Midway Limited, a forestry owner, processor, and wood fibre exporter based in Geelong, Victoria has announced the sale of 17,000 ha blue gum plantations in south-west Victoria to overseas investors MEAG for $154.1 million. Source: Timberbiz
In addition to purchasing the existing Midway plantations, MEAG will invest $200m over the next five years to establish greenfield hardwood plantations in south-west Victoria to underpin supply to Midway over the next 35 years.
As part of the transaction, Midway Plantations Pty Ltd will manage the combined assets under a long-term management agreement and supply Midway Limited with all hardwood log harvested from the combined estate under a long-term offtake agreement, each on arm’s length commercial terms.
“The announcement shows significant international support for investment in Victoria’s forestry sector,” Victorian Forest Products Association CEO Deb Kerr said.
“Today’s announcement clearly shows that the world recognises Victoria as a valuable region for plantation investment with potential to grow the plantation estate into the future. We congratulate Midway and MEAG on this significant investment relationship and look forward to welcoming MEAG Munich RE,” Ms Kerr said.
Managing Director for Midway, Tony McKenna, said the sale of the existing plantation estate and the greenfield plantation development is an excellent outcome for Midway shareholders.
“Midway will realise more than book value from plantation assets. We will generate revenue from the management and offtake agreements, and we will secure future additional volume for our processing operations at North Shore.
“When complete, the change in ownership and control of the plantation estate will simplify the Midway balance sheet and remove annual valuation changes in biological assets that have previously created volatility in the valuation of company held assets.
“The proceeds of the transaction and the ongoing management revenue will support our existing business and allow Midway to develop initiatives that will reposition the company for long-term growth.”
Holger Kerzel, member of MEAG’s Board of Management, said that MEAG was very pleased to enter into a long-term commercial relationship with a significant Australian forestry company such as Midway.
“On behalf of our clients, MEAG identified the Australian hardwood production sector as a key growth opportunity in global forestry and Midway is one of the few companies that could create a platform for significant new commercial hardwood forestry investment that meets our criteria especially for sustainable investments,” he said.
The Midway project team was led by the General Manager of Business Development, Mitch Morison and the General Manager, Plantations, Glen Samsa, and was advised by Azure Capital and SBA Law for this transaction.
This announcement has been authorised by the Board of Midway.
