Would this not be a good time for Elders shareholders to support...

Would this not be a good time for Elders shareholders to support a spin-off of the forestry assets into a separate listed company? We have seen Great Southern and Timbercorp both fail. Gunns seems to have sold out of all of its forestry assets. Many of the smaller ones such as Willmott and Forest Enterprises have also gone into receivership or liquidation. In terms of buying "straw hats in winter", forestry must be one of the most out of favour assets at this time. I don't believe that Australia is going to stop growing trees commercially and the less forestry there is in this country, the better will be the timber and forestry product prices in the future. Prices collapse, everybody leaves then prices surge. That is the way this game plays. We shouldn't be leaving it at the bottom.

Although you can't avoid making the occasional mistake with this approach, it also led to some of the best gains.

So why not support a float off of the forestry assets. As long as the new company were to get them at the cheap going market prices, then in my view we would be holding on to a bargain. At the same time anything we put in to such a float would go to the rescue and future success of Elders. The share prices of both classes of Elders shares would jump sharply at any suggestion that this was a goer.

Elders is clearly being forced to sell these assets to pay down its debt. It is not a time to be selling and it would be better for us to hang onto them yet satisfy the banks in this way.

Surely it would be in the interests of our largest institutional shareholders to support something like this even if they later sell the forestry shares that they get.

The forestry assets are currently valued at $523.6 million. If we were to pick them up in this way for say $380 million or so, Elders shares would jump (and particularly the ELDPA) and those who participated would be getting a bargain priced new investment and one that should be saleable for more than they pay. Clearly raising such funds would present a challenge but why not offer the new shares to Elders shareholders first and the remainder to the general public. There is room for a new forestry company to take the place of those that have failed or left the scene and maybe such a company could look at buying other bargain forestry assets as well.

The alternative is to see these assets sold to some overseas private equity fund which will spruce them up (pun intended) and sell them back to us in a few years time and take the profits (tax free) with them.

GPASAS