TIMBERCORP'S beleaguered grower investors have been told that the best option for receiving a return on their investment is to terminate the forestry schemes and sell their trees.
In a letter sent to investors yesterday by the company's administrator, KordaMentha, the growers were told that none of the potential responsible entities interested in taking over the forestry schemes from Timbercorp's own manager were prepared to put their own capital into the schemes.
KordaMentha has estimated that Timbercorp Securities Ltd (TSL), the current responsible entity, is "hopelessly insolvent" and has no cash available to ensure that the two different type of forestry schemes - those between 1997 and 2004, and 2004 to last year - can be completed.
TSL would need to find $170 million to cover the remaining periods of the 11 schemes but has no chance of doing so.
KordaMentha has received a number of approaches from managers prepared to replace TSL, but it has said the shortfall would have to be made up by the investor growers.
The administrator has taken legal advice which indicates that the documents governing the management of the schemes do not provide any power for existing fees to be increased or new ones to be imposed to cover the shortfall.
Instead, KordaMentha believes the best option for many grower investors would be for the schemes to be terminated so that they could be sold to one or more of the many local and international potential purchasers who have lodged interest in buying the land and trees.
Such a sale would mean that the money raised could be treated as "harvest proceeds" and distributed to growers.
That move would require court approval and KordaMentha says it would allow all investors to make their views known. The administrator accepts that "not all growers may support this approach".
Details of the letter emerged as the new Minister for Financial Services and Corporate Law, Chris Bowen, agreed to meet a committee of Timbercorp investors, who are trying to preserve their holdings in agricultural projects run by the collapsed managed investment scheme operator.
Timbercorp's investors committee is working to find alternative responsible entities to replace Timbercorp Securities.
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