GTP - Great Southern Plantations

[Guff]

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

I believe it was an MIS investor. It may be best that GSL risks insolvency, and goes under if necessary - I just cannot see the share price recovering, even in the "new Great Southern" as they claim it will become. It may not be a going concern, and there are likely to be major floors in their business model logic.

There has got to be a fair management fee for the MIS's, so can GSL provide that or are we kidding ourselves and the whole thing was doomed from the beginning?

As for the 50c, that is the "experts report" and offer floor for the calc of the quantum of shares to be exchanged.

 

[Grumpy Old Man]

I seem to remember a company advertising to buy secondary market MIS woodlots in the Fin Review last year. Does anyone recall who they were or what details?

 

[drsmith]

I believe it was an MIS investor. It may be best that GSL risks insolvency, and goes under if necessary - I just cannot see the share price recovering, even in the "new Great Southern" as they claim it will become. It may not be a going concern, and there are likely to be major floors in their business model logic.

There has got to be a fair management fee for the MIS's, so can GSL provide that or are we kidding ourselves and the whole thing was doomed from the beginning?

As for the 50c, that is the "experts report" and offer floor for the calc of the quantum of shares to be exchanged.

GSL's response to the MIS investor's query on insolvency suggests to me that GSL is trying to influence MIS investors by fear rather than rational investment argument. That speaks for itself.

I'm still trying to come to terms with how this has got past ASIC. Perhaps it was seen as being similar to property development companies merging their trusts into a single entity as Westfield did several years ago and other property groups have done since. To me the change in the nature of the MIS investors is much more fundamental and perhaps similar to a bank proposing a conversion of depositors funds into shares in the bank. If ASIC approved that under GSL's terms there would be rioting in the streets (or at least a run on the bank).

If this gets up for any of GSL's MIS's, the ultimate fallout could be very ugly. Not only could MIS investors end up with shares which are worthless (or close to it), income tax liabilities will be brought forward from harvest to the 2008/09 financial year. While selling the newly aquired shares (even for a token amount) would realise a capital loss this can only be realised against other capital gains and not income. It's a double whammy for MIS investors, particurally for those who have invested in the MIS's over multiple years and built up a large investment. The fact that the proposed arrangement brings forward tax liabilities without a garantee of sufficient income to offset this against is a clear demonstration that GSL is not acting in the interests of MIS investors.

I can't comment on the bank garantees for the MIS investors if GSL goes belly up as I know nothing about them. The key question here is whether the MIS investments are more secure as tree trunks or in the hands of GSL's management and board. The tax consequences as noted above are also a critical factor. Annexure 2 of the offer document is critical reading for all MIS investors.

 

[Guff]

I seem to remember a company advertising to buy secondary market MIS woodlots in the Fin Review last year. Does anyone recall who they were or what details?

wrt this I belive the govt/ATO approved secondary trading after a period of four years, this was also mentioned at the GSL investor information sessions -- do you know anyone that would purchase projects right now?

 

[slim pickins]

I have just talked to my lawyer, and i am trying to organise a court injunction to prevent this vote taking place next month.

in case the injunction is unsussessful, i suggest any investor in MIS that is unhappy with this arrangement contact me to organise a massive damages claim against the company.

i think there might be an action in tort law against GTP. they owed a duty of care to the MIS investors and their actions resulted in our loss.... or will result in our loss.

the aftermaket purchase of woodlots does exist it seems. they are probably being bought up by subsidiaries of GTP in order to influence the vote. that could be their ace up their sleve.

the analogy of a bank forcing deposit holders to convert deposits into shares seems pretty accurate. totally absurd. i cant belive the press hasnt got a hold of this.

to people planning to vote..... if our trees get converted into these worthless shares noone will ever buy another woodlot again and this company will be gone very very soon.

P.S. anyone that wants to buy my woodlots is welcome to do so. any information on any company that wants them would be greatly appreciated.

please Prvate message me if you are interested in joining me in lodging a court injunction.

 

[drsmith]

Further to my comments above on tax I note note that there is no confirmation from the ATO about the tax consequences for MIS holders in relation to this scheme.

This is clear from the reading of section 2.1 from annexure 2 of the explanatory memorandum (2003 plantation).

 

[Grumpy Old Man]

Given that the export price for blue gum chip (according to ITC/GTP/TIM) is so high at the moment, I can only imagine that there must be a heap of competition in Western Australia (and elsewhere) for the trees. Hence GTP wishing to trade shares for them. Are there options in the PDS for investors to individually market woodlots? Should look into this.

Find it hard to imagine that there is no other option but to trade them for 2/3 of a dead duck.

 

[bv2726]

I also went to the presentation meeting last week in Melbourne held by the GTP management.

I learnt a lot. A lot about the arrogance of the directors, and the anger that exists amongst investors towards this "pseudo-captial-raising".

The deputy CEO (I think) summed it up when he said (in response to some angry questions) something like "look, may I remind you that we do not have to be here, there is no legal obligation for us to turn up"

The crowd roared with sarcasm. It was the deputy CEO saying that us peasants should be pleased that we even got to see him.

I am going to vote no.

 

[prawn_86]

I also went to the presentation meeting last week in Melbourne held by the GTP management.

I learnt a lot. A lot about the arrogance of the directors, and the anger that exists amongst investors towards this "pseudo-captial-raising".

The deputy CEO (I think) summed it up when he said (in response to some angry questions) something like "look, may I remind you that we do not have to be here, there is no legal obligation for us to turn up"

The crowd roared with sarcasm. It was the deputy CEO saying that us peasants should be pleased that we even got to see him.

I am going to vote no.

This is the problem with corporate Australia. Its all a big boys club, with heaps of people sitting on multiple boards.

And instos tend to hold the majority of companies, so then the cycle is complete with everyone just taking the small shareholders for a ride.

Shame nothing can be done about it...

 

[slim pickins]

"a sarcastic roar" in melbourne..... hmmmm.. not bad. a riot would have been better.

its so hard to coordinate my efforts against GTP because I am in london right now, otherwise i would lobby and go to the press. and that gives me an idea... if there is anyone concerned about this enough to go to the press may i suggest this is the time to do so.

i am sure some publications will pay for such a story especially someone who would be hard hit by a capital gains tax bill this year, or some other hardship.

of course the scheme should not be presented as a tax write off.. rather an honest investment made in order to diversify and support australia's primary industry.

the good news is that the share price seems to be sinking, 30c as i write, which makes it plainly obvious what the MIS investors will get if they agree to this robbery.

anyone that wants the shares can just buy them on the ASX.... get 'em while the're hot no need to sell your trees. in my humble opinion trees will just continue to increse in price especially since most of the western world is in the grips of the environmentalists. anone using non-plantaion wood will be crucified... just like the whale hunters.

keep your trees they are very valuable. if you want GTP stock buy it seperately

 

[Forenth]

Slim, I agree with you whole heartedly. I am willing to join in any class action against GTP regarding this ripoff. I have contacted the tv networks to see if they'll do a story and spread the word of this sham, and I've lodged a complaint with ASIC as well. I encourage everyone else to do it, you can do it online at ASIC's website. GTP are relying on the fact that we don't know who each other are or can discuss it to get this through.

I received a notice from the company this week telling me I can expect a return of over $3100 / woodlot on my investment when it matures. WHAT! Don't they know they're trying to steal it? Bizarre. Plus they only valued them at $2600 for the purpose of the scheme so its an admitted ripoff now even without the share price factored in.

I'm attending the Albury meeting of investors tonight. I'll let you all know how it goes and I'll spread the word about ASIC and any class action. Anyone attending other meetings should also do so. Get investors details and let's make a list... we can't wait too long.

If we are FORCED to become shareholders then collectively we'll be the majority. First shareholder meeting we vote to sack all unnecessary personnel, including directors, and also from that moment that all directors remuneration, payouts, bonuses etc be paid in the form of GTP shares at 60% above market value. If they say its a fair deal for us then its a fair deal for them.

Lastly, if they do this then who would ever invest with them again, knowing that they have a history of seizing the investment for rubbish shares. This will absolutely be the start of the end for GTP, if it hasn't already started.

In my original 2000 prospectus, section 12 of the Lease and Management Agreement states: "The Lease and Management Agreement confers individual rights on each Grower. The Agreement does not create any association or partnership between the Grower, the Responsible Entity and other persons having an interest in the plantation". So each grower invests as an individual and is not bound by the decisions of other growers. Majority votes can't be taken for anything but early termination of the project, which is written as being the harvest, sale and distribution to growers of proceeds, not transfer of ownership which this scheme is. This seems to be a breach of contract.

In 2000 they listed 600 000 shares in the company. A director then and now, a Mr Young, now has almost 50 000 000 shares. At least someone's been making money while our investments have been failing.

 

[drsmith]

In my original 2000 prospectus, section 12 of the Lease and Management Agreement states: "The Lease and Management Agreement confers individual rights on each Grower. The Agreement does not create any association or partnership between the Grower, the Responsible Entity and other persons having an interest in the plantation". So each grower invests as an individual and is not bound by the decisions of other growers. Majority votes can't be taken for anything but early termination of the project, which is written as being the harvest, sale and distribution to growers of proceeds, not transfer of ownership which this scheme is. This seems to be a breach of contract.

If that statement's in one, it's most likely in all of them.

Check your original prospectusus folks.

 

[bv2726]

I'm attending the Albury meeting of investors tonight. I'll let you all know how it goes and I'll spread the word about ASIC and any class action. Anyone attending other meetings should also do so. Get investors details and let's make a list... we can't wait too long.

I hope you are successful. At the Melbourne meeting, there was some real venom put forward by a couple of financial advisors (venom towards the directors). One or two stood up, had loads of questions, threatened (and promised) to go to ASIC, and also offered to leave his name with anyone who wanted it.

 

[Forenth]

Yesterday I attended the Albury meeting of investors and the directors have learned their lesson from the previous meetings in capital cities where they were harangued.

Tim Jess, Cameron Rhodes and Natalie Roe (?) spent 90 minutes going over the figures, making sure that the audience, who were more retirees than not, were still confused. They introduced a break before the Q & A so that these confused investors could head home and not hear the questions that those who remained were asking and so gain an insight into what are the real concerns that everyone should be worried about. There were still some angry people in the room.

The directors then cut off Q & A after only 6 or 7 questions, they didn't like the direction the questions were going, ie. how can you expect us to allow you to rip us off. You might be increasing revenue from 5.5% to 100% of woodchip sales but we're taking a big loss for you to do that.

The directors presented figures and graphs showing that while the assets of the company would increase, the assets per share should in fact halve with this scheme. They tried to argue that because the share price is under this level then it will go up. If the share price has been sliding for years independently of the current assets per share, then halving the assets per share is NOT going to help the share price, and they said they would not guarantee that it would, but kept arguing that it COULD. And any benefit to ever appear to investors requires that share price to increase a lot!

This dumps a huge risk on investors while the company gets a definite 18 times increase in revenue. We investors currently have hundreds of millions of dollars in investments physically on the ground right now, some coming ready to harvest. They want to take that from us and give us the huge risk that the share price has to almost double from its current level just to get us back to where we are right now. Also we would be hit with an extra tax bill this financial year, something no one has planned for, especially retirees.

The whole presentation argued that the share price should go up to the 73 - 91 cent range from yesterday's close of $0.30 if the scheme goes ahead. I asked if they would guarantee the price and of course they said 'no way'. The price has been falling for 3 ½ years and shows no sign of improving, especially after the ATO ruled against new investments being tax deductible. When assets per share are diluted then why would the market increase its confidence in the share?

Like everyone I plan to implement measures to reduce my tax in the year my investment comes due. Overall, I have calculated that my after tax investment value goes from $2638 / investment to $1487 of shares which are still falling in price, plus a tax bill of $446 if I can't minimise tax in time. Multiply this by your number of woodlots and OMG. This is using Great Southern's own figures. Using my own figures its worse.

This is an attempt to take hundreds of millions of dollars out of investors' pockets, and as mentioned earlier a large number are retirees who were relying on this income to mature year after year and keep them solvent through their retirement. I'm in my early 40's and until now was thinking of my own investment as the beginning of a retirement nest egg. I wasn't planning on it being decimated just as it was coming due.

Most of the votes will be cast by the middle of next week as Great Southern is pushing this vote through by the end of this month. This gives investors only a couple of weeks to work their way through the 191 pages of financial blurb that was sent to them. At the very least one could argue when this much money, especially retirement monies, are involved a longer timeframe should have been given to allow for analysis.

There is currently enough confusion among investors for a yes vote to meander its way through. I have also contacted the media again. If the vote goes yes and you're unhappy, leave your details at greatsouthernripoff@hotmail.com. If you want to join any class action or damages claim we can then get back to you. Write this email down, you could well be wishing you did. Keep it safe.

 

[drsmith]

There's an article on this in today's Sydney Morning Herald.

http://business.smh.com.au/business...w-on-trees-you-know-20081119-6bji.html?page=1

 

[irenebrisbane]

We, too, like Forenth attended the "seminar" on the Gold Coast three days ago and the format was exactly as portrayed in his report. Confusion reigned and they cut the Q & A session after approx 6 questions. As stated they did adjourn after the "explanatory meeting" and it was depressing to see that less than half of the attendees returned for the Q & A session. LIke Forenth, we are worried that there will be enough "yes" voters to carry this motion through. Interestingly, the director(?) asked for a show of hands: existing shareholders; cattle investors; growers of tree lots. The show of hands for cattle investors was minimal; shareholders likewise; tree lots: quite a handsome show of hands. Who were the remaining attendees who did not raise their hands at all? Presumably they would be there at the invitation of Great Southern so must have had some concern. Puzzling. They were the ones who did not return for the Q & A session. We have already cast our "No" vote by proxy to make sure we get it in on time. I do have this sinking feeling, going by the attendees at the meeting, that the our votes will not be enough to stop this madness going ahead.

 

[Forenth]

I have again lodged a complaint with ASIC including extra details. It read:

Great Southern Limited (GSL) continue to press ahead to take the assets of agribusiness growers even without their consent. The basics of the scheme if successful are:

- GSL gains extra revenue from the sale of the harvest, from 5.5% to 100% of proceeds. An increase of 18 times.

- By the issuing of new shares to growers as payment, GSL reduces it's debt gearing to 29% of current levels. This share issue requires minimal actual outlay from GSL.

- Growers are offered these shares at $0.50/share, despite a current market price of $0.30. An immediate 40% loss.

The problems with this are obvious:

- growers don't want shares, if they did they'd go buy them at $0.30.

- growers invested for the long term. Many are retires who invested their savings in projects over successive years. A lot have hundreds of thousands of dollars involved.

- The effect on the value of growers investments is obvious. In my case using GSL's own figures each woodlot of my investment, due in 2011, will distribute $3160 after expenses and deductions. This is close to my own estimate using the foresters reports and prices etc. Most of this value is already on the ground as timber since the project is 75% complete.

I will implement tax minimisation, at the very least via salary sacrifice of salary, so my maximum tax rate will be 16.5%. Overall I take home $2638 of this.

GSL want $0.50 for each share worth $0.30. They are capping the # of shares as 4958 / woodlot, so GSL pay $1487 pre tax for my $2638 post tax of standing timber. If I cannot be effective with tax minimisation in the remaining half of 2007-2008 I will pay $468 tax (@31.5%). Post tax I receive $1019, vastly less than the $2638 I am already set to receive.

Natalie Egan, a GSL manager currently presenting information sessions around the country agreed at the Albury meeting that any possible benefit to growers relies on the share price increasing substantially, and that if it doesn't they will make a large loss. An admission that this plan inflicts huge losses on investors. Cameron Rhodes, CEO, at the same meeting agreed that GSL make no guarantees whatsoever that the share price will improve. He cut off the meeting after 7 questions, perhaps because he didn't want it to become like the Melbourne session where management responded to angry questions with arrogance.

Natalie stated that GSL value the company higher than market value as the assets / share would be around $0.90. However, GSL's own figures show that assets have been stable around $2.00 / share for the entire period of the last 3 ½ years where share price has fallen from $5.03 to $0.30 in a steady downward trend. The last 18 months have been especially consistent.

This is a clear demonstration that assets have no effect at all on market valuation of the company, and to use them as justification of future share prices is ludicrous. This is especially true if assets/share will halve under this plan.

This scheme is only beneficial to GSL, by the huge extent of 18 times more revenue for almost no cost, but inflicts massive losses on investors who already have timber on the ground. GSL want them to take the strong and increasing certainty of their return and replace it with the substantial risk that the share price improves the large amount needed to get back to where growers are right now. ASIC cannot fail to see the implications of this to tens of thousands of growers. I have 5 woodlots but many have dozens and some more than 100. The effect will be similar to those investors in HIH.

Banks do not decide they need more revenue and seize investments by issuing shares with a 60% premium on price.

With regard to the contract for the investments, in my original 2000 prospectus, section 12 of the Lease and Management Agreement states: "The Lease and Management Agreement confers individual rights on each Grower. The Agreement does not create any association or partnership between the Grower, the Responsible Entity and other persons having an interest in the plantation".

So each grower invests as an individual and is not bound by the decisions of other growers. There are no if's, but's, exemptions or other condtions. No partnerships or collectives are established. The decision of one investor to sell cannot be forced on another.

There is also that this scheme has to be fair in all facets, not just financial. The scheme allows individuals to still accept the scheme if the majority vote no but forces all growers to be involved if the vote is yes. To be fair this should include an option for individuals to opt out in this circumstance.

Under section 6 of the Constitution majority votes can't be taken for anything but early termination of the project, which is defined under Procedures of Termination as being the harvest, sale and distribution to growers of proceeds, not transfer of ownership which this scheme is. This is a direct breach of contract.

This entire scheme is hugely detrimental to the interests of the investors and will realise losses of 60%, or more to those on higher tax rates, which do not have to occur at all as growers already own the timber which is already existing. This affects hundreds of millions of dollars owned by tens of thousands of investors.

The scheme also involves breaches of contract on two counts; forcing the decision of one grower on another when explicitly forbidden, and holding a majority vote for a purpose other than early termination of the harvest, in this case GSL seizing the harvest.

Many shareholders are angry and we hope and strongly urge ASIC to investigate this matter quickly due to the large number of investors and value involved, the devastating effects on those investors, including many retirees, and the fact that GSL want to push this all through with a vote on 1/12/08. At least please force GSL to postpone this scheme and vote until ASIC have investigated.

Thank you.


If you are concerned, angry, or just confused and need more time to look over it all then WRITE TO ASIC AND LODGE A COMPLAINT. go to www.asic.gov.au, top right of the page and 'how to complain'. Next page go down to Question 6 'make a formal complaint'. Company details when you're asked are:

GREAT SOUTHERN LIMITED
Company # 052046536
16 Parliament Place
6005
Australia (obviously)
Ph 08 93209700
Fax 08 93219288

Stick to the facts and figures, not too much emotion, and urge them to investigate. Ask them to at the very least force GSL to postpone the vote until those who are confused can have time to clear their mind and make an truely informed decision.

I have also contacted the newspapers in most capital cities in letters to the editor. Please everyone also do this. For most of them you can do it at their web sites.

Let's not sit by idly, let's get some action going!

 

[irenebrisbane]

I will be lodging my complaint today as well as writing to media. We are retirees and this is impacting on our finances - particularly in such a volatile global meltdown - adversely, of course. Many thanks.

 

[Forenth]

Remember the $2.00 net tangible assets being promoted in the 'information seminars'? I've just found a message from Jackob made back on 27/7/08 which I quote:

"GTP’s NTA (net tangible assets) is officially about $610m, or say $1.90/s (at 30/3/2008).

Suppose that GTP could sell 1/10 of its assets in the first year, and what it could get would be ($610m*1/10) = $61m. (The 1/10 assumption is lenient, as most of GTP’s lands are for the 11 year woodchip schemes, and the size of them 11 years ago were only a small fraction of the present).

Now, GTP has debts of ~$700m (at 30/3/2008), which needs interest payment about $70m a year. In addition, GTP has about $2.5 billion worth MIS projects under control, which need at least 2% of the total value as the maintenance cost, that is $50 m.

So, the total expenditure needed would be at least $70m+$50m=$120m, which is about twice of the $61m NTA sale results. Plainly, GTP would indeed go oblivion in such a way.

Thus GTP’s $610m ($1.90/s) “NTA” is only a pie in the sky, which you can never get it. The problem in GTP’s NTA valuation is that it has hidden its liability for maintenance of the existing MIS schemes and service of existing debts in the future. I believe if these hidden liabilities were correctly included, the present GTP’s NTA should be negative."

If that's all true the share price has no backing at all and management are misleading us. This explains clearly the ENTIRE reason for their grab at our money. We know they're not doing well but wow. Cameron Rhodes must really be trying hard to get those performance bonus options issued at $0.00 that are listed in the memorandum.

 

[drsmith]

Based on the above argument the NTA backing is, technically speaking, real (to the extent that valuations on their assets are realistic) but they can't use these assets to finance the day to day running of the business or the cost of credit. This is where the revenue stream from harvesting of the MIS assets comes into play.

The simplest and most effective argument against this is section 12 of the 2000 prospectus as noted in Forenth's letter to ASIC a few posts above, assuming it is common to all the affected forestry prospectusus.