Quintis’ receivers have asked shareholders to sign off on a plan to keep the sandalwood producer afloat.
With the support of secured creditors, McGrathNicol (the receivers) has proposed a Deed of Company Arrangement to the Voluntary Administrators that would see between $125-$175 million in new cash injected into the business to fund operations on a long-term basis.
An extra $20 million of funding has been made available immediately for ongoing operations while the receivership process is concluded.
Quintis owns large sandalwood plantations in the Katherine area.
The DOCA proposal would see Quintis’ business emerging as a private company in a very strong financial position and well placed to continue its strategy as the world’s leading marketer, producer and seller of sandalwood timber, oil and products, the receivers said.
The new plan would release Quintis from all legacy claims.
Under the proposal, Quintis’ bond holders will recapitalise and acquire control of the subsidiaries of Quintis Limited and the entirety of the group’s business and assets.
The proposal represents a favourable outcome for growers, employees and creditors as it preserves Quintis’ vertically integrated business model, the receivers said.
The proposal was submitted to the Voluntary Administrators for consideration ahead of their report to creditors and recommendation on the Companies’ future, which was released to creditors yesterday.
The second meeting of creditors has been convened to be held on June 8.
The proposal has been recommended by the Voluntary Administrator.
If approved by creditors, it is likely that the recapitalisation would be completed by the end of August 2018.
Under the proposal, growers’ investments in Quintis’ Managed Investment Schemes (“MIS”) will be wholly preserved.
There will be no change to the terms of any of the Quintis MIS. 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.
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. This outcome delivers the very best outcome for growers with no change to their original investment. By supporting the proposal, growers ensure they retain the opportunity to maximise returns from their investment in the sandalwood industry.
Quintis will continue to manage institutional and sophisticated investor (“SIO”) plantations on terms that have been put in place by the Receivers with the strong support and endorsement from these investors.
To date, all institutional investors continue to support the recapitalisation of Quintis while close to 80% of SIO growers have signed up to the new payment terms and remain supportive of a recapitalised Quintis.
The proposal means that Quintis’ 221 employees will retain their jobs.
The proposal will also see those employees who were made redundant in the early stages of the receivership have their entitlements paid in full.
The proposal will make available a pool of funds to provide a return to unsecured creditors that will be better than would be achieved in a Liquidation.