QIN 0.00% 29.5¢ quintis ltd

KKR puts sandalwood asset Santanol on the chopping block [IMG]...

  1. 287 Posts.
    lightbulb Created with Sketch. 12
    KKR puts sandalwood asset Santanol on the chopping block
    http://www.copyright link/content/dam/images/g/h/v/2/r/5/image.related.afrArticleLead.620x350.h1000h.png/1526191348174.jpg
    Mature sandalwood trees harvested for processing.
    by Brad Thompson
    KKR has put sandalwood company Santanol Group on the market in the latest twist for the plantation industry based in northern Australia.

    Santanol Group owns about 2000 hectares of plantations with more than 560,000 sandalwood trees in Western Australia and Queensland.

    Grant Samuel is advising on the sale of 100 per cent of Santanol Group in a move which comes after KKR reached a peace deal in a legal dispute with the minority shareholders who founded the company.


    The Santanol Group is being marketed as a vertically integrated producer of Indian sandalwood oil and timber for the global fine fragrance, cosmetics, aromatherapy and traditional markets.


    It expects to materially increase output as plantations mature.


    The assets include a timber processing facility in the WA town of Kununurra and oil distillation and refining facilities in Perth.

    KKR became a majority shareholder in 2013 when it funded the $70 million acquisition of plantations controlled by Elders to add to those held by the Santanol founders.

    Relationship soured
    The relationship between the private equity giant and the minority shareholders, made up of about 20 investors led by Tony Jack and Bob Bunning, soured last year.


    The minority shareholders took their grievances to the WA Supreme Court after two share issues diluted their stake in the private company.

    They also challenged the appointment of receivers to Santanol Pty Ltd and Berg View III Pty Ltd, the entities which own the minority stake, and gained the backing of litigation funder IMF Bentham.

    The legal action was launched amid attempts by insolvency firm McGrathNicol to find a buyer for the Berg View and Santanol Pty Ltd shares. KKR, as a secured creditor, had instigated the appointment of the receivers.

    Mr Jack said on Sunday the issues between the minority shareholders and KKR had been settled out of court.


    "There has been an agreement and that agreement essentially is that we will sell the business and go our own ways," he said.

    "We are parting on amicable terms and have agreed that the business will be sold and each of us will take our proportional ownership share out of that sale."

    The stoush over Santanol has been overshadowed by the collapse of ASX-listed sandalwood company Quintis in January.

    Santanol added to its plantations last year with the planting of about 100 hectares of trees and harvested about 60 hectares for processing.


    Mr Jack said the minority shareholders were willing to continue managing the plantations under a new owner.

    He rejected concerns about the strength of the market for sandalwood timber and oil, saying Santanol had been successful in reactivating demand among perfume and cosmetics manufacturers while pricing its oil at $US2500 to $US3000 a kilogram.

    "It has taken us 15 years as an industry to work out how to grow these trees but now that we have done that ... the long-term supply and demand outlooks are very good," Mr Jack said.

    Sandalwood is parasitic and requires a host tree to thrive. Last year, Santanol conceded that about 120 hectares of experimental plantations grown without hosts on the Ord River irrigation scheme had failed and opted to have them bulldozed.
 
watchlist Created with Sketch. Add QIN (ASX) to my watchlist

Currently unlisted public company.

arrow-down-2 Created with Sketch. arrow-down-2 Created with Sketch.