18 May 2009
Australia largest forestry investment scheme has been put into administration owing more than 40,000 investors up to $4 billion.Great Southern owes up to four times as much as Timbercorp, the group's biggest rival, which collapsed in late April, The Australian reported on Monday.
Up to 43,000 people have invested in the stock exchange-listed group's managed investment schemes, focused on wood pulp, cattle and wine grape production.
The collapse of Great Southern, which was structured to take advantage of agriculture tax breaks for investors, could lead to as much as 1.75 million hectares of agricultural and forestry land flooding the market, The Australian reports.
Great Southern offered investment plans in agricultural projects and manages 240,000 hectares of forest.
But with the market turmoil heightening uncertainty around managed investment schemes, it has struggled to generate short-term cash flow.
Its problems intensified with the recent collapse of rival, Timbercorp, says ABC News. Despite trying to convince its banks that it had a plan to generate funds through asset sales, they have refused to lend it any more money.
Administrators Ferrier Hodgson will hold the first creditors meeting next week.
The Northern Territory Environment Centre's Stuart Blanch says as well as Great Southern's financial problems, there are concern the company has grown a potential weed on the Tiwi Islands. A Senate Environment Committee will hold an inquiry into forestry and mining on the Tiwi Islands in Darwin and Nguiu this week.
It is investigating environmental compliance, approval processes and economic benefits to the Tiwi people.
Sources: ABC News and The Australian
