -- but having investments in 2004 2005 2006 makes a difference. ie GSL may survive long enough for us to collect on the other projects.

Perhaps the key is to accept GSL may need to fail, lets face it -- they were relying on future MIS sales to fund their obligation of all previous MIS projects, so it may not be sustainable anyway and they just fold in 3-4 years time...again not long enough for investors to collect on 2004 projects.

Does anyone know the details of the bank guarantee that would appoint a new manager??

 

[drsmith]

They tried to deliberately concern investors that if GSL went under, a newly appointed manager may price gouge in managing the investments.

Who was first to comment about what happens if Great Southern goes under, a MIS investor or GSL itself ?

 

[slim pickins]

They tried to deliberately concern investors that if GSL went under, a newly appointed manager may price gouge in managing the investments.

Lets face it, the shares need to be 50 cents to get your money back, they are currently at 33 cents, and if the offer went ahead they would probably drop to 10 cents as people seek to dump their newly aquired stock.

to get your money back by my calculations the stock needs to be $1. i dont know how you see that 50c will get your money back. well mine is 2002 and 2003. plus its been growng for 6 years or so... surely it is worth more now. i mean even f you put that amount of money in the bank you would have earned interest. so to get a decent return the price needs to be $2+

unfortunately the price seems to be going down. and will probably continue to do so.

let them go bust i say. someone else will take their place. there is no bigger eye gouge then these people anyway.giving these people our trees will not save them. it will just prolong their agny and they will take us down with them.