http://www.businessday.com.au/business/banks-grant-timber-produce...

http://www.businessday.com.au/business/banks-grant-timber-producer-temporary-debt-waiver-20100104-lq1w.html

Banks grant timber producer temporary debt waiver
COLIN KRUGER
January 5, 2010

FOREST ENTERPRISES AUSTRALIA said it had received a temporary waiver from its banks after failing to renegotiate covenants governing $190 million worth of net debt by New Year's Eve.

The failed deadline marked an appropriate end to the year for the forestry industry, which was buffeted by the collapse of managed investment scheme operators Great Southern and Timbercorp.

FEA's chief financial officer, Fergus Leicester, said the company expected to reach an agreement with its banks by the time the waiver expires on February 19.

The Tasmanian timber plantation grower and processor has debt facilities totalling $240 million with ANZ and the Commonwealth Bank which mature in January 2011.

In September the company launched a $39.5 million raising to shore up its position. At a shareholders' meeting in November, the chairman, Will Edwards, described the raising as providing ''some short breathing space'' while it adapted to the current environment.

The company reported a loss of $14 million last year and said it expected a ''modest improvement in financial terms'' this year.

Following the raising, Gunns emerged as FEA's largest shareholder with 13.6 per cent, and will double its stake with the acquisition of Elders Forestry arm, ITC, which owns 13.5 per cent of FEA.

Gunns had another win in the forestry space yesterday with the announcement that growers have voted for it to take control of another Great Southern forestry scheme.

A meeting of the 2006 scheme yesterday voted for a Gunns' proposal to become responsible entity for the scheme and restructure it.

Gunns is expected to apply today for court approval of the proposal.

Gunns has already taken control of eight Great Southern schemes following grower approval at a meeting held just before Christmas.

FEA shares closed 0.2c higher at 7.2c yesterday, while Gunns rose 1.5c to 95.5c.

Source: The Sydney Morning Herald