Willmott Forests Premium Forestry Blend Project 2009

Willmott Forests Premium Forestry Blend  2009
Cash Rebate	8.25%
Closing Date	CLOSED
Minimum Investment	$5,000 (ex GST)
Term of Project	16 years
Research		AAG
		Adviser Edge
ATO Product Ruling	2008/60 2008/60A

Executive Summary

The Willmott Forests Premium Forestry Blend Project is an opportunity to invest in three timber species to deliver three distinct sources of income by becoming a Grower in the Willmott Forests Premium Forestry Blend Project – 2009 Product Disclosure Statement (ARSN: 131 549 589).

The Willmott Forests Premium Forestry Blend Project involves growing Radiata pine softwood for the production of sawlogs and pulp logs, Silky Oak to produce high value hardwood sawlog for use in panelling, furniture, joinery and veneers, and She-oak biomass to produce renewable energy.

Company Overview

Willmott Forests Limited is a publicly listed (ASX Code: WFL), quality endorsed company that establishes, manages, harvests, processes and supplies timber products from plantation grown resources on behalf of our Growers and shareholders.

Project structured

Growers are issued Woodlots and appoint the Responsible Entity (Willmott Forests) to conduct all necessary plantation forestry activities on their behalf (through executing a Land Sourcing and Forestry Management Agreement). Each Woodlot permits the Grower to conduct plantation forestry activities on specific areas of land on which a minimum number of seedlings of the relevant species will be planted. Woodlots issued to Growers who invest in the Willmott Forests Premium Forestry Blend Project during a particular financial year form part of the Pool referable to that financial year and Growers who’s Woodlots are referable to that Pool share in the proceeds on a pro-rata basis from the sale of timber planted in respect of that Pool.

A Woodlot is equivalent to 5,200 square metres (0.52 of a hectare) of land. This area is further allocated to the three species within the Project as follows:

       ·  She-oak: approximately 300m²
       ·  Radiata pine: approximately 3,500m²
       ·  Silky Oak: approximately 1,400m²

Cost

Application Price
The application price of each Woodlot is $5,000 (“application price”). The application price does not include an allowance for GST, as GST is not expected to be payable in respect of the Application Price.

The application price is fully tax deductible in accordance with ATO Product Ruling PR 2008/60*.

Maintenance, Rent and Marketing Fee
The Responsible Entity will charge a fee for each Pool equal to 10% of the aggregate of the She-oak amount, Radiata pine amount and the Silky Oak amount for the relevant Pool for Maintenance (4%), Rent (5%) and Marketing (1%).

*The Product Rulings are rulings given by the ATO on the application of taxation law and is in no way expressly or impliedly a guarantee or endorsement of the commercial viability of the Investment or the soundness or otherwise of the Investment as an investment, or of the reasonableness or commerciality of any fees charged in connection with the Investment. The Product Rulings are only binding on the Commissioner if the Investment is implemented in the specific manner provided in the Product Rulings.
 

The year of income distribution in the above table is anticipated and may vary depending on a number of factors including growth rates, the actual time of planting and market conditions.

It should be noted that the She-oak trees will not be harvested within four years after the end of the financial year in which the Grower is issued Woodlots. For Growers entering into the Project on or before 30 June 2009, the She-oak trees will not be harvested prior to 1 July 2013.

Each year in respect of a Pool is a period of 12 months commencing on, or on the anniversary of, the completion of planting of seedlings in respect of the Pool. Typically planting will not be completed until approximately 15-18 months after the end of the income year during which the Grower is issued Woodlots.
 

Payment Options

CASH:              Cost per Woodlot = $5,000 per Premium Blend Woodlot (“PBW”)
                    (no minimum investment)
OR

FINANCE:         100% terms payment options are available to approved applicants:-

Finance term offered by Willmott Finance Pty. Ltd.

Finance terms offered by the Commonwealth Bank of Australia (CBA)
Principal and Interest Loans all with 3 year interest only options available.

                                                                                                            
* Minimum investment 7 woodlots - $35,000
 

Repayments

Willmott Finance Pty. Ltd. - 12 Months Interest Free Loan:
Repayments will be direct debited from your nominated bank account on the last business day of each month in Victoria commencing in July, following the year of investment

CBA Finance:
Loans will be available both at fixed or variable interest rates.

The interest rate for fixed interest loans will be set for the period of the loan on June 30 in the financial year of investment.

Finance for this project is provided by Commonwealth Bank of Australia. Repayments for finance arrangement offered will be direct debited from your nominated bank account on the first business day of each interest period in respect of the finance option selected. Repayments are due on the first business day of each month in Victoria commencing on the following month following the financial year of the investment.
 

The Regions

The Project will establish softwood plantations in regions throughout eastern Australia, which have existing commercial softwood plantations, suitable land characteristics, infrastructure and markets.

Willmott Forests intends to establish softwood plantations for its Project on properties in the Bombala; Murray Valley and Central Tablelands regions of southern NSW, the South West Victorian (Green Triangle), Central Gippslands, the Ballarat-Otway and North East Victoria (Murray Valley) regions of Victoria through its commercial arrangement with Hancock Victorian Plantations Pty Ltd.

The She-oak and Silky Oak plantations will be established in the Northern Rivers region of New South Wales or in southeast Queensland. This region extends along the New South Wales north coast from the southern Queensland border to south of Woy Woy and inland to the Great Dividing Range. The average annual rainfall ranges between 900mm to 1,800mm per annum.
 

The Timber Species

The Willmott Forests Premium Forestry Blend Project combines three species creating multiple income streams:

Radiata pine
A high value, lower risk plantation species used mostly for building applications in Australia and a wide range of pulp and paper products. Because Radiata pine has a 25 year maturity profile (it is ‘long-rotation’ timber), the Responsible Entity will enter into an agreement to sell the standing timber during Year 15.

She-oak
A fast growing native species. The timber is anticipated to be harvested in Years 3, 5, 7 and 9 and is grown to produce She-oak biomass for the production of renewable energy.

Silky Oak
A native hardwood prized for high value veneer and decorative timber uses; that is anticipated to be harvested in Year 15.
 

ATO Product Ruling

An ATO Product Ruling is a ruling on the application of taxation law and is in no way an expressed or implied guarantee or endorsement of the commercial viability of the Project, of the soundness or otherwise of the Project as an investment, or of the reasonableness or the commerciality of any fees charged in connection with the Project.

Product Ruling is only binding on the Commissioner of Taxation if the Project is implemented in the specific manner provided in the Product Ruling.
 

Survival/ Stocking Guarantee

Willmott Forests provides you with a Stocking Guarantee for your Woodlots in the Willmott Forests Premium Forestry Blend Project for two years from the date a Grower is registered as the holder of a Woodlot in the Project.

During this period if more than 15% of a Grower’s trees which are referable to the Pool are ‘materially damaged’, the Responsible Entity will, at its own expense (unless applicable insurance has been arranged by the Responsible Entity) remove the damaged or destroyed trees, prepare the ground and acquire and plant new cuttings or seedlings of a quality comparable to the original cuttings or seedlings planted in accordance with the Grower’s Land Sourcing and Forestry Management Agreement.

Refer to section 15.1.12 of the “Further Information” section on page 63 of the Willmott Forests Premium Forestry Blend Project – 2009 Product Disclosure Statement for further details of the Stocking Guarantee and the exclusions that apply.
 

Ongoing Insurance

Yes, you will need to insure your trees, upon expiry of the seven years (i.e. two years Stocking Guarantee and a further five years replacement and re-establishment insurance).

The Responsible Entity will use reasonable endeavours in respect of each Pool to arrange, each year until completion of the sale of the She-oak trees, Radiata pine trees and the Silky Oak trees in respect of that Pool, for the issue to the Responsible Entity of an insurance policy in respect of fire which covers such trees for an amount of at least the Application Price of each Woodlot referable to the Pool. The Responsible Entity may recover a pro-rata proportion of:

          (a) the cost of such insurance; and
          (b) any other cost in connection with such insurance,

from each Grower who’s Woodlots are referable to the Pool, calculated by reference to the proportion of the total number of Woodlots referable to the relevant Pool which are held by the Grower.
 

Project Risks

As with any investment of this nature, there are a number of risks relating to the forestry business. There is no guarantee that the investment will generate positive returns. Risk is a factor that is present in any investment you make.

Whilst the Manager’s believes there is a bright future for professionally managed forestry plantations, the Manager’s are not in a position to guarantee returns.

For details on some of the Project risks that may affect your investment, please refer to Section 5 – Risks in the Willmott Forests Premium Forestry Blend Project – 2009 Product Disclosure Statement (pages 18-19).
 

Disclosure of Fees

Please refer to Section 10 – Fees and Costs in the Willmott Forests Premium Forestry Blend Project – 2009 Product Disclosure Statement for further information regarding the fees and costs applicable to the project.

These fees and costs (other than insurance) may be deducted from your application moneys or Gross Timber Proceeds.

Insurance premiums and associated costs are set out in further details in section 10.7 and 10.8 (page 32) of Willmott Forests Premium Forestry Blend Project – 2009 Product Disclosure Statement.

You should read all of the information about fees and costs in the Product Disclosure Statement as it is important to understand their impact on your investment.
 

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