FEA Receivers give update

 4 May 2010:  Receivers and Managers of Forest Enterprises Australia Limited (FEA) (ASX Code: (FEA)) and wholly owned subsidiary FEA Carbon Pty Ltd (FEAC) and controllers of Tasmanian Plantations Pty Ltd, Deloitte partners Tim Norman and Sal Algeri, have confirmed that the Group’s business model was fundamentally reliant on annual MIS product sales to fund ongoing operations.

 “With an 80% fall in annual investment scheme product sales in June 2009, and worse expected again in 2010, the business model was simply not able to fund its existing cost base,” said Mr Norman.

“There was no Financier in place to fund grower subscriptions for the proposed 2010 Scheme and late in the process FEA’s main MIS distributor withdrew support for FEA Scheme product.

“Despite the significant efforts of the board and management team, particularly over the last 12 months, they were unable to submit a restructure plan that showed a return of the business to a viable position that was able to address the significant operating cash outflows forecast over the next few years.”

Mr Norman has dismissed criticism of the secured creditors that their actions have been inappropriate or premature. 

“Eventually one needs to face the reality that if the business model could not be restructured, funding continued cash deficits through asset sales and stretching creditor payments was not in the interest of any class of creditor, including the MIS Investors, or the FEA shareholders.”

Mr Norman confirmed that going forward the Receivers have two main priorities. Firstly, the Receivers will seek to determine the viability and funding requirements of each scheme to assist with the assessment of options for the forestry and plantation assets.

Secondly, the Receivers will commence a sale process for the Bell Bay Mill which, on a stand-alone basis, is a valuable asset.

FACTS ABOUT FEA:

·         The FEA business is based in Launceston, Tasmania whilst its Forestry headquarters are based in Lismore, NSW. 

·         FEA owns and operates one of Australia's largest sawmilling and timber processing operations located in Bell Bay Tasmania. It is amongst the few sawmills in Australia that is capable of processing both hardwood and softwood.

·         FEA Plantations Limited has released 17 managed forestry projects. It has established over 72,000 hectares of plantations in Tasmania, northern NSW, south eastern Queensland and in the Northern Territory since 1993.

FREQUENTLY ASKED QUESTIONS

1.      Who is Deloitte?

Deloitte Touche Tohmatsu is a professional services firm offering corporate re-organisation services, including in corporate and financial strategy, business management, operational profit improvement, restructuring, taxation, corporate recovery and restructuring, forensic and insolvency services. For more information about Deloitte, please refer to our website.

2.      Who is controlling FEA, FEAC & TP?

Deloitte Partners Tim Norman and Sal Algeri have been appointed Receivers and Managers over FEA, FEAC and as Agents for the Mortgagee in Possession over Tasmanian Plantation Pty Ltd (TP) and have taken possession of their respective assets and are in control of their operations.

3.      What FEA Group companies are not in Receivership?

FEA Plantation Ltd (“FEAP”) which is the responsible entity for the 17 Managed Investment Schemes has not been placed into receivership but is in voluntary administration. 

4.      If I am grower/investor, who do I contact?

All investors in the 17 Managed Investment Schemes should direct all their enquiries to the Voluntary Administrators, BRI Ferrier.  Please refer to the BRI Ferrier website for further details for FEAP: http://briferrier.com.au/pages/welcome.php or contact fea@briferriernsw.com.au.

5.      If I have a grower loan, who do I contact?

If you have a grower loan with FEA your obligations to repay your loan have not altered. Please contact the Receivers on email (FEA_borrowers@deloitte.com.au) with any queries and register to receive further details as they come to hand.

6.      Where do I find out more about the role of Voluntary Administrators, Receivers and Managers and Agents for the Mortgagee in Possession?

For further information about the various types of insolvency appointments, please refer to the ASIC information website.

7.      Where do I register my enquiry?

Email enquiries should be directed to: