Canadian pension fund leads group in buying Great Southern's assets for $415m
Andrew Main From: The Australian January 29, 2011 12:00AM
GREAT Southern receiver McGrath Nicol has raised $415 million for the failed timber group's banking syndicate by selling 252,000ha of plantations to a syndicate dominated by a Canadian pension fund, Alberta Investment Management Corporation (AIMCo).
The buyer was a fund managed by the New Forests management operation, in Sydney.
It made the purchase through its recently raised $500m Australia New Zealand Forest fund, plus a majority contribution from AIMCo.
The banks were originally owed $700m but have been repaid some of that from asset sales and may yet recoup between 95c and 100c in the dollar of their loans, since liquidator Ferrier Hodgson controls some other assets that are yet to be sold.
New Forests managing director David Brand said the deal was the second biggest rural real estate transaction in Australia, after the Packer family's $425m sale of 16 cattle stations in the Consolidated Pastoral Company in early 2009 to the Britain-based Terra Firma group. Great Southern collapsed in May 2009 when the managed investment scheme sector imploded, leaving more than 250,000ha of freehold plantation land in Australia looking for a new owner.
Unlike some other recent deals, Mr Brand said, this was a transfer of the freehold on the land in perpetuity.
The biggest line is 88,200ha in the Green Triangle straddling Victoria and South Australia, followed by almost 76,000ha close to Albany in Western Australia, with other holdings in Tasmania, Kangaroo Island, Bunbury, NSW and Queensland.
He said the buyer was not getting the trees on the land, which under a complicated MIS structure were still owned by the 35,000 grower-investors who put about $1 billion into Great Southern.
"We have two options," Mr Brand said.
"We can let the trees grow to maturity, harvest them and pay investors and then replant our own trees, or we can buy them all out in bulk."
He said many of the trees were six, seven or eight years away from harvesting but the land, valued in the Great Southern books two years ago at about $1bn, had cost less than half that sum.
Mr Brand's organisation will manage the newly acquired holding, although the actual plantations will mostly be managed by Tasmanian timber company Gunns, which was recently installed by grower-investors as the responsible entity managing their timber assets.
AIMCo chief executive Leo de Bever said in Calgary that "the reason that this is such an attractive deal is that obviously, when you buy something out of receivership and you pay cash, that means you can buy at a steep discount. We figure (it is) somewhere around 40 per cent".
He added that the deal had received all the necessary approvals from Australian regulators.
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