Ann: Credit rating change (S&P), page-24

STREET TALK
Davidson Kempner to determine future of Quintis
June 28 2017 - 12:15AM
Hong Kong hedge fund Davidson Kempner shapes as the kingmaker at troubled Indian sandalwood company Quintis.

While Quintis, its advisers and various other stakeholders reckon they are getting closer to a refinancing and shoring-up the company's future, perhaps the biggest impediment is a $35 million put option due in July.

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Frank Wilson, Quintis founder. Photo: Jim Rice
Street Talk can reveal the put is in the possession of Davidson Kempner and under the terms of the agreement, the investor can force Quintis to buy back an interest in immature sandalwood trees at a fixed price as early as next month.

It would be a $35 million setback for Quintis, and something the company or its would-be backers could ill afford.

Sources said the put option was holding up the potential refinancing deal. Understandably, no white knight investor is willing to stump up cash today only to see it fly out the door and into the hands of a hedge fund in a fortnight's time.

Ironically, Davidson Kempner would also arguably be in a worse position if it exercised the put option. If they
exercise and tip the company into voluntary administration, they would be an unsecured creditor, there would be no one to look after their trees and they would have to fund the maintenance of the trees.

It's been a torrid year for investors in the Perth-based group that began when US short seller Glaucus Investments published a contested report asserting that Quintis' equity was worthless, and likened aspects of its business model to a ponzi scheme. Those are claims which the company consistently denies.

That led to the exit of founder and major shareholder Frank Wilson, who resigned to partner up with another investor and mount a takeover bid to reclaim control of the company.