Timbercorp

Timbercorp was an Australian agribusiness and managed investment scheme group involved in forestry, horticulture and investment products. Its corporate origins date to 1992, when Timbercorp Eucalypts Limited was incorporated. The company later adopted the Timbercorp Limited name and became publicly listed on the Australian Stock Exchange in 1996. From the late 1990s through the 2000s, Timbercorp developed and operated managed investment schemes designed to channel superannuation and other investment capital into agricultural assets. The group’s activities extended well beyond conventional timber growing. It operated more than 40 businesses and schemes covering silviculture, pulpwood plantations, and horticultural assets including avocado, olive, almond, citrus and mango orchards. By the middle of the 2000s, Timbercorp was one of Australia’s prominent managed investment scheme operators. In 2004, the company reported a 50 percent increase in profits, while its share price rose by 48 percent. Its managed agricultural holdings reportedly covered approximately 15,000 hectares of orchards by early 2007. Timbercorp’s business model was exposed to changes in taxation policy, agricultural performance, funding conditions and investor demand. On 8 February 2007, its shares fell 28 percent after the Australian Government abolished tax relief for non-forestry managed investment schemes. The policy change weakened the attractiveness of some of the investment products on which the sector depended and increased pressure on Timbercorp’s business model. The Timbercorp group and its associated companies were placed into public administration on 23 April 2009. The failure occurred during a difficult period for Australian managed investment schemes and preceded the collapse of another major operator, Great Southern Group, by approximately one month. Timbercorp’s assets and affairs were thereafter managed by administrators and the group entered a winding-up process. The collapse prompted scrutiny of the structure, disclosure, financing and regulation of managed investment schemes in Australia. The Australian Government subsequently reviewed the sector, with changes to the operation of managed investment schemes announced in 2011. Timbercorp’s case also remained part of public policy debates. In 2014, opponents of proposed reforms that would have relaxed restrictions on investment advice referred to Timbercorp as an example of why stronger safeguards were necessary. Timbercorp is therefore principally remembered not as an active consumer brand, but as a failed Australian listed agribusiness and investment-scheme group whose collapse contributed to regulatory reassessment of the sector.

Timbercorp’s corporate history began in 1992 with the incorporation of Timbercorp Eucalypts Limited. The company was established in the context of Australia’s expanding use of managed investment structures to attract private and institutional capital to forestry and agriculture. It later changed its name to Timbercorp Limited and secured a listing on the Australian Stock Exchange in 1996. During the late 1990s and 2000s, Timbercorp developed a broad portfolio of agricultural businesses and managed investment schemes. The group’s activities included silviculture and pulpwood timber, as well as horticultural projects involving avocados, olives, almonds, citrus and mangoes. Its operating model used investment products to finance the establishment and management of agricultural assets, with investors receiving interests in projects whose returns depended on factors such as crop performance, asset values, tax treatment and eventual production or sale outcomes. The group ultimately operated more than 40 businesses and schemes. Timbercorp was among the leading Australian managed investment scheme companies during the 2004–2007 period. In 2004, it reported a 50 percent increase in profits, and its share price rose 48 percent. By February 2007, the group was managing about 15,000 hectares of olive, almond, citrus, mango and avocado orchards, in addition to its forestry-related activities. The company’s expansion took place against a policy environment in which tax concessions helped make some managed investment schemes attractive to investors. That environment changed in February 2007 when the Australian Government abolished tax relief for non-forestry managed investment schemes. Timbercorp’s shares fell 28 percent on 8 February 2007 in response to the change. The event highlighted the dependence of parts of the sector on tax settings and placed additional strain on the group’s investment model. Timbercorp and its associated companies were placed into public administration on 23 April 2009. The group’s failure came during a wider period of stress in Australia’s managed investment scheme sector and occurred about one month before the collapse of Great Southern Group, another prominent operator. Administrators began managing the group’s affairs and assets, and Timbercorp entered a process of winding up. The two failures led the Australian Government to examine how managed investment schemes were structured, operated and regulated. Changes arising from that review were announced in 2011. The Timbercorp case continued to be used in later policy arguments: when reforms to relax restrictions on investment advice were considered in 2014, opponents cited the collapse as a reason to retain stronger controls. Timbercorp’s historical significance consequently lies in both its former role as a large Australian agricultural investment operator and its contribution to debate over the risks and governance of managed investment schemes.

• 2011

  Managed investment scheme reforms announced

  [1]Timbercorpen.wikipedia.org

  Following the failures of Timbercorp and Great Southern, the Australian Government announced changes to the operation of managed investment schemes.

• 2009

  Administration begins

  [1]Timbercorpen.wikipedia.org

  Timbercorp’s consortium of companies entered public administration on 23 April 2009 and began to be wound up.

• 2007

  Tax-policy change affects Timbercorp

  [1]Timbercorpen.wikipedia.org

  The abolition of tax relief for non-forestry managed investment schemes was followed by a 28 percent fall in Timbercorp’s shares.

• 2004

  Profit growth reported

  [1]Timbercorpen.wikipedia.org

  Timbercorp reported a 50 percent increase in profits, while its share price rose by 48 percent.

• 1996

  Timbercorp Limited listed

  [1]Timbercorpen.wikipedia.org

  The company adopted the Timbercorp Limited name and was listed on the Australian Stock Exchange.

• 1992

  Timbercorp Eucalypts Limited incorporated

  [1]Timbercorpen.wikipedia.org

  The company that became Timbercorp was incorporated as Timbercorp Eucalypts Limited.

Timbercorp positioned itself as an Australian agribusiness and managed investment scheme operator, connecting investor and superannuation capital with forestry and horticultural projects.

• Forestry investment

  Forestry managed investment schemes

  Timbercorp developed forestry and silviculture investment projects that connected investors with the establishment and management of timber assets. Pulpwood timber was among the group’s identified activities. These schemes formed part of the company’s original and most recognizable investment focus, although the group later expanded substantially into horticultural agriculture.

• Agricultural investment

  Horticultural managed investment schemes

  The group operated investment schemes linked to orchards and other agricultural projects, including avocado, olive, almond, citrus and mango production. By early 2007, Timbercorp reportedly managed approximately 15,000 hectares of these orchard assets. The schemes depended on agricultural performance, financing conditions, investor participation and applicable tax treatment.

• 2009

  Entry into public administrationOther

  Background

  After operating a large portfolio of forestry and agricultural investment businesses, Timbercorp and its associated companies faced conditions that led to a formal insolvency process.

  Action taken

  The consortium of companies was placed into public administration on 23 April 2009.

  Aftermath

  Administrators took control of the group’s affairs and assets, and Timbercorp was subsequently wound up. The collapse helped trigger a federal review of managed investment schemes.

  Source

• 2007

  Response to the removal of non-forestry tax reliefStrategy

  Background

  Timbercorp operated in a sector where tax treatment was an important factor in the attractiveness of some managed investment schemes. The Australian Government abolished tax relief for non-forestry schemes in February 2007.

  Action taken

  The policy change altered the commercial environment for Timbercorp’s horticultural investment products and was followed by a sharp fall in the company’s share price.

  Aftermath

  Timbercorp shares fell 28 percent on 8 February 2007. The change contributed to wider concern about the resilience of managed investment scheme operators.

  Source

1. 1Timbercorpen.wikipedia.org