Timbercorp

Timbercorp Group comprised 41 companies with debts totalling over $750 million when our Restructuring group was appointed as Voluntary Administrators in April 2009. They achieved timely and favourable asset sales and court processes that achieved multilaterally beneficial goals.

Background

From 2000–2007, the Timbercorp group operated horticultural managed investment schemes. In fact, it was one of the largest groups to do so, with significant operations controlled by a large number of employees and contractors across regional Australia.

With nearly three million almond trees, the group had the second-largest almond orchard in the world. It also had over two million olive trees. Plus eucalyptus plantations, avocados, mangoes, citrus and table grapes.

By 2009, Timbercorp had no cash. It owed creditors $980 million and we were appointed Voluntary Administrators in April of that year.

On 29 June 2009, creditors voted unanimously to wind up the complex group of 41 companies and subsidiaries owing $661 million to secured creditors, $14 million to unsecured creditors, $5 million in staff entitlements and $300 million in other loans and debt notes.

Timbercorp had no cash to restructure or maintain its horticultural assets. This included the almond orchards and olive plantations, which had high ongoing costs – needing water and fertiliser to survive.

The group had always outsourced the management of its horticultural interests to service providers who, after our appointment, wanted guaranteed payment to manage the orchards. Without water and fertiliser the almond and olive crops would fail and be worthless.

How we helped

We saw value in the upcoming almond and olive harvest. 

The assets, however, were part of managed investment schemes. Managed investment schemes are complicated structures with numerous stakeholders to consider when seeking to protect the value of the plantations.

As the first major agricultural managed investment scheme to collapse, there were few legal precedents to guide us.

We negotiated a crop lien agreement with service providers. The agreement enabled them to recoup their costs from the sale of upcoming harvests and ensured ongoing maintenance of the plantations and orchards in the short term.

The 12,000 hectares of almond trees, however, faced another threat – an urgent need for pollination.

To produce an almond crop for 2010, we had just a month to make sure we had enough bees to pollinate the trees. No pollination, no crop.

In just two weeks we arranged Australia’s largest pollination, hiring 52,000 hives of bees (around 1.6 billion bees) from beekeepers in three states and transported the hives in a fleet of 120 semi-trailers from Queensland and New South Wales.

With agreements in place that provided for the ongoing care of the plantations, we were able to run an international sales campaign in the US, Europe and Asia. Selling the orchards to Olam International Group, a Singapore-based producer and processor of nuts and other agricultural products.

Results

In November 2009, we sold the almond orchards for $128 million – just seven months after our appointment.

The sale ensured ongoing employment opportunities for the vast majority of the employee and contractor base and meant the orchards had new owners with the financial resources to meet future operational needs. It also enabled the orchards to keep contributing to Victoria’s rural economy.