Latest updates on Great Southern administration and receivership.

Great Southern today became the second major Australian agribusiness to collapse in the past month. [Timbercorp was felled last month] 

The company has called in administrator Ferrier Hodgson to manage its affairs after recently putting many of its so-called ‘non-core’ assets up for sale to help pay off about $700 million in debt.

News of Great Southern’s demise puts the funds of 43,000 investors, who hold interests in the company’s 45 managed investment schemes, in doubt. Over the past 22 years, Great Southern had grown to become Australia’s biggest forestry and agricultural fund manager with more than $1.8 billion invested with the company in the past five years alone.

Great Southern owns and leases about 240,000 hectares of land as well as more than 150,000 cattle across about 1.5 million hectares of owned and leased land.

Ferrier Hodgson partner Martin Jones said his first job would be to review Great Southern’s financial position and communicate with key stakeholders. He said he would be contacting creditors in the next few days to alert them to the first meeting of creditors to be held in Melbourne on Wednesday, May 27.

“The company was already well progressed with restructuring its business and executing an asset sales plan and we will be working with management and key stakeholders to leverage the work already done to date and to preserve assets and maximise the value of the Great Southern assets for the benefit of all stakeholders.” via Great Southern calls in administrators as debt piles up

Finally! I’ve been saying for a while that GTP is a POS going to zero. For years I’ve been warning friends not to invest in MIS and yet I stupidly invested in GTP’s debt, GTPGA and GTPGB (TREES2 and TREES3). Stupid, stupid, stupid. I knew it was a bad business, arguably a complete scam and certainly it had all the hallmarks of a Ponzi scheme and yet I thought I’d get my money back. What an idiot. Lesson learnt, shit stinks and sticks to everything, you can’t step in it and end up smelling like roses.

The Fusion Investing Fund has a position in GTPGA and I own positions in both GTPGA and GTPGB. However, there is a big upside. The creditors meeting are being held in Melbourne so I can easily attend. If nothing else I’ll at least get an education for my money.

I have posted here and on Australian investment forums about the dubious nature of GTP’s balance sheet. However, I have been working under the belief that unsecured debt holders would get a small piece of pie to share. I have highlighted on the following table what I thought TREES holders would get to split. Time will tell, but I’m suddenly not as sure that I’ll get 30 cents back on my dollar, though that dollar only cost me $0.74 and I did receive $0.064 in dividends. At this point I’d be happy with a 50% loss!

A lot of people have some very big questions to answer over this fiasco. I am sure many auditors, accountants and financial advisors have been checking their professional indemnity policies.

• Assets and debt from 2008 annual report
• Latest sale of owned debt was for 38%
• Most anecdotal evidence points to land held at dramatically overvalued rate
• Unsecured Debt
  • TREES2 $78,970,000 
  • TREES3 $122,616,000

I will attend and report on the creditors meeting. If anyone wants me to ask questions for them please feel free to leave a comment or contact me.

[Update 21 May 2009
Finally some encouraging news coming from the administrators. "The properties - the 660,000-hectare Moola Bulla property in WA's East Kimberley region, the similar sized Wrotham Park, 300 kilometres west of Cairns, and the 196,000-hectare blue-ribbon station of Chudleigh Park near Townsville - are worth well in excess of the $200 million in Great Southern's books. ... In addition, they plan to accelerate the sale of the company's separately owned timber plantations, wood chipping, processing and ports businesses." via The Age The administrators are planning on an orderly winding up of the company rather than a fire sale. This bodes well for the administrators bank balance, but also for holders of unsecured debt. If sale of assets can raise $800M then TREES holders should get close to face value back.]

Related posts:

1. Great Southern Limited (GTP.AX) Receivership Update
2. Key Dates for Great Southern Limited
3. Great Southern Saga Continues
4. Great Southern (GTP) Update
5. Was Bernie Madoff a Great Southern Advisor?
6. Great Southern Death Rattle