Sandalwood nursery
Jason Preston, Shaun Fraser and Robert Brauer were appointed as receivers and managers of Quintis Limited and a number of its subsidiaries on 23 January 2018 (the receivers).
The receivers provide the following update on the progress of the Receivership and Quintiss business. Source: Timberbiz
Quintis has continued to operate on a business as usual basis since its receivers’ appointment. The company says its staff has been strongly supportive of the initiatives undertaken since the appointment and remains focussed on maintaining plantations across Northern Australia and production at Mt Romance.
The Mt Romance facility has confirmed the delivery of 18 tonnes of Australian sandalwood from the Forestry Products Corporation on 21 February 2018 to meet its ongoing production requirements.
According to the company its constitutional investors have conveyed clear messages of support, with a number showing interest in increasing their ownership in plantations.
There were a small number of redundancies announced on 9 February 2018, amounting to 15 staff or 7% of the total workforce. While the redundancies were unfortunate, they reflected changes in the structure of the business and were necessary to put the company’s cost base on a more sustainable footing.
The receivers have commenced a process seeking expressions of interest and inviting interested parties to invest in or acquire all of Quintis’ business and assets.
Advertisements were placed in national newspapers in Australia and in Asia. Subsequent interest in the business and assets has been strong, with summary information packs forwarded to more than 70 parties including large institutional investors, pension funds, specialist forestry organisations and several large sandalwood buyers.
A more detailed information memorandum and data room is available to parties who have signed a confidentiality agreement.
Non-binding indicative offers are expected by 23 March 2018. A further period of diligence will be available for short-listed bidders thereafter.
The Voluntary Administrators applied for and were granted by the Supreme Court of Western Australia an extension to the convening period for the second meeting of creditors, to 31 May 2018. That timeframe is aligned with the sale process being conducted by the receivers.
An organisation known as the Sandalwood Growers Co-Op, comprising a group of growers in the TFS 2002 MIS, has convened a meeting of participating growers in the TFS 2002 scheme to replace Sandalwood Properties Ltd as the Responsible Entity (RE) for those schemes.
As yet the proposed replacement RE has not been able to secure regulatory approval to act in that capacity for this scheme, and the meeting has been adjourned three times.
Separately, a grower in the TFS 2002 and TFS 2003 scheme has sought to terminate the management aspects of the Lease and Management Agreements (LMAs) with Quintis and has purported to call a meeting of growers on 12 March 2018 to vote on a resolution to appoint the Sandalwood Growers Co-Op as the new manager of the schemes.
The receivers consider that both the notices of termination and the purported resolution to appoint a new manager are invalid. Further, a termination of the LMAs would result in the termination of the growers’ leases and a forfeiture of the growers’ trees, which would not be in growers’ best interests.
The receivers have reconfirmed to growers that the receivers remain well funded and that Quintis will continue to maintain the plantations during the receivership.
By maintaining the key assets of the business and retaining grower support, the receivers expect the sale process will see Quintis emerge from receivership and voluntary administration with the schemes well placed to achieve a favourable outcome for growers.
The receivers have announced the appointment of Primary Securities (Primary) to act as an independent consultant to Sandalwood Properties in its capacity as the RE for the retail Managed Investment Schemes established by Quintis.
Primary is a responsible entity licensed to operate any forestry scheme and to give advice in relation to any managed investment scheme.
Primary has some experience of being appointed RE by growers over a number of other agricultural schemes to represent their interests when the previous RE was under external administration.
Primary has confirmed to the receivers that it is free of conflict and that it is not connected with, funded or otherwise supported by any entity in the sandalwood industry.
Changing the RE while the receivers remain in place would involve complexity and risk and would likely shift a considerable funding and potentially cost increase to growers.
The appointment of the independent consultant has the advantage of enabling growers to receive reports from Primary on matters of concern to them while the receivers preserve the current structure and seek expressions of interest.
Primary will review the operations and performance of SPL as current RE, to verify that grower rights are being adequately protected during the Receivership, including these aspects:
- Leases and payment of rent
- Water entitlements
- Oversight of marketing and the sale of harvested timber
- Preparation of financial statements and compliance reports
- Plantation management
In consultation with SPL, over coming months, Primary will report to growers in relation to the these issues.
The appointment of the Primary aims to provide MIS growers with greater transparency into the performance of the RE during the receivership.
