GTP - Great Southern Plantations
- Thread starter Rafa
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Investor1,
I have crunched the numbers regarding my situation, I don't require advice as its all straightforward. Voting yes will wipe out the large majority of my returns.
With regards to acquiring assets improving GSL's value, their share price is already independent of assets/share as already discussed. It reflects their lack of earnings. Any earnings from project acquisitions will only cover cashflow deficits and not add to shareholder value.
I have little doubt that GSL will survive to complete several more projects after the 1998 project which is complete, or close to. So to me the question of investors having to harvest and market projects isn't likely, at least until after the 2003 project is complete. I do have confidence that GSL's management will sweet talk banks or someone else to let them live at least that long.
One question that GSL will have to ask themselves is: After this whole process in put to bed one way or another, what investor will ever invest with them again? What financial advisor will recommend a product that the manager then wants to seize and therefore ruin his/her reputation?
GSL have sown the seeds of their own end.
I have crunched the numbers regarding my situation, I don't require advice as its all straightforward. Voting yes will wipe out the large majority of my returns.
With regards to acquiring assets improving GSL's value, their share price is already independent of assets/share as already discussed. It reflects their lack of earnings. Any earnings from project acquisitions will only cover cashflow deficits and not add to shareholder value.
I have little doubt that GSL will survive to complete several more projects after the 1998 project which is complete, or close to. So to me the question of investors having to harvest and market projects isn't likely, at least until after the 2003 project is complete. I do have confidence that GSL's management will sweet talk banks or someone else to let them live at least that long.
One question that GSL will have to ask themselves is: After this whole process in put to bed one way or another, what investor will ever invest with them again? What financial advisor will recommend a product that the manager then wants to seize and therefore ruin his/her reputation?
GSL have sown the seeds of their own end.
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Hi Investor
Irrespective of the fact that you have missed the point - in your earlier message you suggested that there are no domestic processing facilities in Australia - notice that you have ignored FEA sawlog mill, hardwood sawmills already processing plantations in NSW and SE QLD, the Australian Paper pulp mills at Wesley Vale and Maryvale - and maybe check your facts a bit better in this regards to Norske Skog and Visy! The Norske Skog facility in Tasmania processes both hardwood and softwood for newsprint. The Albury facility and the Visy Tumut facilty use softwood for pulp production and hardwood for boiler fuel (admittedly the price is low).
In relation to transport distances and stumpages, this is true - and given that GTP have facilities only in Bunbury and Albany, it is difficult to see how within 2-5 years they can possibly hope to process the plantations they have established for export in Green Triangle, Gippsland, Geelong, NE Tasmania, NW Tasmania, Tiwi Islands, Kangaroo Island, Bundaberg and Lismore without utilising the facilties owned by third parties. I imagine that the cost to GTP and growers of developing their own infrastructure in all of these places would be hundreds of millions of dollars, even if access agreements could be negotiated.
The grower is already a price taker with the GTP scheme anyway. And they are completely at the mercy of GTP to negotiate on their behalf - and guess what, under the GTP model, the same company that manages the plantation, is responsible for harvesting, haulage, port management, shiploading and price negotiation.
I understand from earlier comments that GTP charged something like 10% commissions on the way in. What commissions and overheads will GTP take off the top in each step of the process of harvesting and export? Not much I'll bet!!!
And I wonder what they charge their growers for this privelage where they do use their own infrastructure!???
Admire your willingness to present the information that you have as it has certainly generated some interest - but for goodness sake, get real!
doctorj
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I've always felt that GTP's real business model had absolutely nothing to do with trees or grapes or whatever. It was just a means to generate a cash flow to fund the building of a very large property portfolio. Any money made was quickly leveraged and reinvested in the acquisition of even more property.
This is great as long as the property prices continue to go up. The trouble is that land in parts of the world suitable for going trees is limited. In many parts of the world, they were the market for property, so while they were buying prices were going up. And they were keen to buy as long as they could arrange financing for it. Now financing is harder and there are no buyers willing to pay anywhere near what GTP did for land.
This causes refinancing to become more difficult and the danger that as land prices fall is they will find themselves in a negative equity situation.
The question is if GTP was unable to run a profitable business in their current form, how will the trees help? It'll help the net asset position, but from a profit perspective, the reality is many of the older schemes have yielded considerably less than forecast, with many schemes lucky to make their original investment back. There is a rumour that GTP 'topped up' schemes from production outside the land dedicated for the scheme to help boost returns and get the original investment back - this is nice on a scheme level, but if the trees were brought into GTP, it becomes a zero sum game (or even negative sum as I bet these supplementary trees are grown on more marginal lands and therefore yield even less).
I also can't help but wonder if this is a management buy-out by stealth. How much interest does the board and the senior management have in the schemes? What would be the % of shares held by related parties if the proposal went ahead? More importantly, are growers that are related parties allowed to vote on the proposal?
On the issue of land ownership, for the tree schemes, growers interest in the land is arranged by forrestry lease (though, I understand the terminology and form of the agreement varies from state to state). Would the lease survive the failure of GTP? I suspect this could even vary from state to state.
Provided its not an issue, surely the schemes are sufficiently large to attract another manager - particularly in areas like the green triangle where necessary infrastructure is in place.
This is great as long as the property prices continue to go up. The trouble is that land in parts of the world suitable for going trees is limited. In many parts of the world, they were the market for property, so while they were buying prices were going up. And they were keen to buy as long as they could arrange financing for it. Now financing is harder and there are no buyers willing to pay anywhere near what GTP did for land.
This causes refinancing to become more difficult and the danger that as land prices fall is they will find themselves in a negative equity situation.
The question is if GTP was unable to run a profitable business in their current form, how will the trees help? It'll help the net asset position, but from a profit perspective, the reality is many of the older schemes have yielded considerably less than forecast, with many schemes lucky to make their original investment back. There is a rumour that GTP 'topped up' schemes from production outside the land dedicated for the scheme to help boost returns and get the original investment back - this is nice on a scheme level, but if the trees were brought into GTP, it becomes a zero sum game (or even negative sum as I bet these supplementary trees are grown on more marginal lands and therefore yield even less).
I also can't help but wonder if this is a management buy-out by stealth. How much interest does the board and the senior management have in the schemes? What would be the % of shares held by related parties if the proposal went ahead? More importantly, are growers that are related parties allowed to vote on the proposal?
On the issue of land ownership, for the tree schemes, growers interest in the land is arranged by forrestry lease (though, I understand the terminology and form of the agreement varies from state to state). Would the lease survive the failure of GTP? I suspect this could even vary from state to state.
Provided its not an issue, surely the schemes are sufficiently large to attract another manager - particularly in areas like the green triangle where necessary infrastructure is in place.
Hi Guys Happy New Year !
So much angst.
My financial adviser refused to advise me on this matter, even tho i pay a fee for his services and he receives a commission from Great Southern.
I have 2007 Cattle. 4 droves - small time.
No one seems to discuss the cattle much. I voted NO. However I have been in Europe for six weeks and now understand the vote has been delayed till Jan.
This is a big pile of **** for me. I made an investment based on advice I paid for only to be told I was on my own.
So whats the best advice?
Rgds Hodgy
So much angst.
My financial adviser refused to advise me on this matter, even tho i pay a fee for his services and he receives a commission from Great Southern.
I have 2007 Cattle. 4 droves - small time.
No one seems to discuss the cattle much. I voted NO. However I have been in Europe for six weeks and now understand the vote has been delayed till Jan.
This is a big pile of **** for me. I made an investment based on advice I paid for only to be told I was on my own.
So whats the best advice?
Rgds Hodgy
Hi hodgy.
I don't know anything about GTP but my first move would be to demand my "advice fee" back from the "adviser" on the grounds of non-performance of contract. If you make enough noise you may at least get a small return, plus a heap of satisfaction!
I don't know anything about GTP but my first move would be to demand my "advice fee" back from the "adviser" on the grounds of non-performance of contract. If you make enough noise you may at least get a small return, plus a heap of satisfaction!
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So whats the best advice?
Hi Hodgy,
It is illegal for anyone here to offer you any financial advice. If your current adviser wont advise you in this matter then I suggest finding another one who will.
Feel free to discuss the pros and cons of various options or scenarios but a forum such as ASF is not the place to be requesting or offering financial advice. It is for general discussion only.
Morning All,
I note everyone's comments on "Profitability". Profitability can turn around very quickly and I can comment in depth on that, but immediately:
Great Southern's bigger issue I understand is "cash flow".
"Cash flow" in the short term may be dependent upon 3 things,
1) MIS sales
2) Asset sales
3) Project Transform.
Forenth considers Great Southern will survive until the harvest of the 2003 scheme trees. If that is likely, then I consider they will survive beyond that date.
Great Southern has a number of cash flow issues until it is into 2nd rotation use of its vast forestry land bank.
The issue for Great Southern in my opinion was it was not charging enough to investors, selling too many woodlots and then having to buy land in a very short period of time. That land had a significant cash cost to Great Southern and often they paid for land greater than the cost they were charging MIS investors (particularly after paying tax on MIS sales). Therefore, whilst in expansion mode they were significantly cash flow negative due to acquiring land.
Having said that, Great Southern now has a very large land bank and it would be very expensive for anyone else to acquire such a land bank, even if rural property prices were to fall substantially. Ignoring other considerations and why in a few years time Great Southern may be profitable, if I was a large Carbon Polluter (i.e. possibly a power station, a steel processor, etc) I would acquire Great Southern in a few years solely as a Carbon Abatement exercise.
In 2008, they restructured their forestry offering, to be similar to structures previously offered for many years by MIS managers such as Macquarie Bank and others. In my opinion, that structure was more tax and investment efficient for both MIS Manager and Investor. That reason is possibly why Great Southern tried to adopt the structure. But unfortunately the ATO issued a Tax Alert in the year Great Southern endeavoured to adopt the structure and the ATO did not make the alert easy to understand. Also, the ATO refused to provide a Tax PartIVA sign off on the structure. Maybe, the ATO was concerned with the scale that Great Southern could bring to the adoption of that structure. It was also after the ATO decided to attack outright MIS which they lost in Court recently. That tax alert and the ATO's anti-MIS stance may have reduced Great Southern's 2008 forestry sales.
In any event, provided Great Southern can survive a few more years and continue MIS sales, Great Southern may have about 10,000 hectares per annum of land available for replanting (i.e. MIS scheme land harvested and available for replanting) without the need to purchase that amount of land.
If that is correct, Great Southern may improve its annual cash flows by about 10,000ha * $8,000 or $80 million per year. That cash flow may address much of their annual interest expense.
By 2015, Great Southern's 2nd rotation available land may increase even further (i.e. estimated harvest of 36,000ha). From then onwards, it may have minimal CAPEX for land acquisitions and as such, may be generating significant cash flow.
If Forenth is correct and nobody will be investing in Great Southern's products into the future (i.e. 2009), then it may default on its Bank covenants towards the end of this year. In which case, Great Southern may not be around to do any harvesting in 2010 and beyond.
It is my opinion that MIS investors and shareholders in reality should be working together to maximise the value of their various assets.
I accept Grumpier Old Man's comments, however the subsidising of sales revenue by Great Southern for MIS investors may be an example whereby Great Southern is actually working for the benefit of their MIS investors and not maximising margins at every level. Vertical integration, particularly when dealing with your own wood may increase the value of stumpage for the integrated entity.
Regarding local scheme investors acting alone without Great Southern in realising value for their trees, I provide this brief comment. FEA (in whom I am also a shareholder) in Tasmania in respect of its saw mill can in some respects be considered a monopolistic buyer of wood in the region. FEA is also likely to process its Grower MIS wood in priority and also the wood it is committed to purchase under its long term wood supply agreement. It may be difficult negotiating with FEA a highly profitable stumpage price for scheme investors’ wood, particularly if a prolonged world recession continues. FEA may desire to maximise its processing margins, particularly if demand for timber to construct housing in Australia continues to decline. If the offered price to Great Southern MIS investors is not accepted initially, the plantation wood may not be sold. If as a seller you have a lease end date and then you loose your timber (because you do not own the land), negotiations may not be overly pleasant. Similarly, FEA and ITC have to a large extent control of the Bell Bay wood chip export facilities. The price an independent plantation owner may receive for wood delivered there may be influenced by the plantation owner’s alternatives in selling the wood and the demand for wood chip from overseas. The more plantations that Great Southern has near Bell Bay, possibly, the better for FEA shareholders. I note ITC has entered into a long term processing contract with Great Southern’s export chipping facilities.
Many other forestry regions within Australia do not have highly competitive timber purchasing markets. Throughout Australia, sellers of timber may have only a few buyers to negotiate with. Again I state, if as a seller you have a lease end date and then you loose your timber (because you do not own the land), negotiations may not be overly pleasant.
I note everyone's comments on "Profitability". Profitability can turn around very quickly and I can comment in depth on that, but immediately:
Great Southern's bigger issue I understand is "cash flow".
"Cash flow" in the short term may be dependent upon 3 things,
1) MIS sales
2) Asset sales
3) Project Transform.
Forenth considers Great Southern will survive until the harvest of the 2003 scheme trees. If that is likely, then I consider they will survive beyond that date.
Great Southern has a number of cash flow issues until it is into 2nd rotation use of its vast forestry land bank.
The issue for Great Southern in my opinion was it was not charging enough to investors, selling too many woodlots and then having to buy land in a very short period of time. That land had a significant cash cost to Great Southern and often they paid for land greater than the cost they were charging MIS investors (particularly after paying tax on MIS sales). Therefore, whilst in expansion mode they were significantly cash flow negative due to acquiring land.
Having said that, Great Southern now has a very large land bank and it would be very expensive for anyone else to acquire such a land bank, even if rural property prices were to fall substantially. Ignoring other considerations and why in a few years time Great Southern may be profitable, if I was a large Carbon Polluter (i.e. possibly a power station, a steel processor, etc) I would acquire Great Southern in a few years solely as a Carbon Abatement exercise.
In 2008, they restructured their forestry offering, to be similar to structures previously offered for many years by MIS managers such as Macquarie Bank and others. In my opinion, that structure was more tax and investment efficient for both MIS Manager and Investor. That reason is possibly why Great Southern tried to adopt the structure. But unfortunately the ATO issued a Tax Alert in the year Great Southern endeavoured to adopt the structure and the ATO did not make the alert easy to understand. Also, the ATO refused to provide a Tax PartIVA sign off on the structure. Maybe, the ATO was concerned with the scale that Great Southern could bring to the adoption of that structure. It was also after the ATO decided to attack outright MIS which they lost in Court recently. That tax alert and the ATO's anti-MIS stance may have reduced Great Southern's 2008 forestry sales.
In any event, provided Great Southern can survive a few more years and continue MIS sales, Great Southern may have about 10,000 hectares per annum of land available for replanting (i.e. MIS scheme land harvested and available for replanting) without the need to purchase that amount of land.
If that is correct, Great Southern may improve its annual cash flows by about 10,000ha * $8,000 or $80 million per year. That cash flow may address much of their annual interest expense.
By 2015, Great Southern's 2nd rotation available land may increase even further (i.e. estimated harvest of 36,000ha). From then onwards, it may have minimal CAPEX for land acquisitions and as such, may be generating significant cash flow.
If Forenth is correct and nobody will be investing in Great Southern's products into the future (i.e. 2009), then it may default on its Bank covenants towards the end of this year. In which case, Great Southern may not be around to do any harvesting in 2010 and beyond.
It is my opinion that MIS investors and shareholders in reality should be working together to maximise the value of their various assets.
I accept Grumpier Old Man's comments, however the subsidising of sales revenue by Great Southern for MIS investors may be an example whereby Great Southern is actually working for the benefit of their MIS investors and not maximising margins at every level. Vertical integration, particularly when dealing with your own wood may increase the value of stumpage for the integrated entity.
Regarding local scheme investors acting alone without Great Southern in realising value for their trees, I provide this brief comment. FEA (in whom I am also a shareholder) in Tasmania in respect of its saw mill can in some respects be considered a monopolistic buyer of wood in the region. FEA is also likely to process its Grower MIS wood in priority and also the wood it is committed to purchase under its long term wood supply agreement. It may be difficult negotiating with FEA a highly profitable stumpage price for scheme investors’ wood, particularly if a prolonged world recession continues. FEA may desire to maximise its processing margins, particularly if demand for timber to construct housing in Australia continues to decline. If the offered price to Great Southern MIS investors is not accepted initially, the plantation wood may not be sold. If as a seller you have a lease end date and then you loose your timber (because you do not own the land), negotiations may not be overly pleasant. Similarly, FEA and ITC have to a large extent control of the Bell Bay wood chip export facilities. The price an independent plantation owner may receive for wood delivered there may be influenced by the plantation owner’s alternatives in selling the wood and the demand for wood chip from overseas. The more plantations that Great Southern has near Bell Bay, possibly, the better for FEA shareholders. I note ITC has entered into a long term processing contract with Great Southern’s export chipping facilities.
Many other forestry regions within Australia do not have highly competitive timber purchasing markets. Throughout Australia, sellers of timber may have only a few buyers to negotiate with. Again I state, if as a seller you have a lease end date and then you loose your timber (because you do not own the land), negotiations may not be overly pleasant.
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Investor1:
again, you appear to be trying to mislead investors in relation to comments regarding Bell Bay.
In the Bell Bay catchment (north of Launceston), there are two woodchip mills operated by Gunns, one woodchip mill operated by Artec and a woodchip mill operated by SmartFibre (ITC & FEA). There is also a hardwood plantation sawmill operated by FEA. These mills are all within 10km of each other.
So that is five mills actively and agressively competing for wood supply.
Also, Gunns are proposing to build a massive pulp mill in the middle of these other woodchip mills that already exist.
How can you possibly suggest that FEA/ITC have a monopoly buyer position in that catchment?
You need to do some homework on the industry. Get real.
again, you appear to be trying to mislead investors in relation to comments regarding Bell Bay.
In the Bell Bay catchment (north of Launceston), there are two woodchip mills operated by Gunns, one woodchip mill operated by Artec and a woodchip mill operated by SmartFibre (ITC & FEA). There is also a hardwood plantation sawmill operated by FEA. These mills are all within 10km of each other.
So that is five mills actively and agressively competing for wood supply.
Also, Gunns are proposing to build a massive pulp mill in the middle of these other woodchip mills that already exist.
How can you possibly suggest that FEA/ITC have a monopoly buyer position in that catchment?
You need to do some homework on the industry. Get real.
maybe gsp should sue the taxation dept,and recover what is lost in the 2008 plus the on going decline of the share price plus the litigation that is proceeding plus the projected share price in this climate can not meet,plus the recommendations that ausie stock saidwas a good deal in the circumstances
bythe way did aussie stock recommend ABC and Timbercorp ?
If you have the latest voting form then I SUGGEST YOU VOTE I know what I sent back and that is a big fat
NO !!!!!!!!!!!!
ALSO DO NOT I PAY CGT, PLUS WHAT IS LEFT I AM TAXED AT THE MARGINAL RATE ? if I accept this wothless dealGrumpy Old Man,
I think it is excellent that you are presenting your direct and clear views on the Australian timber market and industry for the benefit of those MIS investors that need to make an informed decision on how to vote.
Accordingly, I would most welcome your views on the following questions:
In your opinion which structure is likely to realise the greatest stumpage after all costs for the plantion owner:
1) Great Southern if it owned, harvested, transported and marketed the wood
2) MIS Investors: if Great Southern owned, harvested, transported and marketed the wood
3) MIS Investors: if they owned and had to arrange with third parties the harvesting, transporting, and marketing of the wood?
Do you consider the fact the MIS investors may have a finite lease term as an issue for the forestry MIS investors in realising value for their wood? Particularly, say the schemes that are to be harvested in 2010 and 2011. Do you think it will be easy for them to realise the forecasted values in the valuation report?
Can you recommend a party or several parties that the MIS forestry investors should approach to assume ongoing management of their plantations should Great Southern fail? Provide reasoning for your recommnedation.
Do you think Great Southern MIS investors will need to contribute additional funds prior to receiving harvest proceeds should Great Southern fail? If so, what additional funds may the investors need to contribute towards (i.e. new plantation manager cost, infrastructure costs of plantation roading, port facilities, harvest planning, marketing contracts, scheme adminitration fees, etc)? How much is it likely to be? For Forenth, how may that work if he has limited cash available towards maintaining his project interests?
What do you consider are the risks to MIS forestry investors should Great Southern fail? Do you consider they should be indifferent?
I think it is excellent that you are presenting your direct and clear views on the Australian timber market and industry for the benefit of those MIS investors that need to make an informed decision on how to vote.
Accordingly, I would most welcome your views on the following questions:
In your opinion which structure is likely to realise the greatest stumpage after all costs for the plantion owner:
1) Great Southern if it owned, harvested, transported and marketed the wood
2) MIS Investors: if Great Southern owned, harvested, transported and marketed the wood
3) MIS Investors: if they owned and had to arrange with third parties the harvesting, transporting, and marketing of the wood?
Do you consider the fact the MIS investors may have a finite lease term as an issue for the forestry MIS investors in realising value for their wood? Particularly, say the schemes that are to be harvested in 2010 and 2011. Do you think it will be easy for them to realise the forecasted values in the valuation report?
Can you recommend a party or several parties that the MIS forestry investors should approach to assume ongoing management of their plantations should Great Southern fail? Provide reasoning for your recommnedation.
Do you think Great Southern MIS investors will need to contribute additional funds prior to receiving harvest proceeds should Great Southern fail? If so, what additional funds may the investors need to contribute towards (i.e. new plantation manager cost, infrastructure costs of plantation roading, port facilities, harvest planning, marketing contracts, scheme adminitration fees, etc)? How much is it likely to be? For Forenth, how may that work if he has limited cash available towards maintaining his project interests?
What do you consider are the risks to MIS forestry investors should Great Southern fail? Do you consider they should be indifferent?
prawn_86
Mod: Call me Dendrobranchiata
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Investor1,
What other stocks do you have holdings in? As your analysis is very in depth and if it is that in depth for other stocks it could be useful for ASF members.
thanks
Prawn
What other stocks do you have holdings in? As your analysis is very in depth and if it is that in depth for other stocks it could be useful for ASF members.
thanks
Prawn
investor 1
are you suggesting that gtp went under,that the investors would be gouged by another management team?
if that is the case,would not there be a fire sale and the land purchased would be sold off at a cheaper rate at distressed seller rate to recover monies?
think this over, my trees that I own have a carbon sink value,the coppice that gsp reckons that I am not entittled to have the option of on going in the coppice would still have a carbon sink value.
the point Iam making is why do we have to cop another manager,when if the price is right WE the investors take the trees AND LAND collectively and pay what WE reckon it is worth and get an agreed entity that may even be one of our investors and do it ourselves
this is a concept that big companies freak out at,the audacity of us peasants to contemplate this idea.
BUT there is more the investors can have more diversification and value with on going coppice that gtp have taken off us ,hey when the dust settles us retirees can run the show with very sharp toe-cutters(accountants) and start the investment portfolios ourselves
are you suggesting that gtp went under,that the investors would be gouged by another management team?
if that is the case,would not there be a fire sale and the land purchased would be sold off at a cheaper rate at distressed seller rate to recover monies?
think this over, my trees that I own have a carbon sink value,the coppice that gsp reckons that I am not entittled to have the option of on going in the coppice would still have a carbon sink value.
the point Iam making is why do we have to cop another manager,when if the price is right WE the investors take the trees AND LAND collectively and pay what WE reckon it is worth and get an agreed entity that may even be one of our investors and do it ourselves
this is a concept that big companies freak out at,the audacity of us peasants to contemplate this idea.
BUT there is more the investors can have more diversification and value with on going coppice that gtp have taken off us ,hey when the dust settles us retirees can run the show with very sharp toe-cutters(accountants) and start the investment portfolios ourselves
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Investor1:
As per earlier commentary, ASF is not a forum for providing advice to investors.
However, when you suggest that the MIS owners would be 'on there own', my understanding is that the scheme manager RE and management rights would most likely be sold to a third party in the event that GTP were not able to fulfill this function?
In much the same way, I understand that ITC took over the role of RE for the APT growers in the early 2000's.
In the case that growers had to vote in their own RE, there are numerous reputable consulting forestry organisations in Australia that I am certain would be happy to represent growers as an independent marketer for wood and logs. The Institute of Foresters of Australia (http://www.forestry.org.au/) can provide a list of Registered Professional Foresters who could provide a service to growers. Also the Association of Consulting Foresters of Australia (http://www.consultingforesters.org.au/) may also be useful. Several larger consulting companies in Australia include
1) Poyry (http://www.poyry.com.au/);
2) URS Forestry (http://www.ap.urscorp.com/_business/index.asp?BDY=5);
3) GHD (http://www.ghd.com.au/);
4) Fifth Estate (http://www.fifthestate.com.au/)
I also understand that sales of wood to export mills and domestic mills by third parties happen all over Australia. It would appear to be the exception, rather than the norm that export or domestic mills own all, or even part of the forest resource that they process.
The main reason seems to be that the core business of a processor is not growing forests and vice versa.
As to which model will provide the residual stumpage to growers - I imagine that this is normally dependent upon the location of the plantation in relation to the nearest processing facility. This may or may not be via GTP.
Wooduk,
What I have been endeavouring to do is make investors such as yourself consider what would be your strategy going forward.
I am not sure why many of you are Great Southern MIS investors because you generally don't like the GTP management.
Firstly, Wooduk, in my opinion if you as a group were organised you would vote "YES" call a shareholders' meeting and implement changes.
I could provide ideas.
However, I generally don't believe the MIS investors are organised nor really understand the financial dynamics of the foretry industry (even if Grumpy Old Man would imply I know very little about the industry).
Would MIS investors organise themselves to acquire the land as well as incurr all the other costs?
Will the land really go for a fire sale price? What is a fire sale price? Will all MIS investors in the scheme contribute the same amount of additional funds towards acquiring the land and ongoing management? How will you agree on the new management team?
Your suggestion is likely to result in a change of relative interests for at least some MIS investors. If Forenth is concerned with tax on $400 per hectare, how much will he contribute towards buying the land which is not tax deductible?
How will you as group value the land? Can you compete with a large corporate that may want to use the land in the future for a carbon sink?
IT may be easier Voting YES and sacking the management, or even once taking control of Great Southern structure an organised break-up and liquidation of Great Southern.
What I don't understand is, the offer provided to MIS Investors is to take "CONTROL" of Great Southern. Therefore, you collectively are the management of Great Southern post proposal.
Maybe the real issue, on all sides of the fence is "VALUATION".
Maybe, very few people in this exercise unerstands a whole range of valuation issues, including understanding why Great Southern's share price is at 17cents.
How certain the MIS investors can realise the valuation numbers if they had to manage the process themselves?
There has been within the last year significant volatility in "Valuations" in what may be considered more organised markets than a group of MIS investors taking control of their forestry MIS interests. Consider over the last 6 months the following valuations:
1) Oil
2) Aussie Currency
3) Iron ore
4) Shares (including GTP).
I consider managing your plantations is more difficult than you think, and probably will cost more than you think if Great Southern fails. That is ignoring my views on how easy it will be for you to sell your wood for a high price.
What I have been endeavouring to do is make investors such as yourself consider what would be your strategy going forward.
I am not sure why many of you are Great Southern MIS investors because you generally don't like the GTP management.
Firstly, Wooduk, in my opinion if you as a group were organised you would vote "YES" call a shareholders' meeting and implement changes.
I could provide ideas.
However, I generally don't believe the MIS investors are organised nor really understand the financial dynamics of the foretry industry (even if Grumpy Old Man would imply I know very little about the industry).
Would MIS investors organise themselves to acquire the land as well as incurr all the other costs?
Will the land really go for a fire sale price? What is a fire sale price? Will all MIS investors in the scheme contribute the same amount of additional funds towards acquiring the land and ongoing management? How will you agree on the new management team?
Your suggestion is likely to result in a change of relative interests for at least some MIS investors. If Forenth is concerned with tax on $400 per hectare, how much will he contribute towards buying the land which is not tax deductible?
How will you as group value the land? Can you compete with a large corporate that may want to use the land in the future for a carbon sink?
IT may be easier Voting YES and sacking the management, or even once taking control of Great Southern structure an organised break-up and liquidation of Great Southern.
What I don't understand is, the offer provided to MIS Investors is to take "CONTROL" of Great Southern. Therefore, you collectively are the management of Great Southern post proposal.
Maybe the real issue, on all sides of the fence is "VALUATION".
Maybe, very few people in this exercise unerstands a whole range of valuation issues, including understanding why Great Southern's share price is at 17cents.
How certain the MIS investors can realise the valuation numbers if they had to manage the process themselves?
There has been within the last year significant volatility in "Valuations" in what may be considered more organised markets than a group of MIS investors taking control of their forestry MIS interests. Consider over the last 6 months the following valuations:
1) Oil
2) Aussie Currency
3) Iron ore
4) Shares (including GTP).
I consider managing your plantations is more difficult than you think, and probably will cost more than you think if Great Southern fails. That is ignoring my views on how easy it will be for you to sell your wood for a high price.
Grumpy Old Man,
I acknowledge you know the timber industry.
I would be suprised if you don't have an interest of some nature in the sector.
Grumpy Old Man is correct, MIS investors should do their own research.
I hope you MIS Investors can access some of Grumpy Old Man's real insight to the facts of your situation.
Either Great Southern will survive or as many have indicated will fail in the near future, including one person advising me to sell before 19 January 2009.
The question really is, how will you mximise your future wealth?
I wish you all well.
I acknowledge you know the timber industry.
I would be suprised if you don't have an interest of some nature in the sector.
Grumpy Old Man is correct, MIS investors should do their own research.
I hope you MIS Investors can access some of Grumpy Old Man's real insight to the facts of your situation.
Either Great Southern will survive or as many have indicated will fail in the near future, including one person advising me to sell before 19 January 2009.
The question really is, how will you mximise your future wealth?
I wish you all well.
prawn_86
Mod: Call me Dendrobranchiata
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- 23 May 2007
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As someone with no current financial interest in MIS or GTP i know that my wealth can be maximised far better by NOT investing in either of these co's. Much better money to be made elsewhere, such as an assured return in the bank.
Management are really shooting themself in the feet imo, as potential new investor will steer well clear as its all 'ifs' and 'buts' and 'maybes' when in times like these people want clearly defined.
Hi Guys and gals......I am new to this website and noticed GTP. While I have read the information below...most of it bad news, I would appreciate it if someone could provide their opinion on my situation.
I purchased 8 woodlots in 'high value timber' project 8 months ago. At the time, I was advised that if the seedlings are not planted within 12 months then the contract is void and I can receive my investment back. Reading all the comments in relation to GTP's current transformation, i was wondering if anyone was in a similar position, or had some view on what I should do
Enjoy the comments
I purchased 8 woodlots in 'high value timber' project 8 months ago. At the time, I was advised that if the seedlings are not planted within 12 months then the contract is void and I can receive my investment back. Reading all the comments in relation to GTP's current transformation, i was wondering if anyone was in a similar position, or had some view on what I should do
Enjoy the comments
Investor1 seems to have misunderstood my earlier comment. I am not concerned about tax on $400 per hectare, I am more than annoyed at GSL's proposal that I swap my $2638/ woodlot after tax value for a share issue worth $398 /woodlot after tax. Doesn't that seem like a rather large loss? That's got no if's, it would happen. I don't want to be a GSL shareholder, I would buy BHP before GSL. If I want GSL shares I would buy them now at 17c.Woodlots were supposed to be 1/3 of a hectare as well.
Investor1 seems to demonstrate the same changing of the wording of questions and then answering that different question, as happened to John Hassen's letter to investors which was then rewritten by GSL before they answered what were then their own questions. I believe John's questions went unanswered and some completely ignored, which were perhaps the most relevent of all.
I still ask:
- What about those investors who are at or coming up to retirement with large MIS investments and will have large tax liabilities to pay this financial year, and
- The effect on the share price if they have no other option but to pay this tax by selling their newly acquired shares.
Investor1 seems to demonstrate the same changing of the wording of questions and then answering that different question, as happened to John Hassen's letter to investors which was then rewritten by GSL before they answered what were then their own questions. I believe John's questions went unanswered and some completely ignored, which were perhaps the most relevent of all.
I still ask:
- What about those investors who are at or coming up to retirement with large MIS investments and will have large tax liabilities to pay this financial year, and
- The effect on the share price if they have no other option but to pay this tax by selling their newly acquired shares.
Forenth,
I cannot offer you tax advice.
I do wonder whether the tax deduction of your MIS investment was included in your consideration (i.e. did you have a large taxable income that year)? Would you enter into a MIS project ever again, including this year?
I do not consider a GTP share with interests in many forestry MIS interests is the same as a GTP share without interests in many forestry MIS interests. GTP will be a different entity after the restructure and will be valued by the market after that date.
Your comments that the share price of GTP may be low because of many MIS investors needing to sell their shares indicates you don't necessarily believe the stated market price of a share at any particular time reflects its fundamental value at that time.
Thus your implied views such an overhang may depress the GTP share price should also mean 17cents is not necessarily the long term fundamental value of GTP post restructure. You may consider the market does not necessarily value companies at all times equal to their true fundamental long term value.
I cannot offer you tax advice.
I do wonder whether the tax deduction of your MIS investment was included in your consideration (i.e. did you have a large taxable income that year)? Would you enter into a MIS project ever again, including this year?
I do not consider a GTP share with interests in many forestry MIS interests is the same as a GTP share without interests in many forestry MIS interests. GTP will be a different entity after the restructure and will be valued by the market after that date.
Your comments that the share price of GTP may be low because of many MIS investors needing to sell their shares indicates you don't necessarily believe the stated market price of a share at any particular time reflects its fundamental value at that time.
Thus your implied views such an overhang may depress the GTP share price should also mean 17cents is not necessarily the long term fundamental value of GTP post restructure. You may consider the market does not necessarily value companies at all times equal to their true fundamental long term value.
