The receiver of Forest Enterprises Australia Limited (FEA) has dismissed creditors' claims its decision to explore the sale of assets and determine the viability and fund requirements of schemes within the collapsed agribusiness firm is premature.
In a receiver update from Deloitte partners Tim Norman and Sal Algeri, the receivers confirmed FEA's business model was fundamentally reliant on annual managed investment scheme (MIS) product sales to fund ongoing operations.
"With an 80 per cent fall in annual investment scheme product sales in June 2009, and worse expected again in 2010, the business model was simply not able to fund its existing cost base," Norman said.
"There was no financier in place to fund grower subscriptions for the proposed 2010 scheme and late in the process FEA's main MIS distributor withdrew support for FEA scheme products."
He said despite FEA board and management efforts in the last 12 months, the company was unable to submit a successful restructure plan.
Norman has dismissed criticism of the secured creditors, who claim their actions are inappropriate or premature.
"Eventually, one needs to face the reality that if the business model could not be restructured, funding continued cash deficits through asset sales and stretching creditor payments was not in the interest of any class of creditor, including the MIS investors or the FEA shareholders," he said.
Norman said the receivers now have two main priorities, the first of which is to determine the viability and funding requirements of each scheme to assist with the assessment of options for the forestry and plantation assets.
"Secondly, the receivers will commence a sale process for the Bell Bay Mill which, on a standalone basis, is a valuable asset," he said.
