PFG/SCORPIO, page-7

Agree or banks have completed their standard annual review and discovered Bestons actual results were miles off their budgeted forecast and servicing is clearly not evident. With cash drying up clearly this debt must be called in.

As for owning farms the initial basket case purchased, required litigation against the intitial owners as it was a run down farm that was going broke. They really do struggle to find milk as the the largest farm in the Mount are very weary of them for certain reasons and wont sell to them.

So even after the initial purchase that went a little pear shaped they continued to buy two more farms as they really do struggle to find milk.

It obviously appears to be a little bit of desperation in wanting to sell the farms and lease back. The only reason to do this, is that debt needs to be repaid and obviously the farms would be a major part of the security.

it would add to the cost of the operating expenses by leasing the farms as that lease would be greater than the interest they are paying and will no longer enjoy the appreciation the farms have received

As for operating the farms the drought has destroyed most of Australia, any farmer in the South East where its drought proof, knows if they couldnt clean up in the last two to three years they are in trouble. Mount Gambier farmers know its going to get tougher when those drought areas bounce back and they will need to compete again, the south east has enjoyed the boom time but its about to end and competition hits again