Willmott Forests felled

Willmott Forests manages more than 50,000 hectares of radiata pine, silky oak and she-oak plantations in NSW, Victoria, Queensland and the Northern Territory.

Vicki Wood

FORESTRY projects operator Willmott Forests Ltd has been placed in receivership by its bankers, emulating the downward spiral of collapsed managed investment scheme (MIS) operators Timbercorp and Great Southern.

Willmott Forests manages more than 50,000 hectares of radiata pine, silky oak and she-oak plantations in NSW, Victoria, Queensland and the Northern Territory.

About 8,000 grower-investors had provided about $400 million to fund the plantations.

It's believed Willmott owed about $120 million to its bankers - the Commonwealth Bank of Australia and St George Bank - and was unable to meet the timelines set by the banks to restructure.

Bryan Webster, Mark Korda, Mark Mentha of KordaMentha were appointed receivers and managers of the Willmott Forests group of companies on Monday.

Korda Mentha said Willmott was the last large timber MIS scheme operator left, following the collapse of Timbercorp, Great Southern and others in the past two years.

In July this year, Willmott shares were suspended from trading on the Australian Securities Exchange (ASX) while the group tried to address problems caused by low MIS sales.

Mr Webster said Willmott's business model had relied almost entirely on future MIS sales.

MIS operators were hit by the global financial crisis, the collapse of commodity prices and uncertainty about the tax treatment of the investments.

"It became clear that the MIS forestry industry had collapsed after the failure of Environinvest, Timbercorp, Great Southern, FEA Group and the Rewards Group," Mr Webster said.

"Willmott Forests relies on future MIS sales for cashflow and experienced a decline in new MIS receipts from $66.5 million in 2008/09 to just $1.5 million in 2009/10.

"Willmott's cashflow over the next two years relied on increasing debt and utilising asset sale proceeds to fund operating expanses.

"The Willmott Forests schemes did not require annual maintenance or rental payments from growers.

"Additionally, there are no significant harvesting inflows expected for many years to create a sustainable income stream."

The receivers said they would work with all relevant stakeholders to continue care and maintenance of the plantations while assessing the funding requirement of each of the schemes and identifying an appropriate solution.

Willmott had said on August 31 that it was trying to develop a comprehensive capital management plan for consideration by the company's financiers.

Willmott said on Monday that the company had been reviewing the business and a comprehensive business plan had been presented to its bankers, with the objective of repaying the debt in full via the sale of land assets and reductions in operating costs.

"During this period, the (banking) syndicate granted the company temporary waivers of compliance with certain provisions of the syndicated facility agreement," Willmott said.

"Progression of the business plan was dependent on the finalisation of negotiations to establish a new debt facility.

"The syndicate has today advised Willmott Forests that the temporary waiver is terminated and that all loans are immediately due and payable."

Willmott booked a net profit of $9.57 million for the first half of the 2009/10 financial year, but has not yet released its full-year accounts.