http://www.theaustralian.news.com.au/business/story/0,,25547986-5...

http://www.theaustralian.news.com.au/business/story/0,,25547986-5018010,00.html?from=public_rss


Anthony Klan | May 28, 2009
Article from: The Australian
MOST of the 43,000 investors who poured $2.23 billion into the now failed Great Southern agribusiness empire were told yesterday that all was not lost -- but the future remains far from certain.

Addressing the group's first creditors' meeting in Melbourne yesterday, Ferrier Hodgson administrator Martin Jones said each of the group's 45 managed investment schemes would need to be reviewed for viability.

"It doesn't necessarily follow that the schemes themselves are infected with the insolvency of the responsible entity," Mr Jones said.

"However, each scheme must be looked at in terms of its independent viability ... There are difficult circumstances and there are some quite difficult and complex legal issues for investors to address."

Mr Jones said Great Southern receivers McGrath Nicol would undertake the review of each scheme, and those schemes that were unviable would require investors to put forward further funds. Otherwise, they would be wound up.

It is understood that those viable schemes would likely be bought out by agribusiness competitors, with ITC, Rewards Group and Gunns all expressing interest in Great Southern's assets.

Separately, Mr Jones said the administrators would launch an investigation into a controversial capital raising exercise completed by Great Southern in January, just four months before it collapsed.

Under the deal, hundreds of scheme investors handed the company $88 million worth of cattle in return for now worthless Great Southern shares.

The role of KPMG, which had prepared an "independent expert's report" supporting the deal, which Great Southern called Project Transform, would also be examined, Mr Jones said.

"We have started an investigation of the offer and all of the adviser's roles and will make a thorough examination and report on that," he said.

"The issue of Project Transform has been raised with us several times."

Under that proposal, Great Southern had sought to raise hundreds of millions of dollars by trading shares for the assets of two cattle schemes and six plantation schemes.

The majority of investors in each of the plantation schemes rejected Great Southern's proposal.

The offer was accepted by the majority of investors in the cattle schemes, and those schemes were subsequently wound up, with unitholders now holding worthless company shares.

Disgraced former West Australian premier Brian Burke was one of several disgruntled Great Southern investors present at yesterday's meeting who had been caught out by Project Transform.

"In my mind that exercise was nothing but a capital raising at difficult times at a substantial premium," Mr Burke told the meeting.

"We were told in direct terms that the sale of the cattle was not to relieve capital pressure."

Mr Jones said the responsible entity of the Great Southern schemes, Great Southern Managers Australia -- the arm that managed the schemes -- owed about $600 million to banks but had no rights over any scheme assets.

He said it was too early to determine which Great Southern schemes were most likely to be viable and which were likely to be wound up.

It is understood those schemes that were most established -- and required the least maintenance -- were the least likely to collapse.

Melbourne law firm Macpherson & Kelley is representing dozens of Great Southern investors who claim they had been misled about the stability of the schemes. They are threatening to stop paying fees to maintain crops, which could derail some schemes.