Elders to sell forestry share
TROUBLED forestry company Forest Enterprise Australia (FEA) received another blow on Friday when agribusiness giant Elders said it would sell its large shareholding in the business.
Tasmanian-based FEA, which has about 29,000 hectares under plantation in the Northern Rivers, voluntarily suspended its shares last month as it struggled to reduce its debt of $216 million.
The company had plans to build a processing plant near Kyogle that would have employed up to 200 people.
Elders’ chief executive Malcolm Jackman said the company would sell its 13.9 per cent stake in FEA once the suspension was lifted. It has already written down the value of the stake.
Following the announcement Elders chief operating officer for forests, Vince Erasmus, who has sat on the FEA board since 2007, resigned as a FEA director.
FEA, which has asked for two further suspensions to the trade since it first went to the authorities last month, told the market on Friday it was searching for new ways to reduce its debt levels after the Tasmanian government rejected a loan request.
“As previously disclosed, two financial covenants have been breached and FEA has provided a Certificate of Default to its financiers. The breach continues to subsist,” the statement said.
“Discussions with our financiers continue as we progress asset sales and discussions with potential equity investors, both of which understandably require time and working capital.”
FEA chief executive Andrew White said the company had held discussions with local and global players.
Elders’ review of its forestry assets, including is $34 million holding in FEA, follows the collapse of Timbercorp and Great Southern last year.
FEA shares last traded at 4.5 cents. The current suspension expires on April 19.