Browse > Home / News / Timbercorp calls in administrators

Timbercorp calls in administrators

Posted on April 24, 2009, 10:10am and updated on April 27, 2009 at 12:15 pm

The collapse of agribusiness giant Timbercorp sent shockwaves through the region’s forestry sector yesterday as speculation mounted over the fate of millions of dollars worth of bluegums in the South East.

The embattled company — which manages 63,000ha of bluegums in the Green Triangle — announced yesterday morning that it had entered voluntary administration.

Timbercorp, which operates an office in Penola, was a key player in the proposed $1.5b Penola Pulp Mill and also expected to create hundreds of harvesting jobs in the bluegum sector.

Following yesterday’s announcement, the Limestone Coast Regional Development Board vowed to hold “urgent talks” with the State Government and the appointed administrator in a bid to secure the ongoing management of the region’s sprawling bluegum estate.

The company’s collapse has been blamed on the global economic crisis, which has begun to heavily impact on key South East sectors.

The global meltdown has triggered farm gate milk prices to plummet, the collapse of the region’s multi-million woodchip sector,
unprecedented shutdowns in radiata pine manufacturing and
downsizing of harvesting operations.

It is understood Timbercorp has poured more than $100m into the Green Triangle’s huge bluegum estate — one of the largest in Australia — during the past 10 years.

Administrator KordaMentha announced yesterday all Timbercorp forestry operations in the region would cease while funding options were determined.

Limestone Coast Regional Development Board chair Dale Baker told The Border Watch yesterday the financial collapse of the company was “a great concern” to the board, particularly the fate of thousands of hectares of bluegums in the region.

“We will hold urgent talks with the State Government and the administrators,” Mr Baker said.

He said the government — which managed a large softwood estate in the region — could have a role to play.

“Someone has to manage the resource — there are a lot of jobs and employment at risk,” Mr Baker said.

But he said it was too early to speculate over the fall-out from the collapse and the number of jobs that could be lost.

Mr Baker said the board had already held talks with the State Government over the possible collapse of the company.

Regarding the impact on the Penola Pulp Mill, he conceded it could have repercussions, but again reiterated it was “too early to speculate”.

Meanwhile, Green Triangle Regional Plantation Committee executive officer John Kellas — based in Mount Gambier — claimed the situation was not dire for the region’s hardwood timber sector.

“The trees are not dead, they are still in the ground,” said Dr Kellas, who explained there were local and international buyers who would buy the plantations.

“Forestry is a long-term investment, the market (woodchip) will turnaround,” Dr Kellas said.

He said many of these plantations were approaching harvesting, which meant cash flow would be imminent for potential investors.

Dr Kellas said small private growers should not be greatly impacted by yesterday’s developments.

He said the situation could open new opportunities for pine investors who wanted to convert bluegum estates back to softwood following the first rotation.

The timber expert also claimed it could also open opportunities for new biofuel-related developments.

But he conceded the situation could impact on jobs in the region.

In a statement from KordaMentha yesterday, appointed voluntary administrator Mark Korda said the company had been hurt by the combined impact of declining global asset values, tightening credit, the economic downturn and drought.

“In the full year accounts issued in November 2008, Timbercorp reported current debt of $568m, net debt of $903.1m and net assets of $595m,” Mr Korda said.

He said Timbercorp had about 170 staff based at offices in Melbourne, Perth, Hamilton, Mildura and Penola.

The voluntary administrators will be writing to all creditors to provide notice of the date of the first meeting of creditors.

Timbercorp had previously announced the company’s business model was no longer appropriate in the current environment due to the capital intensity of the projects and was in the process of transforming the business into an integrated agribusiness company.

“Unfortunately these plans, which included asset sales, could not be executed in the timeframe to meet the company’s debt obligations,” Mr Korda said.

Tags: ,  

Comments

We welcome your comments on this story. Comments are submitted for possible publication on the condition that they may be edited. We require a working email address - not for publication, but for verification.