Black Tree Management is a specialist forestry manager established in 2005 to provide forestry and agriculture management services in Australia. Since the collapse of various forestry MIS businesses in 2009 it has focused on finding solutions to stranded MIS investors – investors for whom their responsible entities and the promoters of their schemes had become insolvent. Black Tree has been approached by and is working closely with Grower groups from a number of failed MIS operators to provide equitable solutions to some complex problems.
FEA Update of 6 February 2012
- BRI Ferriers (Deed Administrator) is in court trying to overturn the termination by the Receiver (Deloittes) of the FEA internal leases, and until that is determined by court, there is too much uncertainty as to the status of the leases to vote on the change of Manager from FEAP (in receivership) to Black Tree.
- Of the meetings called to vote on the change of Manager to Black Tree, the meetings for 2003 onwards have lapsed. The only possible prospect in future for investors in these projects is a payment from the sale of the land and trees by either BRI or Deloitte. As to whether this will occur, will be determined by the outcome of the present legal proceedings in the Victorian Supreme Court. Black Tree had no say in the decision to let these meetings lapse, and is not involved in any way in either court proceeding or the likely future sale of the Growers assets. Black Trees’ view is that the prospect of any return, particularly a meaningful return, to Growers is remote. This is particularly the case as the very substantial fees and legal costs charged by these two groups will be paid before any distribution to Growers.
- If and when the court decides to reinstate all or some of the leases, a Growers meeting for the 1999 to 2002 projects inclusive will be held at which the Growers will be able to vote as per the NoM and the agenda.
- Once there is a date for the Growers meeting (to hold a vote), which will be notified to Growers via a Notice of Adjourned Meeting, then the electronic voting service provided by Link will be re-opened to enable Growers to vote electronically.
- In the interim only paper proxies can be utilised and they will need to be sent , as explained on page 3 (1(h)) of the notice of meeting that any new proxy forms should be sent to FEAGG via Clarendon Lawyers at least 72 hours before the meeting either:
By post: FEA Growers Group Inc
C/- Clarendon Lawyers
GPO 4930
Melbourne VIC 3000
By facsimile: +61 3 8681 4499
By email: send a PDF: feagg@clarendonlawyers.com.au
- FEAGG will hold them on behalf of the Growers (The proxies lodged are valid for any subsequent adjourned meetings. Further, it will be expressly stated in the new NOAM that proxy forms already lodged for Resolutions 1 to 5 continue to be valid unless the grower decides to amend it with a new proxy form.)
FEA Update of 19 December 2011
We have received the following from the lawyers for the FEAGG.
On 4 October 2011 the meetings of the 1999 to 2002 Projects were adjourned to a date to be notified to the Growers but no later than 24 January 2012. The meetings were adjourned because of the uncertainty in relation to the status of the leases. On 30 September 2011 the Receivers of FEA commenced legal proceedings in the Supreme Court of Victoria seeking amongst other things declarations that the leases are at an end. In turn, we expect the Deed Administrators to argue that either the leases remain in place or, if they are terminated, should be re-instated.
The Deed Administrators have said that if the resolutions were passed to appoint Black Tree, they would seek court approval before signing the management agreement with Black Tree. However they consider the application would be pointless and likely to fail without certainty that the leases remain intact. In light of this, they must wait until after the end of the current Supreme Court proceedings.
In the High Court appeal on the offset of rental payments, all parties have filed their material and are waiting for the Court to decide whether to grant leave to appeal.
We understand that the administrator received an extension of their time to file material until January so at this stage neither ourselves nor the FEAGG have any information yet about maintenance of the trees.
FEA Update of 28 September 2011
We believe that the Growers meeting on October 4th will, finally, be going to a vote on the Black Tree proposals. Black Tree would also like to draw to your attention to the fact that the Receivers (Deloittes) have recently terminated the leases on which the various FEA Projects are operated. Growers have already been advised by the Deed Administrators (BRI) in a report to creditors and Growers on 16 September 2011. The Deed Administrators are taking court action to reinstate the leases. We refer you to this report for more information about this development. In addition the Deed Administrator has condemned the action of the Receiver in issuing invoices to Growers – use this
link for the letter they recently wrote to them. Please feel free to contact us on FEA@blacktreeltd.com.au if you have any questions on these matters that may not have been satisfactorily answered by BRI or Deloittes.
We will update Growers as soon as the meeting is held or if we hear anything of relevance in the interim.
FEA Update of 10 September 2011
The Growers meetings held in Sydney on August 23rd adjourned the vote to a date to be fixed. We have now been advised that meetings for the 1999, 2000, 2001 and 2002 schemes will now be held in Sydney on Tuesday October 4th at the same place and time of day. Unfortunately we have yet to receive details for a meeting date for the later schemes. The future of these particular schemes now looks very much in doubt due to the court case decision in August. Note however, that BRI may appeal this decision.
All Grower votes previously cast remain valid and the Link voting system is open for any Grower in 1999, 2000, 2001 and 2002 who wish to use it. Please note that there is now an extra Resolution (# 6) to vote on by which Growers will in effect indemnify the FEAGG and the Chair of the meeting against any legal action arising from their efforts to hold a meeting and take a vote. We fully support this action. Voting on Resolution 6 is now available on Link Market Services website. You can contact us to receive instructions on how to vote on this resolution by emailing FEA@blacktreeltd.com.au.
We have received no further information since last month but we understand that BRI have still not received a definitive offer under any alternative proposals, meaning that the Black Tree proposal remains the only one on the table.
There have been no updates issued by BRI since 22nd August but please refer to the FEAGG web site where a detailed update on the legal situation has been posted. We can now only hope that no more interference is generated that will again stop FEA Growers being given the opportunity to make their votes count.
FEA update of 26 August 2011
Growers meetings for all ten of the FEA projects were held in Sydney last Tuesday, August 23rd. The minutes have been agreed by the Chair and can be seen by clicking here. Please see here for a recent growers circular sent out by BRI. In summary the Chairman proposed to adjourn the meeting to a date yet to decided but it will be notified to the Growers and will be a maximum of 6 weeks. This continues to be a source of serious frustration for us.
In addition BRI confirmed that they have still not received a definitive offer under the Deutsche Bank proposal and that their draft proposal was still unacceptable to the Banks who hold security over the land. In other words no progress has been made.
The reason given by the Chair for this sixth adjournment relate to some ASIC concerns with BRI’s on-going role as the Responsible Entity which have still not been resolved. In addition, you may recall that prior to the previous meeting serious legal threats were made by the Receiver against the individual members of the FEAGG and the Chair to force an adjournment – this was not original as BRI very effectively did exactly that some months ago to stall a vote. Nonetheless, it is very serious and perhaps illustrates where their priorities lie. In any event the FEAGG have decided to call for a revised Notice of Meeting so that an additional resolution can be added by which Growers will in effect indemnify FEAGG and the Chair against any legal action arising from their efforts to hold a meeting and take a vote. Please note, this is not a new meeting but still a continuation of the adjourned meeting and all votes cast to date will remain valid. And, as has always been the case, Growers can still change any votes cast already.
We have been advised that a new Notice of Meeting for the 1999 project will be ready early next week. The situation with the later projects may be resolved later in the week. However in light of the loss in Court a few weeks ago on the set-off issue allied with the previous actions of both the Deed Administrator and the Receiver we at Black Tree are not optimistic that a favourable resolution for Growers, particularly in the later schemes, will be forthcoming. ie it appears increasingly likely the land will be sold “in one line” (as BRI put it) and the banks will distribute to Growers what is left after they are repaid and once the Deed Administrator and Receiver are paid their fees – If this scenario eventuates it will not leave much, if anything, for Growers, especially those who invested from 2003 onwards.
FEA : update of 1 August 2011
At the Growers’ meetings held on July 26 in Sydney once again no vote on the Black Tree proposal were held and further adjournments were made to August 23 at the same times and place. Black Tree will provide some more information as soon as possible explaining what happened and also outlining some of the issues and likely outcomes. At this stage we believe that all votes cast to date remain valid and we are now arranging for the voting process at Link to be re-opened as soon as possible so that those Growers who haven’t voted can do so and those that have can change their votes if they wish. Black Tree remains committed to helping Growers get their trees to harvest in the most efficient manner possible despite the frustration of these constant delays.
The BRI report to Growers dated 22nd July states that RFM has withdrawn its proposal while the banks have advised that the Forbearance Agreement is at an end. RFM has since submitted an amended proposal that BRI summarise by saying “It is the view of the Deed Administrators that the revised offer significantly undervalues the interests of the Growers”.
One of the reasons the meetings were yet again deferred was that BRI want to pursue a newly received proposal, headed by an investment bank and supported by two off-shore hedge funds. As with the Black Tree proposal, the 1995 to 2002 schemes are to remain economically unchanged (with BRI noting that “1995 to 2002 Schemes continue as contributory schemes”) but with new leases to be put in place to replace current leases and Growers to receive the benefit of the harvest. BRI notes that “they could be harvested over 4 to 5 years with minimal contributions required from Growers” – however Black Tree points out that under this new proposal any Grower contributions will need to accommodate land rental as BRI further note that: “....the investment bank plans to charge market rent for the 1995 to 2002 schemes. No consideration has been given as to the 28% of growers in the schemes who have prepaid their leases.”
As with the RFM saga, the meetings have been deferred despite BRI noting that: “The investment bank has to undertake due diligence. This is time consuming and could affect final structure” – this is exactly what happened with the RFM proposal which ended up being withdrawn as it offered far too little to Growers. As yet no further details have been released on this proposal from the investment bank - hedge fund syndicate.
Great Southern - Update 08 June 2011
We were advised by our lawyers earlier today as follows. We will provide further details as soon as we are able.
The Honourable Justice Judd delivered judgment this morning in the Supreme Court of Victoria.
Primary RE Ltd (and therefore the Growers) were unsuccessful on each of the two major claims. His Honour held that the termination of the leases was valid and refused to grant relief against forfeiture.
Primary RE Ltd and its lawyers are analysing the judgment in detail and considering whether to lodge an appeal. It is likely the parties will appear again later this week or early the next for orders.
Primary RE Ltd is still to argue that it and Growers have an equitable right to harvest the trees.
The background to this court case is that in 2010, and in conjunction with the Save My Trees growers group Black Tree sponsored a proposal together with the Primary Securities group to revive the Great Southern 2007 and 2008 forestry projects. Meetings for Growers were held on 22 December 2010. The 2007 meeting approved the necessary changes to the constitution and the appointment of Primary RE Pty Ltd as the new responsible entity for the project but the proposal for the 2008 project was withdrawn.
Funds were raised from Growers and in its capacity as RE, Primary appeared in court in late March 2011 to determine their claim for reinstatement of the leases on behalf of the 2007 Growers and for the Receivers’ challenge of caveats (against the sale) lodged by Primary. Further information about the court case can be found on Primary RE's website.
Rewards
Working with the Rewards Grower Advocacy Group (RGAG) and the Administrators, Ferrier Hodgson, late in 2010 a Deed of Company Arrangement (DOCA) proposal was developed for the Rewards Group under which the Rewards forestry projects - teak and sandalwood - would be reconstructed in tandem with the horticultural assets and Black Tree would take over management responsibilities for the timber based projects.
However, the DOCA has not completed because the Receivers of the group did not accept the funds offered to purchase the various group assets. Instead, they have terminated the leases on the timber properties and are now selling them under an arrangement outside the DOCA. In June expressions of interest were due and Black Tree has lodged an indicative offer for portions of the land growing timber. If the land is sold to parties outside of Black Tree then Reward timber investors will have no claim to any of their trees and will have lost their entire investment. Black Tree continues to work with property investors interested in purchasing the timber properties and leasing them back to Growers but, at this stage, such an outcome is seen as unlikely.