New Forests funds major Green Triangle plantation takeover

Funds managed by New Forests have taken a controlling interest in a major Green Triangle plantation – the 46,000 hectare Auspine estate.
New Forests’ Australia New Zealand Forest Fund is the lead investor in the transaction, which includes the land and trees of the 64-property estate, formerly owned and managed by Gunns Limited.
The plantation estate will be managed by Sydney-based New Forests, an investment manager specialising in sustainable forestry and associated environmental markets.
Auspine is the second largest softwood plantation asset in the Green Triangle, one of Australia’s premier timber producing regions, spanning the border of Victoria and South Australia.
The estate consists of radiata pines in a region with an established track record of producing high-quality softwood timber.
Managing Director David Brand said: “This investment will deliver stable long-term ownership of the estate and reflects the potential for institutional capital to support Australia’s forest sector.
“Institutional investors are increasingly seeking real assets such as timberland – particularly opportunities like the Auspine assets that offer a steady cash yield from sustainable timber harvest – as part of their investment programs.”
Under New Forests’ management, the estate will continue to supply local processing mills for domestic structural timbers through long-term agreements, as well as support local businesses providing property management, harvest, and transport activities, according to Mr Brand.
“The Auspine estate is a great addition to New Forests’ growing Australian timberlands portfolio and will enable us to seek improved efficiencies and added value from managing a comprehensive portfolio of properties across the productive Green Triangle region,” he said.
New Forests manages approximately 375,000 hectares of plantation land and timber plantations across Australia, and the company has over $1.25 billion in assets under management in Australasia, tropical Asia Pacific, and the United States.
Gunns Limited, in a statement to the ASX, said the first stage of the transaction for the sale of the Gunns Green Triangle forest estate was completed on 16 March 2012.
The transaction brings together the estate land and trees in a single ownership structure.
Following completion of this stage, as consideration, Gunns states it holds an equity interest in the investment trust valued at approximately $120 million.
This represents the value of land assets vended into the new trust, according to Gunns.
The balance of the equity in the new trust is owned by institutional investor clients of New Forests.
Gunns states the second stage of the transaction will involve the sale of its equity interest to new investors.
A spokesperson for Gunns stated: “The transaction provides for long term timber off-take from the estate to supply Gunns’ Tarpeena sawmill and continued operational management of the estate by Gunns on a transitional basis.”
The completion of the second stage is subject to conditions precedent including approval of the investment by new investors and FIRB approval, as required, according to the statement.
Gunns announced a conditional proposal for an equity raising venture in conjunction with an equity placement to the Richard Chandler Capital Corporation Pte Limited (“RCC”), on 8 February 2012.
Later, on 13 March 2012, the company announced that the RCC investment would not be proceeding.
“Subsequently, there has been some media speculation and comment in respect of the company’s proposed placement of securities to RCC,” the spokesperson said.
“It is the Company’s understanding that RCC decided not to proceed with the proposed investment based on its view that, in aggregate, the investment did not meet the social criteria of RCC’s previously stated evaluation framework.”
“The Company is proceeding with its financial advisors to develop an alternative equity offer and associated transaction documentation.
“The process is continuing and is incomplete.
“The capital raising will be material to the Company’s financial position and strategy. “The Company is not currently able to provide a definitive timeframe for finalisation of the equity offer but expects the current suspension to extend for at least a further 5 business days.
“A further market update will be provided on 26 March 2012.
“The Company is not aware of any reason why the suspension of trading in its securities should not continue.”