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http://business.theage.com.au/business/viability-of-timbercorps-forests-in-doubt-20090604-bwpv.html

Viability of Timbercorp's forests in doubtJune 4, 2009 - 3:23PM
The administrators of troubled agricultural projects manager Timbercorp say they have not yet determined if the company's forestry projects are still viable, or insolvent like its olive and almonds projects.

Timbercorp was placed in administration in April, with liabilities estimated at the time of $930 million.

Mark Korda of administrator KordaMentha said on Thursday that full financial analysis of the forestry projects, which represented about 60 per cent of Timbercorp's total business, was expected to be completed in the next week or two.

Mr Korda said the managed investment schemes (MIS) run by Timbercorp were so complex that the administrators were reluctant to draw conclusions about them until they had fully completed the analysis.

''With forestry, there's probably $10 million required to run them just for the next three months,'' Mr Korda said.
''But we haven't done the full financial analysis of the forestry schemes.''

Mr Korda said investors in the Timbercorp's forestry projects stood a better chance of getting something back than their counterparts in the horticulture projects.

''The trees in forests are an asset. They can be sold, and growers can get proceeds,'' he said.

''That's different from annual crops of things that, in many cases of horticulture, just don't exist at the moment.''

Mr Korda said Timbercorp's olives and almonds projects, which represent about 40 per cent of Timbercorp's total business, were insolvent, leaving around 10,000 investors out of pocket.

''Timbercorp Securities Ltd (TSL), which is the responsible entity for most Timbercorp projects, is hopelessly insolvent,'' he said.

''The full financial analysis on a project-by-project basis has been done so far only on olives and almonds ... all of which are in Victoria.

''They are totally insolvent. They're going to cost more to run than proceeds of the harvests in the next 12 months and beyond.''

Mr Korda said it would cost more than $300 million to operate the almond and olive projects for the next 12 months - $66 million for olives and about $255 million for almonds.

''TSL, the responsible entity, hasn't got any money, hasn't got any assets, hasn't got any access to get more money, hasn't got any infrastructure and hasn't got any staff,'' Mr Korda said.

''It certainly hasn't got the capacity to keep almonds and olives operating.''

Mr Korda said that if the olives and almonds schemes were wound up, investors would lose all of their investment, apart from the proceeds of current crops.

The administrators have gone to the Supreme Court of Victoria seeking guidance from the court on whether it would be proper for the administrators to apply to wind up the olive and almond schemes.

Mr Korda said some growers wanted to exit the projects and others wanted the schemes to continue.

''We think that the court is the proper, most efficient and most independent forum to have that debate,'' Mr Korda said.

AAP