Decision time is nigh

The woodchips that will come onto the market in the next few years from Timbercorp and Great Southern woodlots will be at the behest of administrators and managers trying to wind up the MIS structures. This will help suppress Gunns’ woodchip price already under stress from the effects of the current global crisis which has seen all commodities suffer price falls. Most commodities are in excess supply now so the rapid rise in price in the future is unlikely.

A triumph for absurdity

In December 2008 Tasmanian Times reported on the Race to the Bottom for MIS companies. “(They) are continuing their inexorable journeys towards a catastrophe. Not all will survive intact……..Great Southern Plantations (GSL) seems to be at the head of the peloton at this stage…….Joining GSL in the race to the bottom has been Timbercorp”.

Gunns too are selling assets to pay off debt.

What’s the current situation?

MIS fallout

Discussion of MIS companies like Timbercorp (which hasn’t invested in Tasmania) as well as the local exploiters like Great Southern, Gunns and Forest Enterprises assumes continued MIS investment in plantation trees.

But MIS investment has shrunk over the last 6 months and the next few months doesn’t look promising. A lot of MIS Companies have stopped spruiking. Some are in serious trouble.

Hobart airport sale

 

The Airport sale continues to attract sporadic comments. After reviewing the deal, there doesn’t appear to have been any gross breaches as has been alleged by some.  Just a series of events that were beyond the usual experiences of most of the participants. The Govt did ok, by default rather than good management although they’ve been terribly evasive.  Lennon’s legacy. Some of the proceeds may eventually return to RBF should the airport investment disappoint and lead to an increase in the unfunded superannuation amount required to be paid by the Government. Parliament provided little scrutiny, the Libs dithered and the Greens went searching for the sensational headline. RBF probably paid way too much and have been too defensive as if trying to hide something. The paper shufflers did handsomely out of the deal.

What is interesting is it provides a good example of how privatisation works and how the Macquarie model operates. At a macro level Governments may receive a cash boost, but from an overall social viewpoint, total debt simply increases. And that is what has brought the world to its knees.

Super funds’ investing in heavily geared entities is a recent phenomenon. Fortunately the glory days for such behaviour appear to have come to an abrupt end. Trustees were under pressure to emulate their peers whose performance was boosted by forays into unlisted geared entities.

Trustees although not bound by the continuous disclosure requirements of listed Companies, nevertheless owe it to their Members to keep them informed. It is not evident that RBF has done this with unlisted investments. By their nature unlisted entities tend to be a little more secretive.

Great Southern to quit Tassie

Great Southern held their AGM on Thursday 19th February 2009 at which they announced plans to quit Tasmania. They reviewed a tough year for the company. Their woes are typical of the MIS industry. The Chairman and the Managing Director addressed the meeting. The full address can be found on the ASX website (http://www.asx.com.au/asxpdf/20090219/pdf/31g4gmvvxd9h02.pdf ) but like all such addresses is very much a sanitised view of events. An earlier draft of the address has been ‘discovered’, a draft before the usual sanitisation and omission of facts and the application of gloss by spin doctors.

A better way forward

Thirteen months away from a crucial State election, and the Messiah is yet to appear. Dominated by forestry and Tarkine issues, it is sometimes easy to forget about some of the other matters that bear upon the lives of mortals. Like dollars and cents and hospitals. So it was pleasing to see Alex tackle the neglected subject, and review the State’s Mid Year performance for the period ended 31st December 2008 ( The State Budget update: Panic or celebrate ). But there was little I could agree with, neither his description of the current situation , nor his proposed solutions.

There currently exists a sound base for the future, if only there was a greater willingness to understand the present. And also a greater willingness of the Government to reveal the options for the future. And a greater desire by those in Opposition to do more than merely oppose.

A response to Great Southern

There was disturbing unreality about Great Southern’s Mr Ikin reply (Your Say January 30^th) to my letter on land tax in general and GSL’s Temma property in particular.

Mr Ikin is still reading from an old copy of GSL’s psalm book.

GSL reported on their website in October 2008 that “extensive areas of this plantation have failed and the majority of the failed areas are yet to be replanted……..approximately 36 hectares of this area will not be replanted.”

This differs from Mr Ikin’s assertion that only 14 hectares failed and it has all been replanted.

GSL has also allowed its cattle to graze the property inflicting great damage to the seedlings already battling to survive adverse conditions.