Ann: More than $11 million secured in accelerated sales program, page-11

The Australian

Quintis reaps $7.9m in cash from cut-price sandalwood oil sale

• SUE NEALES
• The Australian
• 6:50PM June 30, 2017

Troubled listed sandalwood farmer, timber and oil processing company Quintis has fast-tracked sales of its sandalwood oil at a greatly discounted price to bolster its troubled finances.

Late yesterday, Quintis announced it had sold — and been paid $US6m cash — for an accelerated sale of 2.85 tonnes of sandalwood oil to Young Living, the largest essential oil company in the world.

Quintis (QIN), which remains in a seven-week trading halt until next Wednesday, July 5, is desperately trying to recapitalise its business after its shares crashed from $1.45 each in mid-March to around 30c a share by May.

The world’s largest owner and manager of commercial Indian sandalwood was the victim of a catastrophic report on its business finances, dealings and structure by US short seller Glaucus Research, timed to be released on the same day as the company’s high-profile rebranding from its earlier name as TFS Corporation to relaunch as new-look Quintis.

The Glaucus report revealed that the company — which is just starting to harvest its first commercial crops of mature sandalwood from its Kimberley plantations — had lost its key major sales contracts in China without the knowledge of its board of directors.

Young Living has paid a total of $US8.55 million ($11.3m) for 2.85 tonnes of sandalwood oil, at a 33 per cent discounted price, as part of an earlier five-year agreement announced last September.

The earlier agreement covered the purchase of a total of 7.8 tonnes of oil spread over five years at a price of $US4,500 per kg.

This sudden sale of 2.85 tonnes brings forward approximately two years of supply under the offtake agreement, with Quintis already receiving $US6m ($7.9m) in cash from the oil sale.

The remaining $US2.55m will be paid by Young Living on receival of the oil shipment in July.

The accelerated oil sale provides cashflow for Quintis as tries to recapitalise its business, but also crystallises the value of Quintis’ sandalwood oil inventory at a reduced $US3,000/tonne.

Quintis also announced yesterday it had lost another director, beauty and health products business expert Gillian Franklin, adding to the company’s high turnover off directors after relatively short, abbreviated terms.

Last week, Quintis suffered a further blow when credit rating agency S&P Global Ratings downgraded its corporate credit rating CCC+ to CCC- and placed the business on its Credit Watch list with negative implications.

S&P said it had lowered the ratings on Quintis because the company’s liquidity pressure had increased pending an upcoming interest payment due on its bonds due in August, and the potential for a put option to be exercised in July 2017.