Embattled sandalwood plantation group Quintis booked institutional investment revenue that never actually arrived, potentially helping it draw down on an important line of credit, the company’s accounts show.
Related party disclosures in the company accounts also show Quintis paid former chief executive Frank Wilson millions for switching his investment in the company’s forestry schemes from old trees to new.
The revelations follow a horror week for Quintis in which its share price was again pummelled after the company admitted it had not disclosed the loss of a sales contract and had its credit rating cut further into junk by two ratings agencies.
Quintis, which has been under heavy fire from US hedge fund Glaucus Research since late March, is likely to come under further pressure from short sellers this week with the publication, as early as today, of research by the secretive Viceroy Research.
In 2011, Quintis, then known as TFS, borrowed $US150 million to help with its expansion plans by issuing “senior secured notes”.
Under the terms of the note issue a final tranche of $US50m was held back, only available once total sales to wholesale investors under Quintis’s Beyond Carbon scheme exceeded $US100m.
Company accounts show that in June 2012 Quintis booked institutional sales that enabled it to hit that target, allowing it to draw down on the cash hoard.
However, the following year’s accounts reveal that “a wholesale investor” failed to pay a promised $34.8m on the purchase of 580ha of plantation.
The company reclaimed the land and even booked a gain, of $50.5m, because the plantation had increased in value in the meantime. A company spokesman declined to say whether the failed sale was instrumental in getting Quintis past the $US100m institutional sales mark. He also declined to say whether the wholesale investor was German bank Jaderberg & Cie, which has heavily promoted investment in Quintis’s forests to its customers.
Nor would he say whether Jaderberg was the institutional investor that failed to settle on a similar deal in 2012.
In that case, the investor failed to pay $19.1m due on the sale of 384ha of plantations. Quintis seized 304ha and booked a gain of $10m, again due to upward revaluation of the forest.
There is no suggestion noteholders were misled about the transactions.
The notes were paid out last year through the issue of $US250m in bonds, 60 per cent of which are now held by investment giant Blackrock.
Also in 2012-13, Mr Wilson subscribed to about $10.56m in one of Quintis’s forestry managed investment schemes, financed by a loan from a company subsidiary, company accounts show.
The loan balance was reduced to about $9.59m by more than $950,000 in commission paid to Mr Wilson.
On July 2, 2013, Mr Wilson sold about $11.2m of a different, mature, plantation back to Quintis, clearing his debt to the company and making a profit of $1.59m.
Mr Wilson declined to comment and a Quintis spokesman said all the transactions raised by
The Australian were “approved at the time and disclosed in the company’s accounts”.
“Since 2014 the board has made a number of changes to corporate governance, including restrictions on staff and management accessing financial incentives that are available to other sophisticated investors.”
A Viceroy spokesman declined to identify who was involved with the group, which has so far published research on junior miner Syrah Resources. “We are a US-based research group who release our contrarian investment theses to the public markets,” he said.
