Middletons Lawyers acted for Neville Smith Group (NSG), Australia’s largest privately-owned hardwood processing company, in its $80 million acquisition by Integrated Tree Cropping (ITC) via cash and the issue of new shares.
Listed firm ITC — majority owned by Adelaide-based Futuris Corporation, owner of Elders Australia and Air International — is one of Australia’s largest hardwood plantation owners.
Futuris has agreed to finance the $40 million cash component of the deal.
ITC said it plans to ask shareholders to approve raising an $80 million to fund the cash part of the acquisition as well as repay $38 million of NSG’s bank debt.
ITC directors not associated with Futuris have decided on “placing” shares to Futuris and institutional investors, with an associated offer to shareholders of up to $5,000 value of new ITC shares to raise additional funds.
The merged entity will be led by NSG’s head, James Neville, and will have a market capitalisation of more than $200 million, taking ITC to within the top 300 ASX listed companies.
Middletons’ team has been working on the deal since 19 April. It was led by Melbourne-based corporate & commercial partner Sebastian Greene assisted by senior associate Jolyon Rogers and solicitors Tom McAveney and Belinda Fan.
Greene said an unusual aspect of the merger was affected by the new regime for wood supplier arrangements which is coming into force in Victoria at the same time. The Sustainable Forests (Timber) Act 2004 was passed in June this year. It amends the Forests Act 1958 and the Conservation, Forests and Lands Act 1987. The new Act is aimed at ensuring the long-term sustainable use of state forests.
“Fundamental to any timber processor is having proper timber supplier arrangements in place,” Greene said. Therefore, they had to provide advice on the changes, such as licensing arrangements, that would affect the merged company.
He said ITC is primarily a manager of “syndicated forestry stands”, whereas Neville Smith is a full service processing company sourcing timber from re-growth forests. “It is really a diversification … it is part of the natural growth of [ITC’s] business.”
On 8 September, a meeting of ITC shareholders will be asked to approve the “placement” of $40 million in new ITC shares at $1.20 each to Futuris; a further $20 million to Futuris on the basis of one share for every share issued under the institutional placement and “shareholder offer” and $20 million to institutional investors.
Freehills’ Perth office acted for ITC.