They are yet to file their half yearly report due
by the end of February 2010.
FEA are currently insolvent because the banks
intend to test their loan covenants by using the yet to be released results.
They’ve now been in breach of banking covenants for
9 months.
The banks chose not to apply the tests to the 2009
results, giving FEA time to restructure.
FEA had the benefit of watching Great Southern and
Timbercorp being mauled by their bankers in their dying days.
They must have missed the lesson.
Perhaps another case of history repeating itself
because no one was listening the first time.
It seems the penny may also have finally dropped
for Gunns given their belated restructure proposals..
The Examiner reported on 4th March that “a
Government rescue package is being developed to assist Forest Enterprises
Australia in the same way as a $12 million low-interest loan saved King
Island’s abattoir from closure last year”.
But even the Premier Mr. Bartlett, imbued with a
humble self assessed prescience in matters forestry (he recently described his
opponents as clueless) is now believed to be against creating a world first by
giving a loan to an insolvent Company.
Press reports highlight that FEA is suspended from
the ASX not on the more salient question of whether they’re trading whilst
insolvent, and the consequences that may flow.
Is FEA continuing to trade? Does this mean the
Directors are personally liable for undertakings henceforth made by FEA?
Is FEA continuing to take supplies of radiata from
the FT/GMO joint venture for their Bell Bay sawmill?
If so, has Mr. Bartlett given any undertakings to
the Directors of FEA that they will not be liable to pay for the logs in the
event of FEA’s default?
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