A $20m offer to buy the timber plantations on Kangaroo Island has been put to the owners

Kangaroo Island Plantation Timber's plans for a seaport at Smith Bay.

• CAMERON ENGLAND

  BUSINESS EDITOR

  @CameronEngland

  
• 12:50PM MARCH 31, 2021
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An investment company has made a $20 million offer to buy 15,600ha of timber plantations on Kangaroo Island, in a deal the proponent says would be a win for shareholders and the environment.

Kangaroo Island Plantation Timbers, which owns bluegum plantations on the island, and has been progressing plans for a seaport on the island to export timber, did not specifically say it had rejected the offer, and executive director Keith Lamb said all approaches were assessed on their merit.

The offer has not been disclosed to the Australian Securities Exchange.

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KI Phoenix Pty Ltd, a company part-owned by agricultural investor AAG Investment Management, told News Corp Australia it had put a conditional $20 million bid to KIPT to buy “fire-ravaged” plantations and convert them to agricultural use.

“KI Phoenix’s plans for transforming the land for agricultural use will eliminate the need for the planned controversial deepwater port at Smith Bay and a high-risk wood pellet mill,’’ the company said in a statement.

KIPT director Shauna Black examines a fire-damaged plantation on Kangaroo Island.

“The planned Smith Bay port has been the subject of significant community and council

opposition for many years amid environmental and biosecurity concerns.’’

KI Phoenix said it had made an offer to KIPT two weeks ago followed by a preliminary meeting on Tuesday.

AAG Investment Management’s Marcus Elgin said the offer was a good deal.

“For shareholders, the financial risk of KIPT proceeding with its current plans of clearing,

replanting, building the port and possibly a pellet mill, plus the cost of estate and company

management is very high and likely to cost far more than the company’s cash reserves well

before the new forests are ready to harvest,’’ Mr Elgin said.

“While disappointed by KIPT management’s response to date, we remain hopeful that the

KIPT Board will put the offer to shareholders, with a sale only able to proceed with their

approval in accordance with ASX listing rules and other customary conditions.”

Mr Elgin said his firm’s plans would create 48 full-time jobs remediating the land.

Mr Lamb said the company received approaches from time to time, and they were assessed with regard to what was in the best interests of shareholders.

“I can talk in general terms. KIPT periodically receives approaches from interested parties and sometimes offers on parcels or even the entire asset,’’ he said.

“Since the fires, early on there was a pique in interest, but that settled down as we progressed with our business recovery plan.

A KIPT plantation before the bushfire came through.

“The company is very open-minded to approaches, I think the board squarely has its view on maximising shareholder wealth .. so certainly considers all offers on their merit and acts accordingly’’.

KIPT said in its annual report that as a result of the bushfire which devastated Kangaroo Island in early 2020, it had revalued its forest estate from $115.2m to $5.95m. An independent evaluation of the land and structures put the value at $59.3m, the annual report says. As at March 8 it had received $62.4 million in progress payments on its tree crop insurance policy, and at the end of the December quarter had $28.6m in the bank.

The company recently lodged a response document to the third round of public consultation on its proposed seaport, and also recently started exporting logs via barge from the island, destined for a customer in South Korea.

In December KIPT started harvesting from its fire-damaged plantations in a bid to generate some value from the remaining stock.

The company’s shares closed 5.1 per cent higher at $1.02 on Wednesday.