Gunns lurches into liquidation

It was not surprising Gunns’ Voluntary Administrator recommended all companies in the Gunns group be placed in Liquidation.

The second alternative of passing control back to a Board was never a possibility as Gunns had already disclosed in August 2012 that liabilities exceeded assets and as everyone knows liabilities are rarely understated whilst the reverse is invariably true of assets.

The third alternative of a Deed of Company Arrangement to allow for an extended period of administration so that all parties could achieve a better result was never a possibility because

·        the unsecured creditors aren’t going to get anything  in an orderly administration.

·        The best chance unsecured creditors have of getting a return is if a Liquidator can successfully establish that Directors allowed Gunns to trade whilst insolvent.

·        Grower/investors need a new Responsible Entity (RE) for their MIS projects if they are to continue until harvest and this can occur even if a Liquidator is appointed.

·        If a replacement RE cannot be found for the MIS projects then the growers will vote to liquidate the schemes at the same time as companies in the Gunns Group are liquidated.

·        Grower/ investors hopes for a return may be boosted if breaches by Gunns Plantations of its RE duties can be upheld.

·        The banks’ returns are likely to diminish with every passing day so they just want to get on with the liquidation. Gunns has well and truly tested their patience and forbearance over a considerable period of time.

·        The banks as secured creditors will claw back some amounts from MIS growers if and when the schemes are liquidated for amounts owing to the RE.

·        The Gunns Group structure has been made incredibly complicated with the overlaying of 49,000 MIS growers each with a leasehold interest in land owned in some cases by Gunns and in other instances by third parties. Even if there was a will to keep the structure under Administration there is not the money.

Mid year report: pass or fail?

 

Election dates are now circled on the calendar.

The countdown has started.

The May Budgets will set the scene for some of the economic and fiscal issues that will be canvassed in both State and Federal elections.

An important lead up set of figures was released by the State Government on Friday 15^th Feb via its Mid Year results for 2012/13.

The updated expected Budget outcomes for the full year 2012/13 were released in December but the latest figures are the actual figures for the six months ended 31^st December 2012.

It is sometimes difficult to draw too many conclusions from six months figures. Other times warning bells sound.

Revenue and/or expenses might not necessarily be evenly spread throughout the year so one can’t be too sure what in store for the next six months.

Both the Finance Minister and the Greens Treasury spokesman have given their brief interpretation of the results.

Mr Bacon said “the Mid-Year outcome contained in the report was consistent with budget forecasts, with a Net Operating Deficit of $201.3 million, in line with the revised Budget estimate of a $326.8 million deficit.”

There’s no basis for that assertion.

He’s reading tea leaves again.

He then says “We continue to be net debt free, with a negative net debt of $212.9 million”.

That not only is a dumb thing to say, it’s deliberating misleading.

It only occurred as we shall see, because the Government spent very little on new assets, plant and equipment and equity injections into GBEs, far less than what was expected in the Budget.

A cause for celebration?

Mr Morris agrees however: “The good news here is that the state’s financial position has stabilised, we are net debt free”.

The astonishing ineptitude of the policy elites.

Excruciating details of how the Gillard government completely failed to discharge their fiduciary duty to the Australian people by securing a higher ‘rental’ fee for our mineral resources are revealed by David Llewellyn-Smith who writes as Houses and Holes on the macrobusiness.com site  HERE

An interesting quick read about the horrendous outcomes which ensue when politicians put politics way ahead of sensible public policy.

 

The alternative is probably worse. Houses and Holes critiques the latest offering from the Opposition  at Abbott's Recession Risk. The last sentence says it all:

"If this speech captures the state of the nation then we are a sausage stuffed with risk, broken ideology, dated growth hopes and empty promises"

What have we done to deserve this?

Federal Hotels: the turning point?

It is difficult to escape the conclusion Federal Hotels’ problems are largely of its own making as a consequence of the path chosen, the capital structure and dividend policy pursued.

Something had to give

Something had to give.

In a capital hungry business with falling profits, ageing assets and demanding shareholders, something had to give.

Tassie's unfunded superannuation liability

The state’s largest liability and the least understood is the liability for unfunded superannuation.

The liability arises because the employer (ie the State and its associated entities) does not set aside employer contributions as is customary for most superannuation schemes.

Instead the employer pays amounts as and when the benefits fall due, upon retirement or resignation, either in a lump sum or as a pension.