Sunday 25 October 2009

Timber! Fizz!

I haven't received any notification as yet from the Timbercorp liquidator KordaMentha regarding the sale of the Timber assets to Australian Bluegum Plantations on 30 Sep for approx. $345m. From the KordaMentha press release it appears that about $198m of the sale proceeds (due to settle on 2 Nov) will be available to the woodlot investors. As Timbercorp's forestry assets included 92,000 hectares of eucalyptus plantations, and each woodlot represented 1 hectare of forest, I estimate around $2,150 is available for distribution per woodlot. However, the earlier woodlots (such as mine) should receive a higher proportion of the sale proceeds as the standing timber was more mature (due for harvest in 2011), and the later woodlots had many more years of maintenance payments due before they would reach maturity. It will be interesting to see what distribution formula (and costs) are used to calculate the final payout figures. Earlier correspondence from KordaMentha had indicated that growers who hadn't paid the last annual maintenance and rent invoice would not be entitled to proceeds from sale of forestry assets, so that may boost the amount paid to the paid-up investors.

I've already written off my initial $11,500 investment in three Timbercorp woodlots, so any sale proceeds will be a pleasant surprise. The $200 contribution towards legal costs I paid to Clarendon Lawyers on 24/8 is probably money down the drain. And I think the annual timber insurance premium I recently paid was non-refundable.

As the initial investment and annual fees were tax deductible, I expect any pay-out will be taxable income. Due to the recent slashing of the amount that can be salary sacrificed into superannuation, my current marginal tax rate is probably the same, or higher, than when I made my investment into Timbercorp. So, no net income tax saving, and probably a negative ROI on the amount invested!

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I sold my main tranche of Coca-Cola Hellenic Bottling company shares several years ago, but somehow wound up with an odd lot of 60 shares (probably from a dividend reinvestment plan allocation). CHB has now been removed from the ASX, and I just sent in the paperwork to have my remaining CHB shares pooled and sold-off on the Athens stock exchange in November. The brokerage fee (0.55%) is good value, but unfortunately the market price could be depressed by CHB purchasing their own shares during the share sale period. Apparently CHB can buy up to 20% of the recent average daily volume each day, and although the maximum price is regulated (no more than highest normal market trades in CHB) there is no minimum stipulated. There is also a special recapitalisation dividend of around $3 per share that I might be paid (depending on timing of the share sale and the recapitalisation being finalised), although I expect the CHB share price would drop by a similar amount as soon as they trade ex-entitlement. I'll probably end up being sent a cheque for around A$1,200.

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