A critical ruling by the corporate regulator has forced Quintis investors to adjourn a meeting that was called to appoint a new responsible entity for their 2002 sandalwood project.
A critical ruling by the corporate regulator has forced Quintis investors to adjourn a meeting that was called to appoint a new responsible entity (RE) for their 2002 sandalwood project.
About 20 investors attended the meeting at Dalkeith Hall this morning, but were told at the outset that the Australian Securities and Investments Commission had raised concerns about the validity of the second resolution.
That resolution called for the election of Sydney-based Huntley Management as the RE for the 2002 project.
It was predicated on investors agreeing to replace Quintis subsidiary Sandalwood Properties.
As Business News reported earlier today, Asic has advised that Huntley is currently not authorised to be the RE for the scheme.
Sandalwood Growers Cooperative chairman Teague Czislowski said he had put forward an alternative view to Asic, but decided it was prudent to adjourn the meeting to February 12.
That will allow Huntley to progress its application to Asic to gain relevant authorisation.
McGrathNicol’s Shaun Fraser, who is one of three partners appointed last week as receivers to Quintis, told the meeting his preference was for Quintis subsidiaries to continue as both RE and manager of the sandalwood projects.
McGrathNicol partner Shaun Fraser
He said any vote in favour of an entity that was not appropriately qualified to be RE would create new risks.
“There is clearly a risk the scheme will have to move quickly to a winding up, which is inconsistent with what the growers (investors) have been seeking,” Mr Fraser said.
He also asked whether a new RE such as Huntley had the capacity to fund its activities, or whether this would add more costs for growers.
Mr Fraser said Quintis’ secured creditors had agreed to fund the group’s operations during the receivership and had a positive long-term view.
McGrathNicol was also about to commence a public campaign to sell or reacapitalise Quintis, which he expected would take five to six months.
“That will leave Quintis as a solvent entity with sufficient capital to enable it to maintain the growers’ interest in the trees," he told the meeting.
“We think this process is very different to what you may have seen in Timbercorp or Great Southern.”
This was a reference to earlier MIS projects, where the plantation schemes were would up and the underlying land sold.
Investor Graeme Scott, who chaired today’s meeting, said Asic’s advice on Huntley was “only a technical matter and will be resolved in the next several days anyway”.
He claimed the way growers had been treated was an absolute disgrace, and said he had no confidence whatsoever in the company’s actions.
Quintis founder Frank Wilson told the meeting that regulatory compliance was not the key issue.
“This isn’t about compliance, it’s about the ability to grow and sell sandalwood.”
Mr Wilson said the low price achieved by Quintis when it sold sandalwood harvested from the 2002 scheme highlighted its poor performance.
Meanwhile, Mr Czislowski has responded to a push by Fremantle-based Primary Securities to be selected as the replacement RE for Quintis schemes.
“The co-op evaluated the proposal of Primary Securities and has rejected it outright, as they were unable to meet the requirements of the co-op,” Mr Czislowski said in a letter sent to growers today.
“Primary Securities themselves acknowledge that they currently lack the funding or the support of growers to become RE of the projects.”
Mr Czislowski said he and the co-op were not aware of Primary or its managing director Rob Garton Smith having any relevant experience in the sandalwood industry.
He also rebutted Mr Garton Smith's call for growers to avoid the co-op.
"Despite the inference by Mr Garton Smith there is some non arms-length relationship or conflict or cross ownership between the (co-op) and Huntleys, this is simply not the case.
"The (co-op) simply believes that Huntley is a worthy replacement RE and can provide all the administration services that (Primary Securities) can, and overall is a better candidate to be the RE of the Quintis 2002 scheme, and possibly other Quintis schemes."
