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FEA Plantations Project 2009

FEA Plantations Project 2009
Cash Rebate 8.25%
Closing Date CLOSED
Minimum Investment $3,450 (Not Subject To GST)
Term of Project Woodlot Option 1 – 14 years
Woodlot Option 2 – 17 years
Woodlot Option 3 – 26 years
Woodlot Option 4 – 19 years
Woodlot Option 5 – 26 years
Research
AAG
 
Options 1,2,3,5 4 stars
Option 4 3¾ stars
 
Adviser Edge
 
Options 1,3 4 stars
Options 2,5 4¼ stars
Option 4 3½ stars
 
Lonsec
All Options Recommended
ATO Product Rulings 2009/23 - Woodlot Option 1
2009/24 - Woodlot Option 2
2009/25 - Woodlot Option 3
2009/26 - Woodlot Option 4
2009/27 - Woodlot Unit 5
 

Financed Applications
For Initial assessment, completed finance applications (with attached supporting documentation) needs to be faxed to FEA by  Friday 26th June 2009.

Cash Applications

Can be accepted up to and including 30th June 2009.

Fax:
(03) 6331 5047

Email: marketing@fealtd.com

   
FEA Response to Timbercorp Voluntary Liquidation
FEA's CEO, CFO and Chair of FEA-Plantations Interview (23mb)
Intersuisse FEA Research
 

NO Application Fee for 12 months Interest Free finance for FEA Plantations Project 2009

FEA have decided to waive the Application Fee for 12 Month Interest Free finance offered by Forest Enterprises Australia Limited for FEA Plantations Project 2009 (of $250 or 0.25% of the loan amount) until 30 June 2009.

If a 12 Months Interest Free finance Application Fee has already been paid, the fee can either be applied to the deposit (thereby decreasing the loan amount) - or it can be refunded.

Project and Finance Summary

An innovative forestry investment from a leading vertically integrated forestry and forest products company

Woodlot Option 1 – EcoAsh®

This Woodlot Option will involve growing Eucalypt# hardwood logs to manufacture EcoAsh® sawn timber and SmartFibre wood fibre. Scheduled income at about 9 years of age (thinning) and about 13 years of age (clearfall).
Woodlot Option 2 – EcoAshclear®

This Woodlot Option will involve growing Eucalypt# hardwood logs to manufacture EcoAshclear® veneer and high-grade sawn timber and SmartFibre wood fibre. Scheduled income at about 9 years of age (thinning) and about 16 years of age (clearfall).
Woodlot Option 3 – BassPine®

This Woodlot Option will involve growing Radiata pine softwood logs to manufacture BassPine® sawn timber and SmartFibre wood fibre. Scheduled income at about 13 and 18 years of age (thinning) and about 25 years of age (clearfall). Given the longer term of Woodlot Option 3, a buy-back offer for Woodlots will be made at around 15 years of age.
Woodlot Option 4 – Khaya Mahogany™

This Woodlot Option will involve growing tropical, high-value African mahogany hardwood logs to manufacture Khaya Mahogany™ rough sawn timber for domestic and overseas markets. Scheduled income at about 11 years of age (thinning) and about 18 years of age (clearfall).
Woodlot Option 5 – Diversified Forestry Offer

This Woodlot Option will create a ready-made diversified forestry investment portfolio by combining a fixed ratio of Woodlot Options 1, 2, 3, and 4 – at an approximate 5% discount. Scheduled income at about 9, 11, 13 and 18 years of age (thinning) and about 13, 16, 18 and 25 years of age (clearfall).



Invest in a blend of forestry investments offered by FEA Plantations - a proven forestry manager

FEA Plantations Project 2009 will offer the opportunity to blend a balanced forestry investment portfolio across a range of proven tree species - such as Eucalypt# hardwood and Radiata pine softwood - and to include a proportion of high-value African mahogany.

You will be able to blend your investment across a diverse range of investment terms, potential income streams and end products - including EcoAsh® and BassPine® value added, branded hardwood and softwood sawn timber products and high-value Khaya Mahogany™ - for a range of domestic and export markets.

The proportion of logs not suitable for sawn timber will be processed and exported as wood fibre.

Take advantage of the blending opportunity that FEA Plantations Project 2009 will offer through the wide range of options that may suit your individual needs and preferred risk and return profile - or consider taking advantage of our ready-made Diversified Forestry Offer.

A successful forestry manager with a sound business model

Forest Enterprises Australia Limited (FEA) is an ASX-listed, vertically integrated forestry and forest products company established in 1985. It is the parent company of FEA Plantations Limited (FEA Plantations).

FEA Plantations Project 2009 (Project) will be FEA Plantations’ 17th consecutive forestry investment.

FEA is Tasmania’s largest plantation sawmiller and has been a plantation forestry manager for more than 23 years.

In 2008, the FEA group clearfall harvested its first forestry investment project (The Tasmanian Forests Trust No 1 ARSN 093 165 210) and delivered returns to investors in excess of prospectus projections with a before-tax IRR of 13.3% pa and an after-tax IRR of 7.3% pa1.

The FEA group has total landholdings of almost 92,000 hectares and manages a plantation estate in excess of 72,000 hectares in Tasmania, northern New South Wales and South East Queensland on behalf of more than 11,000 investors.



FEA is also a substantial forest products processor. It has a long-term contract to purchase 290,000 tonnes per year of plantation softwood, and owns and operates a state-of-the-art $72 million sawmill and timber processing facility at Bell Bay in northern Tasmania.

In 2009-10, the facility aims to process 400,000 tonnes of plantation Eucalypt hardwood and pine softwood and market these products under FEA’s EcoAsh® and BassPine® timber brands.

FEA also manages the joint-venture SmartFibre Pty Ltd (SmartFibre) wood fibre processing and export facility at Bell Bay.

Last year, SmartFibre exported over 500,000 tonnes of wood fibre.

For the forestry investor, FEA’s vertically integrated processing capacity creates a value chain – from plantation to finished product.

This value chain provides the opportunity for FEA to aim to optimise returns by offering prices for investors’ wood that reflect the higher prices FEA is able to realise for value-added, branded products manufactured from this sustainable plantation timber.

Forestry Expertise

FEA is one of the largest, longest-established and most experienced plantation forestry investment managers in Australia.

Its national forestry headquarters is located in Lismore, New South Wales, and a full time forestry team of 45 staff operates in Tasmania, New South Wales, South East Queensland and the Northern Territory.

FEA’s highly qualified and experienced forestry management team also supervises contractors and up to 150 of their staff on any one day.

Key FEA forestry advantages: • Land selection: FEA only establishes plantations in areas of Tasmania, northern New South Wales, South East Queensland and the Northern Territory with good quality soils and an annual minimum average rainfall of 800mm to 1100mm or more;

• Species selection
: FEA uses genetically improved (not modified) seed and seedlings and matches tree species to plantation locations;

• High planting density
: A high rate of 1,200 stems per hectare are planted for Eucalypt# and African mahogany hardwood and 1,330 stems per hectare for Radiata pine softwood;

• Thinning
: Thinning plantations during their growth provides potential early income for investors and also potentially more valuable trees at clearfall harvest; and

• Stocking guarantee
: Investors are guaranteed a stocking rate of 90% of the original stems planted for 3 years from the date they are registered as the holder of the Woodlot or the commencement of general insurance cover for the plantations, whichever is the earlier. If necessary, replacement seedlings will be planted at no cost to the investor to maintain this minimum stocking density during the stocking guarantee.
  Investment Options
EcoAsh
Woodlot
Option 1
EcoAshclear
Woodlot
Option 2
BassPine
Woodlot
Option 3
Khaya
Woodlot
Option 4
Diversified Forestry Offer
Woodlot
Option 5
Woodlot size ½ hectare ½ hectare ½ hectare hectare 3 hectares
Timber and Products Hardwood Eucalypt# sawlogs to manufacture EcoAsh® sawn timber and SmartFibre wood fibre Hardwood Eucalypt# sawlogs to manufacture EcoAshclear® veneer and high-grade sawn timber, EcoAsh® sawn timber and SmartFibre wood fibre Softwood Radiata pine sawlogs to manufacture BassPine® sawn timber and SmartFibre wood fibre High-value African mahogany hardwood marketed as Khaya Mahogany™ sawn timber for use in the furniture and building industries Combined:
Option 1: 4 woodlots

Option 2: 1 woodlot

Option 3: 1 woodlot

Option 4: 1 woodlot
Establishment Fee2 $3,450 $3,450 $3,450 $3,450 $23,000
(approximate 5% discount)
Investment Term3 14 years 17 years 26 years 19 years 26 years
Expected Returns – Thinnings Harvest3 Year 9 Year 9 Years 13 and 18 Year 11 Years 9, 11, 13 and 18
Expected Returns – Clearfall Harvest3 Year 13 Year 16 Year 25 Year 18 Years 13, 16, 18 and 25
Buy-back Offer4 Not applicable Not applicable Year 15 Not applicable Option 3 woodlots only Year 15
Land Sourcing and Management Fees No annual payments 18% of GST inclusive gross Harvest Proceeds No annual payments 18% of GST inclusive gross Harvest Proceeds No annual payments 15% of GST inclusive gross Harvest Proceeds No annual payments 20% of GST inclusive gross Harvest Proceeds No annual payments Option 1 and 2 woodlots 18% of GST inclusive gross harvest proceeds

Option 3 woodlots 15% of GST inclusive gross harvest proceeds

Option 4 woodlots 20% of GST inclusive gross harvest proceeds
Pruning Fees5 Not applicable Year 3 $423.50
Year 5 $445.50
Year 7 $473.00
Not applicable Not applicable6 Option 2 woodlots only
Year 3 $423.50
Year 5 $445.50
Year 7 $473.00



The FEA Value Chain

We don’t grow timber to produce woodchips. We aim to produce sawlogs.

An investment in forestry is ultimately an investment in forest products, and a good forestry investment optimises the value of the end products it produces.

Where many forestry investments are predicated on the basis that all timber produced will be sold as relatively low-value woodchips, FEA Plantations aims to manage plantations so they can recover the highest possible proportion of sawlogs, which should be sold at a higher price than pulplogs for woodchips.

When you invest in plantation forestry with FEA Plantations, you’re growing timber for a range of high-value branded products with proven existing markets.

FEA selects high-quality plantation land with 800mm to 1100mm annual minimum average rainfall and establishes plantations at a high-density stocking rate.

Plantations are maintained, fertilised and thinned as they grow towards final clearfall harvest.

At clearfall harvest, investors’ returns are optimised by recovering the highest possible proportion of higher-value sawlogs to pulp logs.

These sawlogs are processed by FEA into a range of sawn timber and treated products for domestic and international markets.

Logs that are not suitable for sawn timber are processed by SmartFibre Pty Ltd, combined with sawmill residue and exported or sold locally as wood fibre for high-quality paper and paper products, or potentially manufactured into reconstituted boards for building products.

FEA aims to process the highest possible proportion of investors’ timber as EcoAsh®, EcoAshclear®, BassPine® and Khaya Mahogany™ timber products – optimising their return through value-added, branded products.



Khaya Mahogany™ – an exciting new opportunity

The introduction of African mahogany – branded and to be marketed as Khaya Mahogany™ by FEA – into FEA Plantations Project 2009 will offer investors the option of investment in a high-value exotic tropical timber – managed by a large-scale and well-established forestry and products manager.

Mahogany is the common name for a broad range of tree species – the timber from which has been traded around the world from the middle of the 16th century. ‘True’ mahogany, of the genus Swietenia was, it is reputed, introduced to England from the West Indies by Sir Walter Raleigh, and the popularity of the wood increased steadily through the 18th century.

African mahogany is the name of a range of Khaya species which grow naturally in forests in African countries from Senegal to the Congo in West Africa across to Sudan and Uganda.

African mahogany became more commonly used in Europe towards the end of the 19th century to supplement diminishing supplies of Swietenia mahogany from South America.

It is widely recognised that there are reducing supplies of tropical hardwoods globally – including African mahogany – as a result of over-harvesting and illegal logging in developing countries, and it appears the timber resource will continue to come under pressure.

Therefore, demand for high quality plantation grown mahogany is expected to outstrip supply.

African mahogany is one of the world’s finest and most valuable timbers. The heartwood has a rich, red colour, is easily worked, takes a high polish and is strong and durable. It is also remarkably decay and termite resistant.

In Europe, the United Kingdom and the United States, African mahogany is in strong demand for high quality furniture and cabinetry, panels, boat building, veneers, office and shop fixtures, staircases banisters and handrails and domestic fl ooring.

FEA is enthusiastic about African mahogany and the potential it offers.

Khaya Mahogany™ will offer investors the opportunity to potentially achieve high returns from a recognised high-value tropical timber in demand across the world.

And, when you invest in this magnificent timber through FEA Plantations Project 2009, you have the added benefit of knowing that your plantation will be maintained by one of Australia’s largest and most successful forestry managers. FEA’s forestry expertise and resources have resulted in the development of a solid track record as a forest processor and marketer of high-value branded timber products.

Investors should be aware that African mahogany is not yet proven as a commercial plantation tree species in Australia. Therefore, Woodlot Option 4 should be considered as having additional risks as it will involve growing a timber species which is currently untested by FEA.

A wide range of finance options

A wide range of competitive finance options is available for investors in FEA Plantations Project 2009. Finance does not form part of the Project and will be a separate arrangement between the investor and the financier.
 
 

Commonwealth Bank of Australia

Forest Enterprises Australia Limited

  P&I Loans Loans Less than $100,000 (indicative*) Loans More than $100,000 (indicative*) Principal Only and P&I Loans Any Amount  (indicative*) Availability
Term and Interest Rate
(All rates are indicative only*)

Rates current as at 9 March 2009
1 year – variable 10.74% 9.49% 1 year Interest free All Options
1 year – fixed 9.40% 8.15% 2 year – fixed 10.15% All Options
3 years – variable 10.74% 9.49%   All Options
3 years – fixed 10.05% 8.80%   All Options
5 years – variable 10.74% 9.49%   All Options
5 years – fixed 10.65% 9.40%   All Options
7 years – variable 10.74% 9.49%   All Options
7 years – fixed 10.90% 9.65%   All Options
10 years – variable 10.74% 9.49%   All Options
10 years – fixed 11.35% 10.10%   All Options
12 years – variable 10.74% 9.49%   Options 2, 3, 4 and 5 only
12 years – fixed 11.35% 10.10%   Options 2, 3, 4 and 5 only
15 years – variable 10.74% 9.49%   Options 3 and 5 only
15 years – fixed 11.35% 10.10%   Options 3 and 5 only
Minimum Loan Variable rate -$4,000 Fixed rate - $10,000 No minimum
Maximum Loan $250,000. Loans above this amount can be submitted for consideration. No maximum
Interest Only Period Availability Options 2, 3, 4 and 5: 3 year interest only period available for all loan terms greater than 3 years.

Option 1: 2 year interest only period available for all  loan terms greater than 3 years.
None
Deposit Required Optional 20%
Repayments Commence 1st day of the month after notification by Bank 31 July 2009
Application Fee $250 or 0.25% of the loan amount, whichever is greater (can be capitalised) Same as CBA
How to Apply Complete Finance Application Pack Same as CBA
Assessment Statement of Position and Proof of Income Same as CBA
*All rates are indicative only and will be confirmed at time of funding.

This is a summary only of the finance options available to Investors in FEA Plantations Project 2009. Detailed information regarding finance options is available in the Finance Application Pack. Finance applications for FEA Plantations Project 2009 will be subject to each financier’s credit approval process.

1 Before-tax return takes into account 100% tax deductibility of investors’ costs, but does not include tax payable on harvest proceeds. After-tax return takes into account 100% tax deductibility of investors’ costs and includes tax payable on harvest proceeds. Calculations are based on top marginal tax rates.

2 The establishment fee is not subject to GST.

3 The years stated for investment terms, thinnings and clearfall harvests are estimates only and will be determined by FEA Plantations based on the market conditions, the advice of the Independent Forester and the growth rates of the plantations.

4 The buy back offer is expected to be made when the trees are around 15 years of age.

5 These pruning fees include GST and will be increased in accordance with CPI from 31 December 2008.

6 The African mahogany hardwood trees may be pruned up to 3 times during their early growth at no additional cost to the investor.

#
Eucalypt means selected species of the Eucalyptus and Corymbia genera. The species to be planted will be identified in the Independent Forester’s Report to be available at the same time as the PDS.

Past performance is not indicative of future performance and FEA Plantations is not able to guarantee the performance of the plantations established for the Project nor any financial return to investors.

The information contained in this publication is general in nature and does not take into account any particular individual’s financial situation, objectives or needs.


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