Sandalwood nursery
A prominent Kununurra farmer is among a group of shareholders seeking to remove three directors from the embattled Indian sandalwood producer Quintis. Source: ABC News Rural
The company formerly known as Tropical Forestry Services which controls more than 12,000 hectares of Indian sandalwood plantations across northern Australia, has been in a trading halt and seeking recapitalisation since last May.
The group, who together are the registered holders of more than 5% of the voting shares in Quintis, has requested a general meeting with shareholders, where they hope to remove current directors Dalton Gooding, Julis Matthys and Giovanni Groppoli.
They seek to put a resolution to shareholders to vote in long-term investor and entrepreneur John Allen, Kununurra farmer Robert Boshammer and sandalwood grower Craig Duncan to lead the company going forward.
Mr Boshammer said the move was prompted by a loss of confidence in the current leadership group.
“It’s really the uncertainty over the last year and the apparent lack of action of the directors and the board,” he said. “It has left particularly the farming side of sandalwood with a lot of concern; whether the people will still have jobs and what’s going on.
“There’s people out there who want the product. It’s just they’re concerned about dealing with the company because they don’t know whether it will be around much longer.”
The cash-strapped Quintis has been seeking recapitalisation since it stopped trading on the stock exchange in May, following a scathing report by an American short seller Glaucus and a string of revelations that the company had lost major customers but not informed the market.
In response Quintis admitted to shareholders that its biggest customer in China, Shanghai Richer Link, had not requested any shipments yet for 2017, with the five-year contract eventually terminated in October.
Quintis’ cash reserves were $89.6 million at December 31 last year, and by May had dwindled to just $17 million.
Despite the turmoil, the company embarked on a large planting and harvest regime last year in the Kimberley’s Ord Irrigation Scheme and in the Douglas Daly Region of the NT, with a $11 million bulk sale of sandalwood oil in June giving the company a much-needed boost.
In November it released its audited annual report which revealed a statutory net loss after tax of $US416.8 million.
The company was thrown another lifeline in August, after the majority of its key creditors agreed to give it an extra six months to settle its $13.73 million interest repayment.
In November Quintis also entered into a new financing agreement for up to US$20 million through a Note Agreement with a majority of the existing holders, with the proceeds from the Notes being used to fund Quintis’ operations as it works towards recapitalisation.
Mr Boshhammer said at Quintis’ recent Annual General Meeting, the board had failed to satisfy shareholders concerns with a clear plan to turn the business around. However, he said the requisition group were confident the company could become profitable again under the right management.
“We’ve got to get the shareholders on side. So we’ve got to talk more to them and let them know that we are very confident we can manage it both in the farming side and in the marketing side which I believe our team of people can do that extremely well,” he said.
“That will be the hardest part, getting that financing side and debt side up and going but we believe we can do that, in fact we’re really quite confident we can do that.”
Mr Boshammer said it was not only shareholders being left in the dark, with growers and plantation staff unsure of their future.
“A lot of them [staff] are young people. They’ve got mortgages, they’ve got young families and they’ve got to know whether they have got a future there or they will be looking elsewhere,” he said.
“The company can ill afford to lose all their good people just because they can’t make up their mind what they’re doing. According to a statement made on Friday by the requisitioning group’s spokesman, John Allen, they had gained “significant grower support.
“Grower support is the backbone of Quintis and it is critical to the future success of the company,” he said. “As shareholders of a quality company with an excellent market-ready product in high demand, we need a clear plan to move this business forward for the benefit of all shareholder and stakeholders.”
This action has been publicly supported by Quintis’ major shareholder and former managing director, Frank Wilson, who will re-join the company in a sales and marketing capacity should the resolution pass.
Mr Boshammer emphasised that Wilson would not return to Quintis in any leadership capacity.
Mr Wilson, who resigned from the company he helped establish in a bit to join a takeover attempt which failed, is named as a defendant in one of two separate class actions against Quintis in the Federal Court.
Quintis declined an interview request from ABC Rural, however in an ASX announcement released this morning they said the company was in the process of reviewing the validity of the notice and resolutions proposed by the requisitioning shareholders.
“If the notice is confirmed as valid, the company will call a meeting of shareholders to be held within two months of the notice in accordance with the requirements under the Corporations Act,” it said.
“The board intends to recommend that shareholders vote against the resolutions. The full details of the reasons will be disclosed in the Notice of Meeting provided to shareholders.”
Mr Boshammer said despite Quintis’ financial woes, the sandalwood industry had a bright future in the north.
“I’ve been in farming in Northern Australia for the last 35 years, so I know most of the crops and most of the opportunities up there,” he said. “Because of the barriers to entry, Quintis has got probably 10-15 years ahead of anyone else in the world in farming sandalwood, so they’re in a unique position.
“The markets appear to be very strong and very good in India, China, the UAE countries, and now in the pharmaceutical area there’s options.
“We’ve got a great product [and] when people see that Quintis is the leading company and can grow it, and that there are markets for it, I think that investors will be trying to get in.”
Mr Boshhammer said he would remain in the sandalwood industry no matter what the outcome with Quintis.
“If it doesn’t there will be a few of us who are running sandalwood and growing sandalwood and we’ll be doing our own marketing separately.
“The product has a bright future in the region no matter what.”
