This could be great news for SHV if this deal goes ahead.ANZ...

This could be great news for SHV if this deal goes ahead.


ANZ hold key to Timbercorp rescue deal

Adele Ferguson | July 10, 2009
Article from: The Australian

A PLAN hatched by Melbourne's wealthy Smorgon and Baillieu families to recapitalise one of Timbercorp's biggest assets into a $300 million entity listed on the ASX could be derailed by ANZ Bank.

Align Funds Management, in which both families have a substantial interest, is understood to have made a presentation to growers in Melbourne yesterday morning to get an in-principle agreement to proceed with a recapitalisation and restructure of Timbercorp's 2001-05 and 2005-06 almond projects.

This would create the world's second biggest almond plantation business.

All the key stakeholders, including the growers, water and land holders overwhelmingly support the deal as an alternative to the managed investment schemes being placed in receivership.

A spokesman for the Timbercorp Growers Group said it completely endorsed the proposal.

"If Align can sign the heads of agreement with the bank in the next 24 hours, we propose to withdraw the proposal to change the responsible entity from the courts," he said.

However, the deal requires the backing of ANZ, which has been in discussions with Align Funds Management for the past six weeks. A spokesman for ANZ confirmed ongoing discussions with Align, but said a decision had not been made.

There is concern that the deal may fail as a result of ANZ failing to agree to one or more proposals, or because time runs out.

Prepayments for key services for the almond plantations ran out on June 30. The next big cost is $1.5m for bee pollination services. The almond trees need 100,000 beehives to pollinate them and produce fruit. If this does not occur, an estimated $250m in almonds would be lost over the 2009-10 and 2010-11 financial years, according to a source close to the deal.

The source said if ANZ rejected the deal it would end up owning the trees but not the water and land. The bank would either have to run the business itself, as there were no other obvious buyers, or make a low-ball offer for the land and water holdings, and flip the whole business for a massive profit. Under the deal, ANZ would receive 100c in the dollar and all litigation relating to these projects would be eliminated.

Align is proposing that the 4500 growers who invested in Timbercorp's almond projects commit to a $50m renounceable rights issue and contribute the $30m-plus proceeds from this season's almond harvest.

The new vehicle would have an enterprise value of at least $300m, which would include up to $150m in debt. The Smorgon and Baillieu families own most of the land and water rights and would convert these into equity in the new entity.

The growers' interests would also be converted into equity in the new venture. Align would manage the entity for a fee.

Timbercorp went into administration on April 23 after buckling under net debt of $993m. Secured lenders are owed $600m, and some 18,300 people who invested $2bn in a variety of managed investment schemes are under a cloud. Administrator Korda Mentha says Timbercorp's olive and almond schemes are insolvent. It has asked court permission to wind them up.