GTP - Great Southern Plantations

[Grumpy Old Man]

If you don't chop down trees at the time of lows, you can harvest in times when prices are up. MIS schemes have limited choice as to the timing of when the trees are harvested.

Great Southern if it owned the trees can hold off sales until times and prices improve.

I cant help myself...Investor1, are you saying that MIS is a bad way to invest in plantation ownership because there is no control over harvest deadlines? Doesnt that appear at odds with GTP business model?

 

[gorillapolice]

As I understand it from previous PDS', GTP can at its discretion delay harvesting 10% of the plantation due to depressed prices or poor growth with the balance available for the same option as long as a (corum) 75% of the investors agree.

 

[Investor1]

brty,

I never said change the regime to sawlogs.

I was only referring to the fact, sawlog prices (being timber) can fall. You use the word "crashed".

I am pleased you consider that will not happen to woodchip prices.


Grumpy Old Man,

Regarding investing in plantation ownership, the Federal Government introduced new tax provisions from July 2007 to encourage investment into plantations. When more of the new incentives are incorporated into new generation MIS projects, the MIS structures will probably have an advantage over other alternative structures, including old style MIS products. Having said that, I am not aware of many other investment models that are resulting in significant establishment of new plantations in Australia. In addition, not all MIS product offerings have restricted harvesting periods (i.e. some products offer flexibility in when the trees are harvested).

drsmith,

I am not completely sure regarding company schemes of arrangements, but I think they are becoming more commonly used instead of take-overs and I understand they have a 75% vote test.

 

[Investor1]

gorillapolice,

I don't know the answer. Can the investors decide to extend their lease if GTP or the landowner does not want to extend the lease term?

Maybe the Bank's receivers have received an offer for the land and the new land owner does not want to extend the lease term to the Growers. Maybe the new owner is a forestry company that is happy to assume ownership of the trees if the trees are not harvested prior to the expiry of the lease.

 

[drsmith]

drsmith,

I am not completely sure regarding company schemes of arrangements, but I think they are becoming more commonly used instead of take-overs and I understand they have a 75% vote test.

It's not something i know a lot about so perhaps it's something we both should leave to others.

My response to one of your comments from the previous page is awating a further response from yourself if you have anything further to offer.

Compulsory acquisition can be shares for cash, not just shares for shares.

Compulsory acquisition cannot be shares for cash so I'll assume you mean cash for shares.

Cash would represent a lower risk profile to MIS investors than the timber so that would be in their favour.

In any case Great Southern did not offer cash as an option. If they did the scheme would have received a more favourable resopnse from MIS investors overall.

 

[Investor1]

drsmith,

I have no connection with GTP.

But, I gather at least currently, GTP could not offer a cash offer for interests.

I would not be surprised if new structured offers would be made to investors in future years. They may have improved tax profiles (i.e. swap on 1 July rather than in February), or have cash components. But I assume cash will be only offered by GTP if they had free cash or they had a buyer to acquire the plantation once the scheme was unwound.

 

[Fatcat]

drsmith,

I have no connection with GTP.

I don't believe anyone on this thread believes that for a second. The laughable way in which you try to defend GTP's outrageous proposal blew your credibility about 100 posts ago.

 

[Investor1]

Fatcat,

I think the proposal makes sense.

I think the timing of the proposal could not be worse. I can understand why people consider they are not getting value, particularly if they cannot shelter their tax on the transfer of their forestry interest. For those that can manage their tax and have a long term view on capital growth from GTP shares may do better.

For those that think GTP will go under, all I say selling your trees may not be as easy as you think if GTP goes under.

I also have little faith in stock prices at the moment. I note regulators have concerns with short selling of financials.

I have no connection with GTP. If I was connected with GTP, would I constantly say, once you have majority shareholding, Vote the Board and management out?

I am interested in GTP as I hope to make money from trading. The NO vote have not expressed any substantive reason for voting NO other than GTP is going under or GTP's management are not nice people. I am expressing only my thoughts. I actually don't care what the MIS investors do.

I actually would like the NO voters to provide some real information I can use in making my trading decisions. They have not convinced me that GTP is going under.

 

[drsmith]

drsmith,

I have no connection with GTP.

Where have I suggested you have a connection with GTP ?

But, I gather at least currently, GTP could not offer a cash offer for interests.

True but it was you who defended GTP's shares for trees on the basis that takeovers can involve cash for shares.

I would not be surprised if new structured offers would be made to investors in future years. They may have improved tax profiles (i.e. swap on 1 July rather than in February), or have cash components. But I assume cash will be only offered by GTP if they had free cash or they had a buyer to acquire the plantation once the scheme was unwound.

An obvious and necessary path for GTP will be have further bites at the MIS capital. I expect it to be an annual event for as long as it keeps the company afloat. It won't do much for future MIS sales however so GTP will be heavily reliant on revenue from the future transfer of MIS assets for running the business and to service debt. Unless the MIS no voters change their minds on mass GTP can only expect a trickle of MIS assets over the next few years from this approach.

Once the proceeds from the cattle investments are exhausted the GTP mothership is going to sink and bailing out the water with a teaspoon is not going to change that.

 

[SDE]

An obvious and necessary path for GTP will be have further bites at the MIS capital. I expect it to be an annual event for as long as it keeps the company afloat. It won't do much for future MIS sales however so GTP will be heavily reliant on revenue from the future transfer of MIS assets for running the business and to service debt. Unless the MIS no voters change their minds on mass GTP can only expect a trickle of MIS assets over the next few years from this approach.

Once the proceeds from the cattle investments are exhausted the GTP mothership is going to sink and bailing out the water with a teaspoon is not going to change that.

You are absolutely correct drsmith

The jewels in the GS forest crown are the 04, 05 & 06 projects. All up, woodlots totalling almost 280k. (98-03 forest projects total just 153k by comparison). The numbers fall away significantly for the 07 & 08 projects.

Might involve some scare tactics that worked with the cattle projects, like billing for inceased costs, etc.

Is anyone out there willing to start a movement to get an new RE?

 

[gorillapolice]

Investor1;

You make some very contradictory statements.

You have stated that:-

I also have little faith in stock prices at the moment.

Then why would you consider voting yes and taking the GTP shares?

You also state that:-

For those that think GTP will go under, all I say selling your trees may not be as easy as you think if GTP goes under.

This may be the case however I sight the case of Australian Plantation Timber Ltd. This company was publically listed (as GTP), planted trees in WA and the Green Triangle (same as GTP) had significant debt (same as GTP) and subsequently was forced into liquidation by its lenders.

For the record the Shareholders which included financial advisers and growers (same as GTP) lost all their money. The Growers however continued to have their trees managed and harvested by ITC. They subsequently received returns from their trees.

Why would this be any different in the GTP case? Keep in mind that GTP or whoever is the Manager is entitled to 5.5% of the Gross Sale proceeds from the eventual harvest. This is a lot of money for managing trees which, once older than 4 or 5 years, requires very little spent on them.

You keep forgetting that this Company and its management have been extremely derelict in the way it’s managed its projects. How can you think that owning shares is any better when the same people are running the company and controlling the assets?

One of the key research fundamentals of Company’s is to look at the Management and their ability and achievements. This lot could not run a Carnival.

They have used MIS investor’s funds to acquire assets only to insult them by attempting to by their investments back for a 10th of their initial value.

I actually would like the NO voters to provide some real information I can use in making my trading decisions.

Here you go, buddy, hope this helps:

stock⋅brok⋅er
   /ˈstɒkˌbroʊkər/ Show Spelled Pronunciation [stok-broh-ker]
–noun
a broker, esp. one employed by a member firm of a stock exchange, who buys and sells stocks and other securities for customers.

 

[SDE]

I think the proposal makes sense.

For whom, Investor1?

An exchange of assets at roughly 65% discount for the MIS investors, plus bringing forward a tax liability by several years certainly doesn't make much sense IMO.

The big winners seem to be the high salaried execs at GS. Are you sure you are not a PR spinner for GS?

 

[wooduk]

You are absolutely correct drsmith

The jewels in the GS forest crown are the 04, 05 & 06 projects. All up, woodlots totalling almost 280k. (98-03 forest projects total just 153k by comparison). The numbers fall away significantly for the 07 & 08 projects.

Might involve some scare tactics that worked with the cattle projects, like billing for inceased costs, etc.

Is anyone out there willing to start a movement to get an new RE?

YEP as atree hugger in 03,04and05 ,I am more than happy to be in the frey.
GOM and you other forum pretorians are correct,I have been going to the referal's that state anticipated price forecasts and this continual barrage of the credit crisis as the excuse ,sorry the MAIN xcuse is crap.

It was either an exercise in deception to rort the ATO,or it was sold to advisers by one of the 29 gtp salespersons that either did not know what the company would do if their financial incompetence surfaced as the disclaimer does not detail what would happen.
So why put a disclaimer ?

The point is this ,up till 2007 the reports gave no significant demise and now drinks all around at gtp HQ as they have delayed the doomsday --for how long?

Let's get 'em

 

[ThePav]

I honestly cannot conceive how anyone can interpret the offer as being in their best interest.

From my discussion with forestry professionals Blue Gum's do not continue to grow after 10 year so their is no point keeping them in the ground any longer. Keeping them in the ground just results in additional ongoing insurance costs and other associated maintenance costs. The woodchip price has remained largely unchanged over the last 15 years and has infact had a droped in real terms, it is hard to imagine that this will change much particularly with the current economic circumstances. So really getting them out of the ground at the 10 year mark makes the most economic sense.

What investor1 seems to ignore is that Great Southern has assets but no cashflow. MIS sale are their major source of cash, that is the issue. If they can't turn over a profit with $315m in sales how are they going to do it with $150m? They are doomed. Their current strategy is to sell these assets so they can continure paying themselves a small fortune. They just hope they can sell these assets faster than their debt repayment requirements.

 

[turbo23]

Say what you like but Investor1 makes very valid points and like it or not he gets you thinking.... I think he was the first to suggest "you wanted every second year to accept as long as it wasn`t yours" well it turns out a bit better than that .... those that want it get it and those that didn`t don`t....Except the cattle but correct me if i`m wrong but cattle people were still paying through the nose..... for GTP`s ineptitude.... (don`t think i`d fancy that either).....i Just hope GTP have enough fire power now to turn this co. around (atleast till my trees are harvested)...not sure all the dillution they suggested wouldda been good for them ...(did they expect it ?)
at least for now they are a viable enitity ...
As far as future MIS sales income go ..... well "there`s one born everyday"..(isn`t there?)(isn`t the Niarobi or Gambian e-mail still making money) as well as greedy F. planners.,.... won`t be me......(but this is what i worry about)... but I live and die by my decisions and pray I make the right ones(seems i haven`t here but this aint over) hope others are prepared to do the same (consider the risks)I won`t die here .... live to fight another day ...and at the end of it i will be 1 hell of an experience wiser ...fwiw
Cannot the tax losses relised be overcome by selling losing shares and buying them back again?(who aint got them ?)


fingers crossed for everyone
t23

 

[Forenth]

We have all realised how incompetent GTP's management are. The business model doesn't work anymore and they aren't updating it except to take over the investments they were contracted to manage for others. I wouldn't mind picking up millions of dollars of assets in return for typing a few more names on the share registry. Where else can you get something for literally nothing? It has cost GTP close to zero for what they've got, its not like they were actually going to pay cash for the trees/ cattle they were after.

GTP's management style can be summed up by this:

Despite the world financial crisis, GTP's debt levels, the low Aussie dollar, the stagnant woodchip price and the very low returns from investments, GTP management will still all get good increases in their remuneration packages and Rhodes won't be paying for his own lunches.

They'll acknowledge there has to be belt tightening. but its you and me who they think should do it, not them. Sack a few office staff but how many directors does it take to run a company into the ground?

 

[ThePav]

I don't understand the mentality of people when they say as long as GSP is around long enough to harvest my trees. Now lets look at the harvest process. GSP hires harvest contractors to cut the trees down and then uses a contract haulage company and a contract chipping company to continue the process and then uses a export agent to arrange the shipment. Now can you please tell me why GSP is a required part of this process?

Like many people have mentioned before it is the business model that is broke and until this is changed pouring cash into this company is like pouring into a bucket full of holes. As you may or may not be aware this business model rely's on MIS sales and these sales are evapourating. $80m in cattle assets not much when you are looking at $150m loss in annual MIS sales. As you can see there is already a short fall of $70m.

 

[Taltan]

Seems to me there are a lot of predictions here but ultimately GTP fate will be decided by their bankers. Given GTP huge land holdings I would not be surprised if they survive, One cashed up opportunistic land buyer and they would cross the line. If that occurss than the shares would be worth more than the MIS schemes expiring at a pre-determined date. Currently its all about cash flow and I am not sure why MIS investors are so confident selling timber in a market where GTP can't sell land.

 

[turbo23]

I don't understand the mentality of people when they say as long as GSP is around long enough to harvest my trees. Now lets look at the harvest process. GSP hires harvest contractors to cut the trees down and then uses a contract haulage company and a contract chipping company to continue the process and then uses a export agent to arrange the shipment. Now can you please tell me why GSP is a required part of this process?

Well what I`m thinking is as long as i get cash for my trees and not something that i wouldn`t have in a fit (and would leave me with a tax bill).I`ll live with it
And correct me if I`m wrong but aren`t all growers in the same plantation all tied together ? Procceeds are split according to the amount of lots you held .(better returns if you`ve been badly effected by die off)Surely it would be far more economical to negotiate in bulk than the individual grower doing it themselves (a few here and a few there).
Also due to the fact that future MIS sales(don`t scoff) could well rely on the returns they provide current investors ,you would hope that they would still be trying to achieve the best possible results they could .(not that that instills a great deal of confidence).Plus you wouldn`t have to pay anyone else to take over management till the trees are ready !

Just my thoughts ....could be way off !

 

[ThePav]

Taltan what you need to remember is that MIS investors were given an offer it is this offer that needs to be considered. The offer was pultry and even KPMG changed their recommendation for the 1998 and 1999 projects, effectively saying you'd be better off not to accept the offer.

Again the issue isn't really how much can the MIS investor get for their trees it is how much can they get compared to what they were offered by GSP. I'd be happy to sell up my investment if the offer was more attractive. This offer was so far from attractive it was rude and arrogant. You don't have to think that far back and they were basing their offer on a $1.10 share price, that is only 600% higher than where it currently sits - arrogant.

Sure I have revised my estimates down and am hoping to receive about $2.5K per woodlot, from what I have been told is realistic and is about where the 1997 and 1998 payments will finish up. As dissappointing as $2.5K is it is infinitely better than the offer that GSP proposed.