Great Southern investors may miss out

Great Southern investors are concerned the banks will seize their assets after receivers were appointed to the agribusiness manager’s responsible entity company.

Two days after Ferrier Hodgson were appointed as administrators to 35 Great Southern companies, the ANZ Bank appointed McGrath Nicol as receivers of both the holding company and Great Southern Managers, the responsible entity.

Consultum adviser Neil White, representing a number of investors at yesterday’s creditors meeting of Great Southern in Melbourne, asked if the growers “would be disenfranchised by more powerful creditors”.

Ferrier Hodgson partner Martin Jones said each scheme needed to be assessed as to whether it was viable and then decisions would have to be made.

“We need to look at each individual scheme to see which are viable and what returns investors will receive,” he said.

The investors in the schemes at this stage are not creditors of Great Southern.

Jones said they could become creditors if the responsible entity does not deliver an agreed undertaking, in which case the growers would have a claim on the company.

Many investors at the meeting saw a conflict of interest having Ferrier Hodgson acting as administrators for both the holding company and the responsible entity.

One investor argued the responsible entity was there to act in the interests of the investors and should answer only to them.

They also expressed concern that McGrath Nicol would act in the interests of the banks first and investors second.

White asked about what would happen to the crop harvests and where the proceeds would go.

Jones admitted their role was to administer the companies and on some issues they would have to refer to the receiver.

“If we require more funds to run the schemes, we will have to ask the receivers to supply those funds,” he said.

“If there are issues where a definition of what should be done needs clarifying, we will have to go to court and seek a judgement.”

Jones said the legislation concerning the role of administrators and receivers was structured to deal with many situations.

“However, [the Australian Securities and Investments Commission] will also have a role to play in some situations,” he said.

ASIC could also become involved in Great Southern’s move earlier this year to make some investors in cattle and forestry schemes swap their units for shares in the company.

Cattle scheme investors agreed to the swap while the forestry schemes held out.

Jones said Ferrier Hodgson was investigating the roles played by all parties in the proposal and if there were irregularities, they would be reported to ASIC.

One investor said the share swap proposal documents in January said the company was financially secure.

“The cattle projects are an issue which needs to be looked at,” Jones said.

For these investors, they are not considered a creditor of Great Southern, but if the company is liquidated, they will be entitled to a payout on the remaining assets after the secured and unsecured creditors have been paid.