GTP - Great Southern Plantations

[Portfolio]

Hi brty,

I refer to my comments earlier:

"My view as worst preferred option for an MIS investor of the following 3 options:

a) Great Southern manages the tree harvest and marketing and I remain an MIS investor
b) Exchange trees for shares.
c) Great Southern fails and the MIS scheme manages the process.

Option c would be my most least preferred.

Therefore, I may vote "NO" but I would minimise the amount I am slagging off the company. I would like the company to survive as a minimum until after harvest date."


Restructuring may not require Great Southern to rely predominently on MIS sales into the future.

If Great Southern fails, what I am trying to indicate is existing MIS investors may have an additional cost should they desire to harvest their trees.

As Grumpy Old Man indicates, we can all have a guess as to the future value of timber.

Those that vote "NO" and don't understand the timber market risks may have to spend more money to manage their trees going forward. They may also find out their trees will not generate them enough money to cover their additional funding.

brty, maybe if Great Southern is going to fail soon, as you imply, is take any money and run the best option?

At least Forenth has adopted a clear position, Great Southern will not go bust prior to his trees being harvested.

If you are in the 2003 scheme with a harvest date in 2013 are you also taking such a position? How prepared are you to contribute additional risk expenditure to determine whether you will realise value for your trees? How much are you relying on the valuation report, when you at the same time are not relying on the KPMG recommendation?

As Grumpy Old Man indicates everyone needs to do their research. But, unfortunately, freely available research regarding future timber prices and plantation operating costs (harvesting costs, transport costs, processing fees are not that readily available), even on google. Nor the costs of bringing the MIS investors together.

Again, how certain are the MIS investors about the real future value of their trees? The valuation report was provided to them by the same party they don't trust regarding any other information.

Or should they take some money and run, if Great Southern is to fail within the next year or so?


In my opinion, the fact it seems Great Southern has generated such a bad PR position as a result of the anti Great Southern campaign, and MIS sales may be negligible, is even more reason to accept the offer. Or quickly research what it means to them if Great Southern fails. As I stated earlier, by all means vote "NO" but don't actively campaign to destroy the company until after you have received your harvest distributions (i.e. until after your trees have been harvested).

It is unlikely 6 months ago you would think oil would be about US$40 per barrel today. I continue with the view, other than wishful desire as to a value for their trees, the MIS investors have not really analysised the value of their trees to them should Great Southern fail. I would propose the outcome may for many be a negative value relative to accepting the offer. If Great Southern fails, they are likely to test their views by a request to fund more expenditure.

I also think funding a law suit is not much value if you think the company is broke either.


I think my comments regarding:

"As I stated earlier, by all means vote "NO" but don't actively campaign to destroy the company until after you have received your harvest distributions".

By the No vote campaigners not adopting such a position, I think they are not acting logically and thus, don't think they are doing themselves any favours.

Hi Investor,

I personally dont think you are a MIS investor. The big winners out of this are the shareholders and employees / directors so i'm pretty sure your one or the other. However if you are a MIS investor:

Option A above is not possible. Great Southern will go under if it is not bailed out (if you dont believe me read the notes in the annual report under "going concern"). The banks will not touch them. No investor would invest in any capital raising. Surely you understand this.

Therefore your choice is between B and C.

BUT I would also aay that i personally think that this discussion is moot. It wont get up. GTP will go to the wall and someone will pick over the assets.
Shareholders and Employees will be the losers - and so they should be as this is capitalism and the weak fail. MIS investors will be ok - ok meaning that they will get their timber harvested (if only by the buyer of the land through a liquidation sale that needs to harvest the trees to get the land back to commerical use) but now realise how bad a decision it was to invest in MIS through GTP in the first place.

 

[irenebrisbane]

I think "Investor 1" just spat the dummy. Methinks Investor is pushing the Yes vote a bit too strongly not to be aligned somewhere/somehow with GSL.

 

[Fatcat]

I think "Investor 1" just spat the dummy. Methinks Investor is pushing the Yes vote a bit too strongly not to be aligned somewhere/somehow with GSL.

100% agree irenebrisbane.

Being a cattle investor I am ropeable with those grubs at GTP on so many levels . One thing is for certain, the company has no future whatsoever. How could any financial adviser with an ounce of credibility ever again recommend a GTP "investment"?

 

[Investor1]

Wally1952 stated:

"Many of the others got involved with tea-tree oil, lemons, grapes etc and have been subsequently burned!".

I am pleased MIS investors are of the view and happy with the knowledge that GTP may go under.

I am still of the view that you have no idea what to do after that date.

I also do not think people understand that a share plus a forestry interest is not the same as a share prior to the forestry interest.

That is like saying a company with $0.17 in cash today and then someone puts in $0.50 of cash/assets for a share, and the new share issued is $0.17 cash.


Based upon your attitudes today, I wonder whether you made a more informed decision when you actually became an investor in the schemes.

I have no relationship with Great Southern (management or employee).

However, I have been involved in buying up failed MIS investor project land in the past. Probably will be again. My experience, the trees often end up being forfeited to the new land owner. The MIS investors often do not organise themselves, nor are they often prepared to inject additional money.

In my opinion, it makes so much more sense for the MIS investors to take-over Great Southern, sack the existing management (even if you have to pay them out redundancy payments) and take-over the land assets.

Unless, you are that much of the view, Great Southern cannot survive even with the forestry interests.

Anyway, maybe a deal will be done with the cattle investors and Great Southern will survive to harvest your trees.

brty, if you read my earlier comments, I considered that if MIS investors thought the deal was so good for shareholders, then at $0.17 they should buy more shares and win by becoming a shareholder.

As scheme investors are so eager to see the demise of Great Southern, MIS investors should stop complaining and begin planning their future when they may need to go alone. Even better, they should already be searching for their new MIS manager. Have you?


Regarding pushing the "yes" vote, maybe I honestly believe it is the right choice. I have seen the aftermath of schemes with failed managers before.

It seems to me emotion and wishful desire that the trees are worth alot is the reason for the "NO" vote.

In my experience with buying failed MIS land, we offered some investors a sizeable amount of cash a hectare to the investor land lessees. Naturally, they did not accept it. They assumed it was not value because we were making such a cash offer. Let's say, I believe they wished at a subsequent date that they took the money.

I suggest you consider, what would you accept to sell your interests?

Also, remember, GTP's shares were not $0.17 when the offer was made.

 

[drsmith]

Investor1,

I won't speculate about the motivation behind your point of view but I will suggest a careful analysis of the information contained in this thread from page 57 onwards.

 

[Wally1952]

I am still of the view that you have no idea what to do after that date.

Honestly Investor1, many of the people I know that have GS MIS investments have really given up on this company. Many feel they have been deceived, originally thinking they had a good investment. They are bitter and are quite happy to see Great Southern go to the wall, I kid you not! All are certainly voting NO. What happens after if they do fold they don't care. They would not give the Directors the satisfaction of a win, and it would be a win for them if the vote was YES. The several I know that attended the meetings could not believe the arrogance of this lot!

 

[wooduk]

Investor 1

could please calculate what the current PE is,then just give me the forward projection you would expect if all participants agree to sell for the share deal

 

[wooduk]

Investor 1

could you please calculate what the current PE is,then just give me the forward projection you would expect if all participants agree to sell for the share deal

Apologises Investor 1, I would like to know from others in the forum also.

even from the broker especially.


not even I reckon after the 19/01/09

 

[ThePav]

Investor1 - very amusing dummy spit earlier, not sure what inspired that but it did make you look silly.

I have been reading this forum for sometime and it seems to be getting a little bogged down in the YES v NO vote. From the information that has been released to date the trees offer is dead in the water, the required 75% is not going to happen. The cattle on the other hand is still to be decided with the 75% not yet achieved. Will this happen? This should be known at close of business on Friday when all the proxies are collected. Given the information released to date they will not get any projects over the line. We are just awaiting final confirmation of this.

What will happen next? The company is bound to tighten the purse strings significantly which will be to the detriment of all projects. Is a manager that is in financial crisis desperate for cash going to manage these schemes to the benefits of investors? Or is a new arrangement going to maximise returns? I think this whole situation could be a blessing in disguise. One issue that has become clear with the current arrangement is that there is a lack of accountability and poor corporate governance. No one is working in the interests of scheme investors and no one is being made accountable.

A board that genuinely represents investors and requires operational managers to be accountable for their decisions is the only way these projects can maximise returns. The only way this is going to be achieved is if a new manager is found / created with the correct governance structures put in place. I am not sure how this is going to happen but it is what ALL GS scheme investors should be trying to achieve. Lets take control of our investment and distance ourselves from the GS wreck.

As a note it continues to amaze me at how much the executive of this company are getting paid? I read the annual report with amusement again this year. I always thought that reward was meant to reflect performance. If this was the case they would be getting the minimum wage.

 

[goodie3shoes]

Clearly you would have to be insane,mischeavous or have a vested interest to support the YES vote and ,I suspect,Investor 1 is part of the GTP PR Group that has been appointed and is being directed by the two GTP 'head kickers' Rhodes and Butlin.It is interesting that the 'London Barrow Boy' who created this monster ,John Young sold a truck load of his shares when the company had its last stock issue.
The model is broke and never really worked.GTP paid too much for land and the running costs are ludicrously high.Not one of the many MIS schemes promoted by GTP have provided results consistent with promises or even matched the 'Independent' experts concensus.
You would have to be a fool to let these overpaid incompetants continue managing this or any other company.
Who,seriously could say YES to this proposal? A 1998 Woodlot investor is being offered $783 for his lot!! 4606 shares at 17c for something he paid $3,000 (plus GST and insurance).AND he will have to pay tax this year that will possibly be more than the $783!!
I am a 2006 cattle investor and I am offered $1,005 (5910 shares at 17c) I paid $5,000 (plus GST and insurance) for these cows.Plus,of course, I pay tax whether I sell the shares or not.WHY would anyone accept this pittance for our cows that we know can be trucked to the nearest abbatoir and get at least double?
But Investor I (or his puppet master) throws in the red herring suggesting that GTP have all the facilities,contracts etc and they are just about the only game in town for us poor wooducks.That is just garbage.There IS demand for woodchip and at good prices.GTP has contracts to this effect and the buyers are not going away.By the way,if you received the GTP shareholders blurb,the village idiots at GTP actually use this,strong demand at higher prices, as the rationale for sharehloders to accept.(The real reason for shareholders to accept ,as we all know, is to prevent the company going into insolvency and to preserve the ridiculous salaries for the management)
There is a line of companies waiting to move into the various management roles.With something like 20,000(?) MIS investors impacted,it is pretty clear to see that ,even if they charged us all $100 and retained the other fees GTP would rip out of us, all of us would be better off by a mile.
Don't accept this crap from Investor 1.His interests are not for us MIS investors.

 

[Investor1]

Hi wooduk and ThePav,

wooduk, maybe you will be right and Great Southern will be less than $0.01 cent by 20 January 2009.

Interesting possibilities should that occur.

Would the management begin buying up shares at $0.001 after the vote? I don't know, but I assume after the vote they would not be prevented from doing such.

At $0.001 cent could it be a speculative buy?

Can Great Southern be turned around?

Can it survive as an MIS company with a change of management?

A change of business?

Should the MIS investors join up with the company in the future to manage their forestry interests, or should they allow the land to be owned by one or more third parties and the schemes each try to manage the harvest of their trees?

Questions and questions.

Should the scheme investors establish a leadership team to commence discussions with GTP or some other manager for the future? Do they need to?

What will happen?

Are there any people with strategies post the vote?

Regarding the Board and accountability, maybe there are few options for the Board other than to propose and recommend a concept such as Project Transform in its current financial situation?

Was Project Transform poorly explained?

Would I buy a few shares in GTP should it fall to less than $0.01?

 

[ThePav]

Hi Investor1,

Not sure what is with all your questions, where you are heading with them but I can only provide my opinion.

Project Transform was not poorly explained but rather poorly conceived. It is an idea that has benefits to only one party GS management.

The going concern issue has already clearly been stated by EY as part of their external audit report so this is it doesn't need any ellaboration. Auditors don't provide such opinions lightly.

The issue really comes down to the RE representing the scheme investors and maximising investor returns. GS currently operates as if this is a secondary concern. Understandably the currently priority of GS management revolves around cashflow and retiring debt. This is where the project investor come to the rescue. To maximise their own cashflow project investors should distance themselve from GS because they will just suck it all up to keep afloat.

 

[brty]

Investor1,

You have failed to cover the aspect that new MIS schemes are unlikely to occur successfully in all your arguments.

GTP themselves state that they are likely to go bust without them, as I have highlighted before.

Where do you see these sales being made and to whom?? Existing MIS holders are getting a return of only 20% of their investment, what would make new schemes have a positive return???

brty

 

[dmor]

I invested in the plantations in all the years from 1998 to 2004 except 2001 and 2002 and that is my only interest. An investment adviser suggested the investment. I do not know personally any of the directors.

The 30 June 2008 balance sheet (page 9 of Annexure 1) in the Supplementary Explanatory Memo mentions "Interest-bearing loans and borrowings" of $782,269,000.

On page 5 of (Annexure 1), para 2.6 under (d) borrowings there is mention of $105m of this debt being due in October 2009 and "..the ability of GSL to refinance this debt is uncertain.."

The same para 2.6(d) mentions the possible sale of the cattle business as a way to reduce the borrowings. (to address someones point on the possible sale of the cattle business, of course if it was sold it would be to reduce debt which it may have to do based on the above comments in the Supplemenatry Explan Memo.

Although I am as disappointed as anyone else my own view is that as an investor I am better off backing the company proposal since, if all goes well, and the share market recovers the share price will no doubt improve and the Company will be a much stronger company than it is now and I'll be laughing down the track. (as, in terms of the latter, it seems to me, is evident from reading the proforma balance sheet on page 23 of the Supplementary Explan Memorandum)

Sadly, I don't think the proposals will succeed in which case my own view is that the investors will be far worse off than they would have been otherwise.

I understand the anger, I don't understand the rejection of what I think is an opportunity to salvage something.

Someone in this thread said and I am not quoting it exactly, that they were amazed at the valuations. Well the reality is that things have changed, a lot. I would rather take my chances with the reconstituted company than be left with what I have now.

 

[drsmith]

I'll suggest that for the most part MIS investors are not angry at the proposal itself but at the possibility they may have no choice in relation to their own individual investment.

To me much of the argument presented by supporters is based on fear and blind hope with little common sense or logic.

 

[turbo23]

"To me much of the argument presented by supporters is based on fear and blind hope with little common sense or logic."
Perhaps this is the case DR ... fear of being taken by the same people twice ... As they say take me for a ride (fool) once it`s your fault ...take me twice and it`s mine....
I really dont care what i get for my lots (as i invested the tax cut i recieved in a good market and did reasonably well )...
Since then however things have soured on many levels.... and as a consequence I find myself not being able to afford a tax bill on "percieved monies i will recieve" and absolutely no desire to invest in this mob... if you give me $10 for them at least then after tax i still have something in my pocket... (okay a loss ...but that has been dealt with ...as will my tax bill (maitenence aside)) ... If i have to sell these trees as firewood so be it as long as i get the cash (to deal with said tax bill)...

I do see Investors point about the company surviving.. (at least till after harvest)... But wish not to trust them again ....in any form.... especially when i distincly remember them having all the answers on the what ifs back then .... and how the land was specifically selected for their shallow water table to gaurd against drought....As if ...in hindsight I should of seen the writing on the wall .....but i trusted them.... my badNever again ...
Perhaps my loss will be somebody else`s gain.... as these "imcompetents" (thanks Goodie)...will not be able to do this to anybody else...(is that anger? ...You forgot anger Doc).

 

[Investor1]

Good Morning All,

The investment world seems to be changing.

I think managing your tax bill is something you may have all done before.

One of my thoughs prior to the vote.

Seriously what is the value of the trees. If trees fall in value by 10%, 20%, 30% over the next few years, what is the impact on the value of the trees. Demand for many commodities around the world seems to be falling.

I have noticed in the press lately that the price for metals may fall by significant amounts in the near future. World recession seems to be on its way. Demand for timber may also fall.

When the sale price of trees falls, other costs such as harvesting costs may not necessarily fall by the same amount. For example, if timber sale price today is $200 m3 less costs of $150 m3 remainder is $50. If trees fall to $180 m3 less costs of $150 m3 remainder is $30.

I am not sure what the costs are or the margins, but if the valuations were based upon 2008 export prices and they return to 2007 or earlier export prices, the valuation of your woodlots may be significantly less.

Also, a bigger seller often in the timber sector can secure better prices for timber and lower service costs (i.e harvest and transport costs, etc).

Before you vote "NO", really think what is the value of your trees?

Can someone say with grounds that they think the price of trees will rise over the next few years in Australian dollars? Please give reasons, as it will benefit everyone on the forum.


I can understand if you are unhappy with the management. But if Great Southern goes under you will need to find new managers of your trees. If you vote "YES" you can replace the management.

Good luck.

 

[Guff]

Would the management begin buying up shares at $0.001 after the vote? I don't know, but I assume after the vote they would not be prevented from doing such.

At $0.001 cent could it be a speculative buy?

Can Great Southern be turned around?

Can it survive as an MIS company with a change of management?

A change of business?

1. So what if the management buy up he shares at less than 1c, it is still insolvent.
2. You're free to buy up those shares good luck with it.
3. GSL being turned around needs capital injection and a complete change of business, why not just invest in anoher company! One that is actually already successful and has good management already in place.
4. GSL can't survive without massive capital injection, or without some capital injection and flogging off all of its assets at a big discount to book value - just to meet cash flow requirements.
5. Change of business... sigh, again why invest in GSL when there are other companies to invest in -- and MIS investors don't want to do that! I certainly don't.

 

[Guff]

I can understand if you are unhappy with the management. But if Great Southern goes under you will need to find new managers of your trees. If you vote "YES" you can replace the management.

Good luck.

Well, voting yes doesn't wipe out the fact that the company is insolvent and unprofitable. I'm not keen on paying for the privilege to replace the management when it will be done once the company goes to the wall -- and that IS going to happen I'm afraid.

You're obviously linked to GSL and have a reason you see everything through rose coloured glasses.

Given you're so positive, I have some MIS projects for sale - how much will you pay?

 

[wooduk]

annual report december 29/08,page 25-gearing (nett debt/equity)

as of the 30th sept 08 is 99%------Austock Securities research report 31/10/08 forecast it to be 69%.

Austock I recall from another source recommended ABC and Timbercorp

because of the shortfall in Trees 1 and Trees 2 the investors are entittled to a redemption payment,how many millions$$$$$ is that?


the land is encumbered$$$$$ by the banks,so Ithink gtp is running on empty.

Ospraie hedge fund announced their withdrawal last year from gtp and I can be corrected,but have since gone under.