The creditors of sandalwood company Quintis, led by US group Blackrock, have proposed injecting $175 million to take control of the business, in a deal that is likely to leave shareholders with no return.
The creditors of sandalwood company Quintis, led by US group Blackrock, have proposed injecting $175 million to take control of the business, in a deal that is likely to leave shareholders with no return.
Under the proposed deed of company arrangement (DOCA), the Quintis business would emerge as a private company after receiving between $125 million and $175 million to fund its operations on a long-term.
In addition, the creditors have immediately injected $20 million to meet its ongoing needs.
The proposal means that Quintis’s 221 employees would retain their jobs, a statement from receivers McGrathNicol said.
The ASX-listed company Quintis Limited will not form part of the restructured group, meaning shareholders are likely to receive nothing.
“There may be an opportunity for shareholders to realise value in the event the administrator is able to sell the corporate shell,” the statement said.
“The DOCA will not impact the ongoing shareholder class actions.”
Under the proposal, growers’ investments in Quintis’s managed investment schemes would be preserved.
“There will be no change to the terms of any of the Quintis MIS,” McGrathNicol said.
“Growers will retain the right to defer all lease and management costs throughout the life of their projects and their trees will continue to be maintained by Quintis’ experienced team of sandalwood forestry experts.
“The Quintis responsible entity will be well funded and therefore the vehicle best placed to protect grower interests.”
The receivers continued to question the credibility of the Sandalwood Growers' Cooperative, which has been seeking to take control of some of the projects.
“Others seeking to take over the management of growers MIS investments do not have the assets, infrastructure, expertise or funding to properly carry out that role,” McGrathNicol said.
The proposal will also make available a pool of funds to provide a return to unsecured creditors.
The proposal was submitted to the administrators for consideration ahead of their report to creditors and recommendation on the companies’ future.
The DOCA will be voted on at a second creditors meeting, which is planned for June 8.
McGrathNicol said the proposal has been recommended by administrator KordaMentha and if successful is likely to be implemented by August.
The proposed Quintis deal has been announced two weeks after WA's second sandalwood producer Santanol was put up or sale.
Santanol is jointly owned by private equity group KKR and a group of local investors, including Tony Jack and Bob Bunning.
The founders and KKR had a falling out, which led to Supreme Cout action being commenced.
The sale of the business is part of a negotiated settlement of the dispute.
